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Efficiency Is a Weapon: How the Word Healthcare Loves Most Is Quietly Destroying It — with Larry Benz · The Operator | Healthcare Business

• 0:00
  okay all right today is one of those
• 0:04
  ideas that sounds right it still sounds
• 0:07
  right when it's coming out of my mouth
• 0:09
  until you actually look at what it's doing
• 0:11
  oh yeah consequences of the actions and
• 0:13
  the word today is efficiency i don't think
• 0:17
  i've ever heard anybody argue against
• 0:19
  efficiency it feels like the safest word
• 0:21
  in healthcare operations i feel like it
• 0:23
  might signal it signals discipline
• 0:25
  performance control
• 0:28
  But what if the thing you've been
• 0:31
  optimizing is the exact thing breaking
• 0:34
  your clinic?
• 0:34
  Because here's the tension,
• 0:36
  as Larry writes in his new article,
• 0:38
  the more efficient clinics become on
• 0:39
  paper, the more clinicians churn,
• 0:43
  the more patients drop off,
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  and the long-term revenue quietly erodes.
• 0:48
  So either the operator is wrong or the
• 0:49
  model is.
• 0:50
  So today,
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  Larry is going to break down how this
• 0:52
  thing that felt safe and good and
• 0:54
  wholesome efficiency went from a useful
• 0:56
  concept
• 0:57
  to something that's actively working
• 0:59
  against clinical care and why most
• 1:01
  platforms are chasing metrics that look
• 1:03
  good while destroying the outcomes that
• 1:05
  actually matter.
• 1:06
  So Larry,
• 1:06
  let's start with what we were talking
• 1:08
  about before we hit record.
• 1:09
  Let's make sure we understand the terms
• 1:11
  because we don't want to make these terms
• 1:13
  nebulous.
• 1:13
  Probably the first step in where we get
• 1:15
  in trouble.
• 1:17
  No, that's exactly right.
• 1:18
  And whether we're talking about efficiency
• 1:20
  or scale or growth,
• 1:23
  these are very general terms that allow
• 1:25
  you to define them any way that you
• 1:27
  want.
• 1:28
  Left to our own devices,
• 1:29
  we tend to define them on a very
• 1:32
  narrow scale.
• 1:34
  and a bias.
• 1:35
  You know, so when we get to,
• 1:37
  you know,
• 1:38
  the whole idea around weaponizing
• 1:40
  efficiency,
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  I'm one of the guys who would say
• 1:43
  that because it shows up in the whole
• 1:46
  area around scheduling.
• 1:47
  And so let's take a step back for
• 1:49
  a minute.
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  In my experience in multi-site operations,
• 1:53
  which is effectively forty years,
• 1:56
  what I noticed even as my companies,
• 1:58
  and I had a couple generation of this,
• 2:00
  or even go back to my military days,
• 2:02
  the most
• 2:04
  variable function that I've ever seen in a
• 2:06
  healthcare site, physical therapy clinic,
• 2:08
  dental clinic, primary care,
• 2:10
  is how you schedule.
• 2:12
  And you can be part of the same
• 2:13
  brand,
• 2:13
  but from one clinic to another clinic to
• 2:15
  another clinic, it is highly,
• 2:16
  highly inconsistent.
• 2:18
  And so what is our knee-jerk reaction?
• 2:20
  Our knee-jerk reaction is to make it more
• 2:22
  efficient or to optimize it,
• 2:24
  to increase productivity.
• 2:26
  And I've seen board decks,
• 2:27
  including recently,
• 2:28
  where somebody's talking about going from
• 2:34
  is really a goal that should be followed.
• 2:37
  In any event,
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  the whole template around scheduling is
• 2:41
  where it becomes a weapon and that's
• 2:43
  ground zero because the scheduling
• 2:44
  template is where every abstraction about
• 2:47
  efficiency becomes concrete.
• 2:50
  dogmatic, irreversible.
• 2:52
  Somebody in a home office or a consulting
• 2:54
  engagement,
• 2:54
  which is even further from the operating
• 2:57
  floor,
• 2:57
  decides what the optimal visit lengths,
• 3:00
  the optimal daily count,
• 3:01
  the units per visit,
• 3:02
  the ratio of support personnel.
• 3:05
  They run the math.
• 3:06
  The math looks clean.
• 3:07
  They roll it out.
• 3:09
  And then let's use physical therapy as an
• 3:11
  example.
• 3:12
  A therapist tries to explain to a seventy
• 3:13
  four year old woman with a new hip
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  who's got maybe mild dementia and a
• 3:18
  daughter who drove a long way to help
• 3:20
  her at the appointment,
• 3:21
  that they have eleven minutes left in the
• 3:23
  appointment.
• 3:24
  And so the therapist is thinking,
• 3:26
  my blocks of time efficiency that's been
• 3:29
  pushed on me from corporate,
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  and I've got this situation in front of
• 3:33
  me.
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  And that's where it becomes a weapon.
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  It becomes a weapon in the treatment room.
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  And the worst part
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  We never blame the template.
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  We never blame corporate.
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  The clinician knows time management
• 3:44
  issues, not hitting productivity targets.
• 3:47
  And obviously all that compounds patient
• 3:49
  by patient, clinician by clinician.
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  And somebody finally wonders why there's a
• 3:53
  retention problem and patient outcomes are
• 3:55
  drifting.
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  It's a scheduling template did that.
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  We just never put it on a metric
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  dashboard.
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  So when operators do say the phrase,
• 4:02
  we need to be more efficient,
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  what are they actually chasing and why
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  does that feel so seductive?
• 4:10
  Yeah,
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  what they think they mean is what I
• 4:12
  would call doing more with less,
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  eliminating waste,
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  getting rid of resources,
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  sort of the Toyota production system,
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  being lean, sort of the good stuff.
• 4:23
  But what they're actually doing more often
• 4:26
  than not is they're compressing parts of
• 4:28
  the clinical encounter that are really
• 4:30
  hard to measure and therefore they're the
• 4:32
  easiest things to cut,
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  the intake conversation that surfaces the
• 4:35
  real problem.
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  I like my clinicians doing much more
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  subjective talking, relationship building,
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  otherwise things become transactional.
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  That doesn't get counted in minutes.
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  You don't bill for a CPT quote around
• 4:48
  that.
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  The two minutes at the end of the
• 4:50
  visit where the patient asks questions,
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  and as you well know,
• 4:53
  based on survey data long term,
• 4:55
  the last thing we tend to do as
• 4:56
  medical practitioners is explain things to
• 4:59
  patients.
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  That doesn't get counted.
• 5:00
  Clinical reasoning,
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  all those kind of things,
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  and none of that shows up as a
• 5:04
  line item.
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  It all does show up in the outcomes,
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  though, eventually,
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  but eventually is sort of too slow for
• 5:12
  a quarterly review so that by the time
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  a board comes to it, you know,
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  at the end of it,
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  they start to cut out waste.
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  And when what really gets cut is margin
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  and it's clinical margin.
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  The buffers allow really good care to
• 5:27
  happen under imperfect conditions.
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  You have to,
• 5:30
  management's tough because you have to
• 5:32
  give flexibility to your professionals.
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  If it's PTs,
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  you're a doctoring profession.
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  If it's dentists,
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  you have to give some professional leeway.
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  And if that means once in a while
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  a patient in the waiting room waits a
• 5:44
  little bit more and is disgruntled about
• 5:46
  it,
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  that's probably okay.
• 5:48
  I'm not saying that's a good way to
• 5:49
  conduct their business,
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  but those are the necessarily, you know,
• 5:53
  the unintended consequences of good
• 5:55
  management.
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  The unintended consequences of bad
• 5:58
  management is every patient gets seen on
• 6:00
  time.
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  If you have a clinic that is celebrating
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  that every patient is seen on time and
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  nobody's disgruntled about waiting room
• 6:08
  time,
• 6:08
  then my guess is you have inefficiency,
• 6:10
  not efficiency.
• 6:12
  All right.
• 6:12
  In the article,
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  you bring up Taylorism and industrial
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  efficiency.
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  I like when you give examples in other
• 6:19
  industries and bring them in.
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  We found this in pin making or car
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  production, and we brought it over here.
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  So where did healthcare go wrong in
• 6:28
  borrowing that industrial efficiency
• 6:30
  model?
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  Yeah, this is just my guess.
• 6:33
  I think that the moment somebody said that
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  healthcare is a service business and then
• 6:38
  a consultant heard service business and
• 6:40
  they thought manufacturing,
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  that's my guess.
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  And so really, you know,
• 6:44
  when you take manufacturing and Taylorism
• 6:47
  and industrial efficiency framework,
• 6:49
  time and motion studies, specialization,
• 6:51
  standardization, throughput optimization,
• 6:53
  all that works brilliantly when the idea
• 6:56
  is to produce the same product.
• 6:58
  every single time without variation but
• 7:00
  you need it it works for steel it
• 7:03
  works for semiconductors it works for the
• 7:05
  assembly line of an auto plant but it
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  does not work when the product is
• 7:10
  relationships and therapeutic ones at that
• 7:13
  in the raw material
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  It's humans.
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  Those are humans in pain who show up
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  with a history.
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  They don't come.
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  They don't come to get become their reason
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  to get treated, not hell.
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  They come for help.
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  And so what we do is we want
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  to, you know, bad,
• 7:28
  bad business says we treat them with
• 7:30
  efficiency.
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  And when that starts to happen, watch out,
• 7:34
  you know, in the.
• 7:35
  In the nineties is when,
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  at least my best recollection,
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  when we got to this whole concept of,
• 7:41
  you're a little young for this Jimmy,
• 7:42
  of managed competition and managed care,
• 7:45
  the utilization review movement.
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  the idea was to apply rigor to what
• 7:51
  you know effectively if you think about
• 7:53
  health care was an artisan economy right
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  and some of it was legitimate there was
• 7:58
  a lot of waste a lot of variation
• 7:59
  practice patterns real room for better
• 8:01
  improvements variability and treatment of
• 8:03
  how we go about no real protocols so
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  there was some reason to it but the
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  mistake was believing that this framework
• 8:10
  was
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  You could apply it any and everywhere.
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  You could standardize parts.
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  Some do and most don't standardize when
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  you're dealing with human beings.
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  And what suffered was clinical judgment.
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  That became a variable to be controlled
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  rather than a capacity to be enabled.
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  And when you really think of when doctors
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  and therapists and dentists leave,
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  it's because they've been infringed upon.
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  They spent all these years in school and
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  what do we do?
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  We do all this stuff to take that
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  away from them.
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  And so we're paying for that mistake just
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  with very, very different terminology.
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  And we have to think twice about that
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  because we look at turnover and retention
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  data and burnout,
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  but we don't look at really the underlying
• 8:52
  causes.
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  And part of it is our insistence on
• 8:55
  being efficient.
• 8:58
  In this article,
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  you argue that the causal chain is
• 9:00
  actually backwards,
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  that efficiency doesn't drive revenue.
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  It's the other way around.
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  So what actually does then?
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  What drives revenue?
• 9:08
  Yeah.
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  Well,
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  so the conventional model runs efficiency,
• 9:14
  capacity, revenue, growth.
• 9:16
  That's the conventional model.
• 9:18
  Right.
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  The actual model runs closer to this.
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  Clinical quality, number one,
• 9:25
  patient outcomes,
• 9:27
  word of mouth referral relationships,
• 9:29
  new patient volume, revenue margin growth.
• 9:34
  Let me think backwards on that a minute.
• 9:35
  Yeah.
• 9:36
  The old model is efficiency, capacity,
• 9:40
  revenue growth.
• 9:41
  The actual model should run closer to
• 9:44
  this.
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  Quality is number one.
• 9:47
  Sounds like Ford Motor Company, wasn't it?
• 9:49
  Yeah, yeah, yeah.
• 9:50
  Quality is number one, right.
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  So let's bring that to healthcare.
• 9:53
  That then leads to a drive on patient
• 9:57
  outcomes.
• 9:59
  word-of-mouth referral relationships comes
• 10:02
  out of that.
• 10:03
  New patient volume then is generated that
• 10:06
  sort of the network effects,
• 10:07
  then revenue margin,
• 10:09
  which obviously all that is growth.
• 10:11
  You see, big difference.
• 10:12
  So growth is the end-pull.
• 10:15
  One is based on efficiency, capacity,
• 10:17
  revenue.
• 10:17
  The other one is based on clinical
• 10:18
  quality, patient, word-of-mouth,
• 10:20
  driving that to growth.
• 10:22
  And those things are hard to put,
• 10:23
  as you've mentioned before,
• 10:24
  in a slide deck or harder to measure.
• 10:28
  So what does this look like on the
• 10:30
  ground for clinicians?
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  Where does efficiency start turning into
• 10:35
  burnout or what you actually call,
• 10:37
  you're bringing in different words,
• 10:39
  which I liked, you call it moral injury.
• 10:42
  That's exactly right.
• 10:43
  And I think it starts the moment the
• 10:45
  clinician starts making trade-offs because
• 10:48
  I'm not letting clinicians off the hook
• 10:50
  because default goes from the love of care
• 10:54
  and compassion and empathy and outcomes
• 10:56
  and clinical intervention and the science.
• 10:59
  to now I'm going to default to the
• 11:01
  company says I have to see this many
• 11:02
  patients per hour, this many per patient.
• 11:04
  This is what I'm based on.
• 11:05
  My daily email tells me my productivity,
• 11:08
  where my bonus is based on that
• 11:09
  productivity.
• 11:11
  What happens in all those examples is your
• 11:13
  incentives shift.
• 11:16
  and you start to make trade-offs and your
• 11:17
  default mode mechanism changes and that's
• 11:20
  the inflection point not when the schedule
• 11:23
  busy necessarily clinicians always expect
• 11:26
  to be busy not when the documentation you
• 11:29
  know requirements are annoying they're
• 11:31
  always annoying damage starts when the
• 11:33
  system creates a structural conflict
• 11:36
  between the job and the love and the
• 11:37
  passion meeting a certain efficiency
• 11:40
  performance standard and then the
• 11:42
  clinician either is forced
• 11:45
  to adopt to that performance standard,
• 11:47
  or they default out and they go to
• 11:48
  another employer,
• 11:49
  or they have kind of cognitive dissonance.
• 11:53
  When seeing a complex patient carefully
• 11:55
  puts you behind the productivity metrics,
• 11:57
  so what do you do?
• 11:58
  You hustle through it and don't do what
• 12:00
  you know is the right thing,
• 12:01
  avoiding the time spent with them because
• 12:04
  your incentives have shift to either a
• 12:06
  dollar sign or a carrot,
• 12:10
  some type of reward system.
• 12:12
  And so we have to stop rewarding with
• 12:14
  carrots,
• 12:15
  incentives and bells and all those kinds
• 12:18
  of things.
• 12:19
  And we have to go back to liberating
• 12:21
  clinicians.
• 12:22
  What I find interesting is clinicians want
• 12:25
  autonomy.
• 12:26
  I'm not saying you,
• 12:28
  get rid of all guardrails.
• 12:29
  What you do is you get rid of
• 12:30
  the number of guardrails that you have and
• 12:32
  you create boundaries and autonomy within
• 12:35
  structure and accountability.
• 12:36
  And if a clinician's expected productivity
• 12:39
  is eleven and one day they see thirteen
• 12:41
  and another day they see nine,
• 12:43
  You got to live with that.
• 12:44
  And managing a service-related business is
• 12:48
  much a battle in what I call normalizing
• 12:50
  discomfort.
• 12:50
  You have to get comfortable with the
• 12:52
  uncomfortable and the fact that you can't
• 12:54
  have equal standards across them.
• 12:56
  I have some clinicians that are really
• 12:58
  more built around productivity.
• 13:00
  Maybe their patient mix is more
• 13:02
  commercial.
• 13:03
  I have others that I want them staying
• 13:05
  within the elderly Medicare patients.
• 13:07
  And I know that they're
• 13:09
  You know,
• 13:10
  their numbers are going to be less.
• 13:11
  But you know what?
• 13:11
  We do that in baseball.
• 13:13
  You know,
• 13:13
  we're not going to give up on the
• 13:14
  great receiver.
• 13:15
  I'm sorry, the great shortstop,
• 13:16
  who's an incredible fielder,
• 13:18
  but her batting average is less.
• 13:20
  We want our center fielder to have the
• 13:21
  higher batting average, right?
• 13:23
  Those are just examples of how we
• 13:24
  professionalize it in sports.
• 13:26
  But somehow or another,
• 13:27
  we've made it an industrial experiment,
• 13:31
  B-School project,
• 13:32
  and really screwed it up in healthcare
• 13:34
  service businesses.
• 13:35
  Plus, you know, in baseball,
• 13:36
  when a guy's like, oh, he's due.
• 13:38
  What do we say?
• 13:38
  He's due.
• 13:39
  He's a good hitter.
• 13:40
  He's going to go seven for eight in
• 13:41
  the next three games.
• 13:43
  That's what you know.
• 13:44
  You've described something called
• 13:46
  efficiency theater.
• 13:47
  You touched on a couple of those elements.
• 13:49
  But what are some common examples that
• 13:51
  operators are celebrating?
• 13:52
  They're actually hurting them.
• 13:56
  Yeah.
• 13:56
  Efficiency theater.
• 13:57
  So someone opens a dashboard.
• 13:59
  The dashboard has green numbers.
• 14:02
  Everybody nods, oh, it's green.
• 14:04
  It's not yellow.
• 14:04
  It's not red.
• 14:05
  But nobody asks,
• 14:07
  what's downstream of the green numbers?
• 14:10
  And that's efficiency theater.
• 14:11
  It's the performance of sort of what I
• 14:14
  call operational sophistication with no
• 14:16
  substance behind it.
• 14:17
  The metrics are clean,
• 14:19
  but the causality is unexamined.
• 14:21
  And the room sort of moves to the
• 14:23
  next slide, right?
• 14:24
  That's the theater of it.
• 14:26
  Nobody starts talking about how
• 14:28
  utilization rates that look strong because
• 14:31
  patients are seen at a high volume without
• 14:33
  any analysis of completion rates.
• 14:35
  You and I have talked about the visit
• 14:37
  cleft.
• 14:37
  dropout patterns, outcome quality,
• 14:40
  productivity numbers that hit benchmarks
• 14:42
  because clinicians have figured out how to
• 14:44
  make numbers work.
• 14:44
  They game the system.
• 14:47
  You bet on margins that hold because
• 14:48
  overhead has been cut.
• 14:50
  So, you know,
• 14:51
  all of this leads to really this
• 14:54
  this sort of notion that there are
• 14:57
  intended,
• 14:57
  unintended consequences of all these
• 14:59
  things.
• 15:00
  Let's have an adult conversation about
• 15:03
  them.
• 15:03
  And don't expect the cleanest numbers.
• 15:06
  You're dealing with human beings all the
• 15:08
  time.
• 15:08
  You're dealing with no-show cancellation
• 15:10
  rates.
• 15:10
  So here's what tends to happen.
• 15:13
  A classic example.
• 15:14
  Well,
• 15:14
  now you're getting less number of new
• 15:16
  patients.
• 15:16
  So what do we do?
• 15:17
  See, got to do more marketing.
• 15:19
  We got to do more lead generation.
• 15:20
  We got to create more fun things in
• 15:21
  the funnel, but never, nobody ever asked,
• 15:24
  you know,
• 15:24
  answered the fundamental question.
• 15:26
  If you are a friend's family and former
• 15:28
  patients,
• 15:28
  your word of mouth referrals went from
• 15:30
  thirty five percent.
• 15:31
  Most people even measure it down to twenty
• 15:33
  percent.
• 15:34
  Why did that occur?
• 15:35
  My guess is that typically occurred
• 15:36
  because you're emphasizing efficiency at
• 15:39
  the sake of outcome.
• 15:42
  Well,
• 15:42
  efficiency feels like it's brought in to
• 15:44
  save money,
• 15:45
  but there's a moment in the article that
• 15:46
  you described the math actually flips.
• 15:48
  Efficiency saves money early.
• 15:52
  but in the long run costs millions.
• 15:54
  I remember the first time somebody
• 15:55
  explained to me what replacing a clinician
• 15:59
  actually costs in all the different
• 16:01
  aspects, recruiting, lost revenue.
• 16:04
  So why are operators missing that?
• 16:06
  Is it short term, feels good,
• 16:07
  looks good on a chart?
• 16:10
  And then long term,
• 16:11
  this plays out over and over again.
• 16:13
  It loses money or bleeds long term.
• 16:15
  What are operators missing about that?
• 16:17
  Yeah,
• 16:18
  so I think the costs are distributed in
• 16:20
  such a way that doesn't fit really any
• 16:22
  standard financial model.
• 16:24
  If you think about standard financial
• 16:25
  models, we have a P&M,
• 16:26
  we have a cash flow statement,
• 16:28
  we have a balance sheet.
• 16:29
  But the dynamics that go between new
• 16:31
  patients, visits,
• 16:34
  lab costs if you're in dental or something
• 16:37
  else, all of those things,
• 16:38
  there's no interplay that we look at.
• 16:39
  And so the turnover cost
• 16:42
  of losing,
• 16:42
  say a senior clinician is very real.
• 16:45
  Recruiting, onboarding, ramp time,
• 16:48
  productivity gap,
• 16:49
  and credentialing now it takes three to
• 16:51
  six months.
• 16:51
  And so you have to factor the lost
• 16:53
  opportunity costs there.
• 16:55
  I've seen conservative estimates at fifty
• 16:57
  to one hundred and fifty percent of annual
• 16:58
  salary.
• 17:00
  I tend to look at it more as
• 17:02
  what do they produce in a year?
• 17:03
  So you take a physical therapist,
• 17:04
  average production,
• 17:05
  just say for sake argument is three
• 17:07
  hundred thousand dollars and add another
• 17:09
  three months to it.
• 17:10
  That's a hundred thousand dollars just
• 17:12
  there.
• 17:12
  Plus your cost of replacement and
• 17:14
  onboarding,
• 17:14
  credentialing and all those things you're
• 17:16
  looking at.
• 17:16
  In some cases, you know,
• 17:18
  one hundred to two hundred percent of the
• 17:19
  costs.
• 17:20
  Don't forget about the referral
• 17:22
  relationships.
• 17:22
  Let's say that clinician had a really
• 17:24
  strong referral source,
• 17:26
  good word of mouth,
• 17:26
  they had great quality.
• 17:28
  They leave,
• 17:29
  their business doesn't suffer as much,
• 17:31
  but you're missing out on it.
• 17:33
  And I think what we tend to do,
• 17:36
  In healthcare services and in dental
• 17:38
  services,
• 17:38
  we forget that these practices are many
• 17:42
  practices within a practice.
• 17:43
  I tell my dentist right now, I said,
• 17:45
  you are in private practice.
• 17:47
  Everybody is,
• 17:48
  even if you're within a practice,
• 17:49
  you work and live within the team.
• 17:51
  You don't live and work within the
• 17:52
  corporation.
• 17:53
  And in your team might be you in
• 17:54
  the dental assistants and a PT,
• 17:56
  it might be you in a PTA and
• 17:57
  a tech.
• 17:58
  That's the team you gotta be thinking
• 18:00
  about.
• 18:00
  And as a business owner,
• 18:01
  you have to respect that you're promoting
• 18:04
  a real estate agent and not the brand
• 18:06
  of the real estate agent to use that
• 18:08
  context.
• 18:09
  And that's what I love about the business.
• 18:11
  If you do things right,
• 18:12
  you'll do it that way.
• 18:13
  Yes, you're at risk of losing people.
• 18:15
  It's your job to keep them.
• 18:16
  And it's,
• 18:18
  but what we tend to do is we
• 18:20
  work hard at optimizing and efficiency and
• 18:22
  we drive them away.
• 18:24
  Which brings up the next point,
• 18:25
  which is finding someone is one thing,
• 18:28
  but retaining them is a different thing.
• 18:30
  And you mentioned several things in this
• 18:31
  conversation of how to keep people.
• 18:34
  We hear it over and over again, autonomy.
• 18:36
  So if throughput isn't the answer,
• 18:37
  what does real efficiently look like or
• 18:39
  what should it look like?
• 18:41
  And what should leaders be measuring
• 18:43
  instead?
• 18:44
  I feel like you repeat the same thing
• 18:46
  over and over again,
• 18:47
  which is good because it means it's the
• 18:49
  answer.
• 18:49
  But what should they be measuring instead?
• 18:52
  Yeah.
• 18:52
  So the list is, you know,
• 18:54
  we've gone through this a couple of
• 18:55
  different times.
• 18:56
  I keep scaling it down a little bit.
• 18:59
  Most of it isn't new.
• 19:00
  It's just not traditionally on the
• 19:02
  dashboard.
• 19:03
  I think episode completion rate,
• 19:05
  and I'll grant you that it's harder to
• 19:07
  measure, but with EMRs and AI now,
• 19:10
  I don't think it's as hard as it
• 19:11
  once was.
• 19:12
  And that is what percentage of patients
• 19:14
  finish their plan of care, you know,
• 19:16
  versus the drop off cliff and all those
• 19:18
  things that go with it.
• 19:19
  The reason I say, Jimmy,
• 19:20
  is because to me, that's a proxy, right?
• 19:22
  If they're not finishing, why?
• 19:25
  Sometimes it's for the right reasons.
• 19:27
  Most of the time it's not though.
• 19:29
  And anything below sixty percent is,
• 19:32
  in my view,
• 19:33
  a clinical or operational problem.
• 19:35
  It just happened to be wearing a referral
• 19:37
  patient referral problems clothes.
• 19:39
  You know,
• 19:40
  I think the same thing in dental is,
• 19:41
  you know,
• 19:41
  there is such a thing as completion rate
• 19:43
  and treatment plan and treatment plan
• 19:46
  acceptance.
• 19:46
  And, you know,
• 19:47
  so for dental would be a little bit
• 19:49
  easier or a little bit different metric,
• 19:51
  but it's the same concept is how many
• 19:53
  are actually doing what was the intention.
• 19:56
  Dropout timing, when are they leaving?
• 19:59
  After the evaluation?
• 20:01
  And in dental and in behavioral health and
• 20:04
  in primary care and in PT,
• 20:06
  that's a real problem.
• 20:07
  The times are different,
• 20:09
  but they very much are.
• 20:10
  So in a PT realm,
• 20:12
  dropping out after the first visit,
• 20:13
  that's obviously a really tough sign.
• 20:16
  I think another one is referral source
• 20:18
  engagement.
• 20:18
  Are your top referral sources sending you
• 20:21
  more complex patients or fewer?
• 20:25
  Complexity is a proxy for trust.
• 20:28
  I used to hear this from referral sources
• 20:30
  that in many cases own their own physical
• 20:31
  therapy.
• 20:32
  We send you our difficult patients, right?
• 20:36
  The orthopedic surgeons who send you their
• 20:38
  family members, right?
• 20:39
  I think clinical outcome rate by
• 20:41
  clinician, not to rank people punitively,
• 20:45
  But to understand,
• 20:46
  and now what we do with AI is
• 20:48
  we're able to give it almost a daily
• 20:50
  if we wanted to,
• 20:50
  but we do kind of a weekly report
• 20:52
  card on our operating structure,
• 20:55
  not as a punitive measure,
• 20:57
  but as a monitoring measure.
• 20:58
  Because again,
• 20:59
  people generally like accountability
• 21:01
  within structure.
• 21:02
  or I should say autonomy within structure
• 21:04
  and accountability.
• 21:06
  So some elements of feedback,
• 21:08
  call it sophisticated feedback.
• 21:10
  None of these are exotic, Jimmy.
• 21:12
  They're just harder to collect.
• 21:15
  And management is made to be efficient,
• 21:18
  not to be what it should be,
• 21:20
  which is to have complex adult problems
• 21:23
  that you get to the table and you
• 21:25
  deliberate about and you address.
• 21:27
  When you oversimplify solutions,
• 21:31
  your own desire for efficiency and
• 21:33
  management is contributing to the problem
• 21:35
  of trying to be efficient clinically.
• 21:37
  Right.
• 21:38
  Let's give a forward tease.
• 21:39
  What are you writing about next?
• 21:41
  What comes up next week?
• 21:43
  So this next week we're looking at,
• 21:46
  you know,
• 21:48
  we've done efficiency and now we're going
• 21:50
  to start looking at other concepts around
• 21:54
  efficiency that can be used, you know,
• 21:55
  for the same, you know,
• 21:56
  for the same concept.
• 21:57
  So I've got, you know,
• 21:59
  two or three in the hopper.
• 22:02
  Let me,
• 22:03
  give me a half a second here.
• 22:05
  Then I'll, I'll, I'll,
• 22:08
  We had growth, we had scale,
• 22:10
  we had efficiency.
• 22:12
  And now we're going to look at things
• 22:13
  like teamwork, collaboration.
• 22:17
  Again,
• 22:18
  these are words that are great words,
• 22:20
  but what do they really mean?
• 22:22
  And then where do they show up on
• 22:24
  the scorecard?
• 22:25
  How do you measure them?
• 22:26
  But you could easily go into an
• 22:28
  organization and say,
• 22:29
  there's no collaboration,
• 22:30
  there's no teamwork.
• 22:31
  But you weren't, I wasn't optimized.
• 22:33
  I'm not getting graded on that.
• 22:35
  Therefore, I don't do that.
• 22:37
  No, that's exactly right.
• 22:38
  That's exactly right.
• 22:39
  So we're going to look at some of
• 22:40
  those kinds of things.
• 22:41
  Also going to look at,
• 22:43
  I'll tell you what's been on my mind
• 22:45
  lately,
• 22:46
  because I've had some people write me
• 22:48
  about this.
• 22:48
  And that is, they say, okay,
• 22:50
  our cost per visit has gone up.
• 22:52
  It used to be in a service business
• 22:53
  at forty to forty two percent.
• 22:55
  Now it's above fifty percent.
• 22:56
  So in PT,
• 22:57
  that would be your cost of salary,
• 22:59
  wages and benefits for your physical
• 23:00
  therapist is over fifty percent of your
• 23:02
  visit cost.
• 23:04
  Right.
• 23:04
  There's fifty percent of your net revenue.
• 23:06
  And remember,
• 23:08
  expenses of people are about sixty seven
• 23:10
  percent of your overall expenses and about
• 23:13
  now a little bit over fifty.
• 23:14
  How do we regain margin if we're not
• 23:16
  efficient?
• 23:17
  Right.
• 23:17
  And so that's a problem I'm going to
• 23:18
  be tackling through my writing as well.
• 23:21
  And one of them,
• 23:21
  and part of the solution, by the way,
• 23:23
  is not all that surprising.
• 23:24
  And that is those who manage best manage
• 23:26
  least.
• 23:26
  You got to cut overhead.
• 23:28
  You have to absolutely start learning to
• 23:30
  trust your therapist to make decisions and
• 23:33
  to do things the right way with limited
• 23:36
  guardrails.
• 23:37
  And with the ability to hold them
• 23:39
  accountable.
• 23:40
  So we're going to talk about how to
• 23:42
  regain margin back in the business because
• 23:44
  no margin, no mission.
• 23:45
  So you have to have I'm not a
• 23:47
  you know,
• 23:48
  I do have capitalistic tendencies.
• 23:49
  I'm not against the profitability of all
• 23:51
  these kind of things.
• 23:51
  But how can you do that in a
• 23:53
  way that makes sense without trying to be
• 23:55
  overly efficient?
• 23:57
  All right,
• 23:57
  if this episode made you a little
• 23:58
  uncomfortable, good, that's the point.
• 24:00
  This is one of those ideas that I
• 24:01
  think hides in plain sight.
• 24:03
  It looks like a warm and fuzzy,
• 24:04
  but can actually be weaponized against
• 24:06
  you.
• 24:06
  So if efficiency feels responsible,
• 24:08
  it feels disciplined,
• 24:10
  but if you didn't define it correctly,
• 24:12
  it could quietly dismantle the very thing
• 24:14
  you're trying to build.
• 24:16
  Make sure you check out Larry's Substack.
• 24:18
  It's called The Operator.
• 24:19
  The link is in the show notes.
• 24:20
  Until next week, Larry,
• 24:22
  thanks for digging into efficiency.
• 24:23
  Absolutely.
• 24:24
  Thanks, buddy.
• 24:26
  Hey, Jimmy, a couple things.
• 24:27
  My book is going to be,
• 24:29
  the publisher's dot up.
• 24:31
  I mean,
• 24:31
  they're just in the editing stages of a
• 24:33
  couple things.
• 24:34
  I mean, everything's done.
• 24:36
  So I'm guessing, call it six, eight weeks.
• 24:39
  So I want to do a launch up
• 24:40
  to it.
• 24:41
  It's a second edition.
• 24:42
  It's expanded.