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The Five Dysfunctions That Keep Killing the Same Platforms · The Operator | Healthcare Business

• 0:01
  All right,
• 0:01
  last time we talked about why healthcare
• 0:03
  platforms fail,
• 0:05
  and the headline surprised a lot of
• 0:07
  people.
• 0:08
  It got people very, very fired up,
• 0:10
  maybe because they didn't listen long
• 0:12
  enough.
• 0:13
  It's not private equity,
• 0:15
  it's not the ownership model,
• 0:17
  maybe it's the operators.
• 0:18
  So today we're gonna go deeper.
• 0:20
  Larry just dropped part two of this
• 0:22
  series.
• 0:22
  And this is where it gets uncomfortable
• 0:25
  because now we're not talking theory.
• 0:27
  We're talking about actual dysfunctions
• 0:29
  that keep blowing these things up.
• 0:32
  History keeps repeating themselves.
• 0:35
  Five of them.
• 0:36
  And the scary part,
• 0:37
  we've seen all five before.
• 0:39
  And we're still repeating them,
• 0:41
  just like history.
• 0:42
  So today we're breaking down where
• 0:43
  platforms actually go wrong and why smart
• 0:46
  people keep making the same mistakes and
• 0:49
  what the few operators who get it right
• 0:52
  are doing differently.
• 0:53
  So Larry, let's get into it.
• 0:56
  You said something that stuck with me.
• 0:58
  Failure is financing agnostic.
• 1:01
  That was the thing I think a lot
• 1:02
  of people last week said.
• 1:04
  when they heard you say,
• 1:05
  PE isn't the bad guy.
• 1:06
  They didn't stick around long enough to
• 1:08
  maybe go deeper.
• 1:09
  Maybe that's the trick.
• 1:10
  But if it's not private equity,
• 1:12
  then what actually is the root problem
• 1:15
  here?
• 1:16
  Yeah,
• 1:16
  so the root problem is that we keep
• 1:18
  treating American health care services
• 1:21
  like it's a scalable,
• 1:23
  dehumanized business product.
• 1:25
  And it isn't.
• 1:26
  CVS had ten point six billion.
• 1:28
  Amazon had effectively unlimited capital.
• 1:32
  Walgreens had the biggest national
• 1:34
  distribution infrastructure than any P
• 1:36
  firm would ever have.
• 1:39
  They were all three public,
• 1:41
  and they all walked into primary care with
• 1:43
  resources that would make any private
• 1:45
  equity sponsor blush.
• 1:47
  All three ended up with impairment
• 1:49
  charges, clinic closures,
• 1:50
  full dismemberment within three years.
• 1:53
  So if the answer were just getting better
• 1:55
  financing,
• 1:56
  then those three would have certainly
• 1:58
  figured it out.
• 1:59
  But the actual problem is structural.
• 2:03
  Healthcare is a relational,
• 2:05
  locally embedded reimbursement constrained
• 2:08
  and clinician dependent.
• 2:10
  Those are sort of four characteristics and
• 2:12
  they don't respond to capital the way that
• 2:14
  a consumer product or say a logistic
• 2:17
  business does.
• 2:18
  You can't centralize your way past them.
• 2:21
  You cannot acquire your way past them.
• 2:23
  You cannot hire sort of a McKenzie or
• 2:25
  a Bain team to optimize your past.
• 2:28
  They're optimized.
• 2:29
  You pass them at all.
• 2:31
  And the platforms that forget this,
• 2:33
  regardless of who's writing the check,
• 2:34
  end up in the same place.
• 2:36
  History does have a way of repeating
• 2:37
  itself,
• 2:38
  which is why I keep saying the financing
• 2:40
  is the accelerant, not the arsonist.
• 2:44
  Right.
• 2:44
  But it sometimes is the most visible.
• 2:47
  So we blame the most visible.
• 2:49
  You mentioned that word over
• 2:50
  centralization.
• 2:51
  My previous career was in broadcasting.
• 2:53
  We saw this.
• 2:54
  If you could manage one radio station,
• 2:55
  why not a hundred?
• 2:56
  Why not a thousand?
• 2:57
  You call over centralization the original
• 3:01
  sin.
• 3:02
  Why does something like that that looks
• 3:04
  like good management end up killing
• 3:07
  platforms in health care?
• 3:09
  Because it sort of feels like good
• 3:11
  management right up until it does it.
• 3:13
  When the platform is scaling fast and the
• 3:15
  acquisition pipeline is full and the
• 3:17
  EBITDA is growing, centralizing HR,
• 3:21
  finance and clinical protocols look like
• 3:24
  an operational discipline.
• 3:25
  It looked like a demand.
• 3:26
  It looked like a necessity, a default.
• 3:30
  but it looks like professionalizing a
• 3:31
  fragmented cottage industry.
• 3:34
  That's what we are as a cottage industry.
• 3:37
  It looks exactly what boards are asking
• 3:38
  for,
• 3:39
  but what's happening is you're dismantling
• 3:41
  the thing that makes the practice
• 3:43
  valuable.
• 3:44
  a patient's relationship with their
• 3:46
  hygienist, their PT,
• 3:47
  their primary care doctor.
• 3:49
  That's the product.
• 3:50
  The product is the relationship,
• 3:52
  the intangibles, the thing that is very,
• 3:55
  very difficult to scale and to quantify.
• 3:58
  That relationship is local, it's personal,
• 4:01
  and it also took a long time or
• 4:02
  years to build.
• 4:04
  The moment you start optimizing it from a
• 4:07
  corporate office four states away,
• 4:09
  you're not running the business better.
• 4:11
  You're consuming the business.
• 4:13
  And by the time the revenue trend makes
• 4:15
  that visible,
• 4:16
  the founders are already gone.
• 4:17
  The culture is already hollowed out.
• 4:19
  And you're trying to hire your way back
• 4:21
  to something that you destroyed on a
• 4:24
  spreadsheet.
• 4:24
  You know,
• 4:25
  if you look at the sort of the
• 4:27
  Harvard postmortem on Steward,
• 4:29
  they named it explicitly.
• 4:31
  Failure to invest in patient care combined
• 4:34
  with financial engineering that extracted
• 4:36
  value instead of building it.
• 4:38
  That's centralization's end state when it
• 4:41
  goes wrong.
• 4:42
  Five hospitals closed,
• 4:43
  five thousand workers displaced,
• 4:46
  a CEO dodging a Senate subpoena.
• 4:48
  That's where like looks like good
• 4:50
  management eventually goes.
• 4:53
  So then at what point does a platform
• 4:57
  cross the line?
• 4:58
  If I could manage one and then five
• 5:00
  okay,
• 5:02
  maybe this is a fair or unfair question,
• 5:04
  at what point does it cross the line
• 5:05
  from helpful infrastructure and
• 5:07
  centralizing thing to actually,
• 5:09
  what you just said,
• 5:10
  dismantling what actually made the
• 5:12
  business valuable?
• 5:13
  Yeah, it evolves over a process.
• 5:17
  It starts out...
• 5:19
  honoring the clinician,
• 5:20
  it ends up treating them like widget
• 5:22
  makers,
• 5:23
  that they're just fungible commodities.
• 5:26
  So that line is crossed when the local
• 5:27
  operator loses what I call real authority,
• 5:31
  not influence, authority,
• 5:33
  decision-making processes.
• 5:35
  There's a difference.
• 5:37
  Shared infrastructure at times makes
• 5:39
  sense.
• 5:40
  Billing, credentialing, supply chain,
• 5:42
  marketing, technology,
• 5:43
  nobody needs
• 5:45
  EMR implementations across a platform.
• 5:47
  That's legitimately more efficient and it
• 5:50
  frees up clinical time.
• 5:51
  I've got no argument with that.
• 5:53
  But the line gets crossed when the
• 5:55
  decision on how many patients a clinician
• 5:58
  sees and
• 6:00
  what they're being paid for seeing them
• 6:02
  and what the patients see which patients
• 6:04
  they see in terms of payer mix and
• 6:06
  whether that practice keeps the culture
• 6:09
  that they built because all of a sudden
• 6:12
  central management starts sending things
• 6:15
  out and they say you have to see
• 6:17
  this many patients you're doing this much
• 6:19
  you have to do this you have to
• 6:20
  adopt this and those decisions then
• 6:23
  migrate they could migrate even to a you
• 6:26
  know regional operator or a ceo who's
• 6:28
  never treated a patient
• 6:30
  That's when they've stopped building
• 6:31
  infrastructure on the clinical business
• 6:33
  and they started replacing the clinical
• 6:34
  business with a management layer.
• 6:37
  So that's how that thing evolves.
• 6:38
  The patients eventually figured out,
• 6:40
  referral sources figured out,
• 6:42
  and then the clinicians figure out and
• 6:44
  they leave.
• 6:45
  They go down to something better.
• 6:46
  It's usually in that order, by the way.
• 6:48
  Yep.
• 6:49
  And then the thing that made you valuable
• 6:50
  walks out the door and you're confused as
• 6:52
  to what happened.
• 6:54
  Yeah.
• 6:54
  You've said misaligned compensation isn't
• 6:57
  a bug.
• 6:57
  It's a feature.
• 6:59
  This is super zoomed in.
• 7:00
  We've seen this a lot.
• 7:01
  We had a discussion before about KPIs when
• 7:04
  you're aiming at a target that isn't
• 7:05
  valuable in the long term.
• 7:08
  So what are these systems actually
• 7:10
  incentivizing clinicians to actually do?
• 7:14
  Yeah,
• 7:14
  so this is a key out of the
• 7:15
  five dysfunctions.
• 7:17
  It's the effectively misaligning
• 7:19
  compensation.
• 7:20
  And it's two things, and they're both bad.
• 7:24
  The first is what I'll call the
• 7:25
  volume-driven model, revenue per visit,
• 7:28
  daily patient counts,
• 7:30
  units per billing targets,
• 7:31
  where you explicitly tell clinicians that
• 7:33
  more is better,
• 7:34
  regardless of what the patient actually
• 7:37
  says.
• 7:37
  is coming in on that particular day so
• 7:40
  you get treatment center you know you get
• 7:42
  these sort of treatment sessions
• 7:43
  structured around maximizing time billing
• 7:46
  codes rather than clinical outcomes it
• 7:48
  shifts the incentive shifts from the love
• 7:52
  and meaningful work of seeing patients to
• 7:54
  external numbers units time codes all
• 7:57
  those kind of things
• 7:59
  And the clinicians who take on these cases
• 8:01
  have to because the schedule demands it.
• 8:04
  They try to optimize the schedule.
• 8:06
  You get throughput, if you will,
• 8:09
  disguised as sort of productivity.
• 8:11
  And then burnout isn't a side effect of
• 8:14
  that system.
• 8:15
  It's the logical output of asking sort of
• 8:18
  a doctoral-level professional to function
• 8:20
  like a widget in an assembly line.
• 8:23
  Again,
• 8:23
  it's that migration of the business into a
• 8:27
  model system
• 8:28
  of manufacturing, if you will,
• 8:30
  rather than relating it's a people
• 8:32
  business all about the relationships.
• 8:35
  The other,
• 8:35
  the second failure is the flat salary
• 8:39
  model.
• 8:39
  Oh, we're going to pay our therapist X.
• 8:41
  Oh,
• 8:41
  and then the new class comes in a
• 8:43
  year and they're going to say,
• 8:43
  we're going to pay them X plus ten.
• 8:46
  Well, guess what?
• 8:47
  And then they go back to the other
• 8:48
  X and have to ten up them.
• 8:51
  And this is really popular more in the
• 8:53
  physical therapy and the dental hygiene
• 8:55
  space.
• 8:57
  We build professionals where the only way
• 8:59
  you can increase your income is to stop
• 9:00
  seeing patients move into management.
• 9:02
  So our best clinicians,
• 9:04
  the ones with the deepest clinical skills
• 9:06
  and the strongest patient relationships,
• 9:08
  are now economically incentivized to
• 9:11
  become a regional manager.
• 9:12
  They're incentivized to leave clinical
• 9:14
  practice as soon as it's possible.
• 9:17
  Then we run studies wondering why we have
• 9:19
  workforce shortages.
• 9:21
  Between two thousand twenty three and two
• 9:22
  thousand twenty four on the physician
• 9:25
  side,
• 9:25
  union petitions surged nearly nine hundred
• 9:29
  percent,
• 9:30
  nine hundred percent in a profession that
• 9:32
  spent decades philosophically opposed to
• 9:34
  collective bargaining.
• 9:36
  They were against unions.
• 9:37
  When you see that number,
• 9:39
  that really implies that the compensation
• 9:42
  dysfunction isn't sort of theory.
• 9:45
  It's producing,
• 9:46
  it's really a structural argument,
• 9:49
  structural response.
• 9:51
  Let's talk about this other problem that
• 9:52
  you brought up, this altitude problem.
• 9:55
  Decisions getting made further and further
• 9:58
  from the clinical floor,
• 9:59
  where that business,
• 10:00
  the value that the organization provides
• 10:02
  actually happens.
• 10:04
  What's the real cost of that disconnect,
• 10:06
  that altitude problem?
• 10:08
  Yeah,
• 10:08
  the real cost is that by the time
• 10:10
  bad decisions become visible as the
• 10:13
  revenue line,
• 10:14
  the damage has been in process for like
• 10:17
  a year to a year and a half.
• 10:18
  That's sort of a lag period,
• 10:20
  twelve to eighteen months.
• 10:21
  A CFO who's never seen a physical therapy
• 10:25
  episode designs a productivity metric.
• 10:27
  A compensation committee that's never
• 10:29
  worked in a clinical environment sets a
• 10:31
  pay structure.
• 10:33
  all these for doctoral you know
• 10:35
  professionals a regional director whose
• 10:38
  entire health care background is a
• 10:40
  consulting engagement or maybe they worked
• 10:42
  in a multi-site and worked their way up
• 10:44
  and it's all clinical efficiencies you
• 10:46
  know from a spreadsheet none of these
• 10:48
  decisions produce an immediate sort of
• 10:51
  catastrophic event it happens over time a
• 10:53
  slow degradation of clinical engagement
• 10:56
  patient experience,
• 10:57
  referral relationships,
• 10:59
  and a real bigaboo, retention.
• 11:01
  And by the time that degradation shows up
• 11:03
  in the numbers,
• 11:04
  the people who made those decisions have
• 11:08
  oftentimes moved on.
• 11:09
  They've had souped up, tricked up resumes,
• 11:11
  worked with search firms.
• 11:13
  I've had now success and growth in a
• 11:14
  multi-site and they move on.
• 11:16
  I call that the altitude problem because
• 11:19
  the higher the decision that gets made,
• 11:20
  the less grounded it is.
• 11:22
  and the reality of where that care
• 11:23
  actually happens at the clinic.
• 11:26
  And in health care services,
• 11:27
  the care is the business.
• 11:31
  Everything else is supportive
• 11:32
  infrastructure.
• 11:33
  When the supportive infrastructure starts
• 11:35
  making business decisions about the care
• 11:38
  without understanding the care,
• 11:40
  you've inverted the model,
• 11:42
  and that in itself is a symptom of
• 11:44
  the dysfunction.
• 11:45
  The tail is now wagging the dog,
• 11:47
  and the dog is the part that actually
• 11:48
  generates the revenue.
• 11:49
  Yeah, let's get even scarier.
• 11:51
  Let's bring in Frankenstein to this
• 11:52
  equation.
• 11:53
  You've described what you call
• 11:54
  Frankenstein network,
• 11:55
  where many platforms prioritize
• 11:58
  acquisition, buying new things,
• 12:00
  absorbing things over actually integrating
• 12:04
  what they've already bought.
• 12:06
  Why does this happen?
• 12:07
  Yeah,
• 12:08
  so let's get to the Frankenstein by
• 12:09
  setting some context here a little bit.
• 12:11
  See, acquisitions generate headlines.
• 12:15
  Integration doesn't.
• 12:16
  When you close a ten clinic deal,
• 12:18
  there's a press release.
• 12:19
  There's a multiple that went up.
• 12:21
  There's something to show the board at the
• 12:23
  next quarterly meeting.
• 12:25
  When you spend eighteen months integrating
• 12:26
  that acquisition, aligning EHR systems,
• 12:29
  building shared culture,
• 12:31
  developing clinical staff,
• 12:32
  investing in same-store growth,
• 12:34
  There isn't a press release.
• 12:36
  The board doesn't really care.
• 12:37
  It's an expectation they have,
• 12:38
  but that can take eighteen months.
• 12:40
  There's just quiet operational work that
• 12:43
  eventually shows up as margin improvement
• 12:45
  and retention.
• 12:46
  The way to judge an acquisition is you
• 12:50
  pay a multiple and that multiple has to
• 12:52
  be brought down to a better return on
• 12:55
  that multiple.
• 12:56
  in over a period of time.
• 12:58
  I think eighteen months is a reasonable
• 13:01
  expectation.
• 13:02
  And in my experience,
• 13:03
  you can grow a company twenty to thirty
• 13:05
  percent over that time period.
• 13:07
  The problem is you start stacking all
• 13:09
  these acquisitions,
• 13:10
  which is what happened in all these
• 13:11
  dysfunctional companies,
• 13:13
  and they couldn't integrate
• 13:15
  and one didn't get to one point two
• 13:17
  point oh,
• 13:17
  it got to point six and point seven.
• 13:20
  You see,
• 13:21
  PE incentive structures don't wait for the
• 13:23
  quiet operational work.
• 13:25
  They're on a five year hold period.
• 13:27
  Every quarter you're not acquiring is a
• 13:29
  quarter you're not building towards the
• 13:30
  exit multiple.
• 13:31
  So here's what you end up instead.
• 13:33
  That's what I call the Frankenstein
• 13:35
  network.
• 13:35
  Dozens of acquired practicing,
• 13:38
  each with its own EHR,
• 13:39
  each with its own culture,
• 13:41
  each with its own billing practice
• 13:43
  stitched together under brand
• 13:45
  shared name and a shared debt load with
• 13:47
  almost none of the operational synergies
• 13:50
  that justify the acquisition premium.
• 13:52
  Systems don't align, cultures clash.
• 13:55
  It's all one sided central management
• 13:57
  telling you what you have to do.
• 13:59
  No area of collaboration,
• 14:01
  no fierce disagreement, no teamwork,
• 14:03
  none of the things, you know,
• 14:05
  the tacit knowledge skills that you have
• 14:07
  to do when you really bring teams
• 14:08
  together.
• 14:09
  Then the clinicians who joined that
• 14:11
  platform,
• 14:12
  when they still had its original culture,
• 14:14
  they watch it get diluted with all these
• 14:17
  successive deals and same store growth,
• 14:19
  which is the actual proof that the
• 14:21
  business model works,
• 14:22
  never gets the investment it needs because
• 14:24
  the capital is always paying for the next
• 14:26
  acquisition or paying the interest on
• 14:28
  their acquisition.
• 14:29
  It's a great way to build a very
• 14:31
  impressive looking platform that is
• 14:33
  quietly hollowing out from the inside.
• 14:36
  Looks great on paper while they're
• 14:37
  quietly, I guess, running out of cash.
• 14:41
  Yes.
• 14:41
  Let's at least close on something hopeful.
• 14:45
  What are the platforms that actually get
• 14:47
  this right doing differently?
• 14:49
  This is the reason we study history all
• 14:51
  throughout school, right?
• 14:52
  We're supposed to watch the failures and
• 14:54
  piece together the things that could have,
• 14:55
  should have, would have happened.
• 14:56
  But who's doing it right now?
• 14:58
  Yeah,
• 14:58
  so I'll answer the second part of that
• 15:00
  carefully because the platforms doing this
• 15:02
  really well are usually private and
• 15:04
  they're not looking for attention.
• 15:06
  The ones that shout out about it the
• 15:08
  loudest are usually the ones that have the
• 15:09
  slickest decks and the most questionable
• 15:12
  unit economics.
• 15:13
  So I'll give you that pattern rather than
• 15:16
  the names,
• 15:17
  although I'm not afraid to name a few
• 15:19
  of them here.
• 15:20
  But what they share,
• 15:21
  let's talk about their commonalities.
• 15:22
  Clinician-informed leadership at every
• 15:25
  level.
• 15:25
  They don't run off founders.
• 15:28
  They don't do those kinds of things.
• 15:29
  They don't have this kind of poster child
• 15:33
  chief clinical officer joined at the hip
• 15:36
  of their COO as though that is some
• 15:38
  kind of big deal.
• 15:41
  But they don't care about clinical
• 15:42
  advisory boards that report up.
• 15:45
  But what they have is actual operators
• 15:47
  with actual authority
• 15:49
  and rooms where decisions get made see
• 15:51
  clinicians have transportable skills that
• 15:53
  have allowed them to be entrepreneurs and
• 15:56
  managers and they built businesses now you
• 15:58
  take them out of businesses doesn't make
• 16:00
  any sense right compensation models where
• 16:03
  a clinician who produces more takes home
• 16:06
  more that's realignment not a peloton sort
• 16:09
  of leaderboard with penalty tiers
• 16:12
  They don't do the next acquisition until
• 16:14
  the last one gets integrated.
• 16:16
  They do success one at a time.
• 16:18
  They share systems.
• 16:19
  They bring on culture.
• 16:21
  They recognize that you have different
• 16:23
  cultures and history and legacy,
• 16:24
  but you bring them together and they
• 16:27
  create new commitments around that.
• 16:29
  They use same store growth as the primary
• 16:33
  metric, organic growth.
• 16:36
  The reason they do that is if you
• 16:38
  can't do something well organically,
• 16:40
  why should you ever be entitled to buy
• 16:42
  anything?
• 16:44
  The clinician entrepreneurs who built the
• 16:46
  local businesses,
• 16:47
  they stay in the platform one way or
• 16:48
  another.
• 16:50
  They keep equity.
• 16:51
  They have genuine operational authority.
• 16:54
  They still have ownership at the local
• 16:56
  level.
• 16:56
  They might have it at the top level,
• 16:58
  but they really need it at the local
• 16:59
  level.
• 17:00
  They're not transition out six months
• 17:03
  under some cockamamie CEO trying to make a
• 17:06
  name for themselves and say, oh,
• 17:09
  we got running off founders as though that
• 17:11
  was built with some sort of strength.
• 17:14
  And here's the one ad that doesn't get
• 17:16
  enough attention.
• 17:18
  The professional managers in these
• 17:19
  platforms have verifiable track records of
• 17:23
  organic growth,
• 17:24
  not tricked up search firm resumes that
• 17:28
  claim top line growth,
• 17:29
  even though you bought a bunch of things,
• 17:31
  right?
• 17:32
  Specifically during the post COVID period,
• 17:34
  this is what is incredibly important
• 17:36
  because this is the period of time when
• 17:39
  labor costs have spiked,
• 17:40
  supply chains broke,
• 17:41
  reimbursement got cut,
• 17:44
  And clinician shortages were the new new.
• 17:46
  They were the new normal.
• 17:48
  Anyone could look at an operator in a
• 17:50
  free money environment from years ago
• 17:52
  where acquisitions were made and claimed
• 17:54
  they had all kinds of growth.
• 17:55
  And that's what you see on these tricked
• 17:57
  up resumes is the bragging of growth.
• 18:00
  Which, by the way,
• 18:01
  I'm going to go back and redo two
• 18:04
  more additions to metrics that don't
• 18:06
  matter.
• 18:06
  And growth and scale are going to be
• 18:09
  the next few episodes.
• 18:10
  But the question is,
• 18:12
  what do these companies do?
• 18:13
  They grew and they couldn't buy their way
• 18:15
  into it.
• 18:15
  These are companies that are quiet
• 18:17
  gainers.
• 18:18
  They didn't have to be flashy,
• 18:20
  shiny objects by buying new companies.
• 18:23
  The platforms that ask the questions in
• 18:25
  the hiring process are the ones that I
• 18:28
  will be watching.
• 18:29
  In dental,
• 18:30
  I could tell you Heartland Dental,
• 18:32
  a long-term DSO established by KKR,
• 18:36
  very thoughtful about how they do
• 18:39
  acquisitions and de novos.
• 18:42
  I think you've seen some physical therapy
• 18:44
  companies in the early days who've
• 18:46
  collapsed.
• 18:47
  But they started out doing mostly de
• 18:49
  novos,
• 18:50
  then went to mostly acquisitions and then
• 18:52
  failed.
• 18:53
  So there are winners in this world,
• 18:56
  but they remain relatively quiet and
• 18:59
  understated.
• 19:00
  Quiet and humble.
• 19:01
  All right.
• 19:01
  Let's play a quick segment called Operate
• 19:04
  or Overrate.
• 19:05
  Just give me an overrate.
• 19:06
  You want to operate or overrate?
• 19:09
  Centralized clinical protocols.
• 19:12
  Is that overrated or underrated?
• 19:16
  centralized clinical protocols.
• 19:20
  I think that's probably underrated.
• 19:23
  I think you have to have a
• 19:27
  consensus-driven approach to clinical
• 19:31
  protocols from the standpoint of evidence
• 19:33
  and the hierarchy of evidence.
• 19:35
  And say,
• 19:36
  out of the framework of low back pain,
• 19:39
  these are the clinical prediction rules
• 19:41
  we're going to use.
• 19:42
  These are the algorithms that we're going
• 19:44
  to teach.
• 19:46
  the treatment approaches.
• 19:47
  Yes,
• 19:48
  we understand there are deviations and
• 19:49
  comorbidities and things off of them.
• 19:53
  But I know I always wanted physicians
• 19:56
  coming back to me and saying, you know,
• 19:57
  I love the fact that when I send
• 19:59
  a low back pain patient,
• 20:00
  you do a clinical prediction rule or
• 20:02
  something and then engage them in a
• 20:03
  protocol.
• 20:04
  You don't have one person who just does
• 20:06
  manual therapy,
• 20:06
  another person that just does sports
• 20:08
  medicine,
• 20:09
  another person that just does McKenzie,
• 20:10
  another person that just does Syriax.
• 20:13
  So I do believe that an organizational's
• 20:16
  value in clinic is deciding on the top
• 20:19
  twelve to fifteen diagnosis and having
• 20:21
  treatment parameters and clinical
• 20:22
  prediction rules and evidence based
• 20:24
  process.
• 20:26
  You know,
• 20:27
  all they're driven through meta analysis
• 20:30
  and through and through the Cochrane
• 20:32
  system for the hierarchy of evidence.
• 20:34
  How about this one,
• 20:35
  which has been a buzz the last twelve
• 20:37
  to eighteen months?
• 20:39
  AI in health care operations.
• 20:41
  When it first popped up,
• 20:42
  it was going to be the savior of
• 20:43
  everything.
• 20:43
  But is it overrated or underrated or
• 20:46
  properly rated?
• 20:48
  Today, I would call it overrated.
• 20:50
  I think in the future it will be
• 20:52
  underrated.
• 20:53
  But right now.
• 20:54
  What you have is a lot of underfunded
• 20:56
  companies with shiny objects,
• 20:59
  adding things to EMR packages,
• 21:02
  marketing lead generation,
• 21:03
  schedule optimizing.
• 21:05
  All they are doing is allowing the over
• 21:07
  centralization feature that I've talked
• 21:10
  about it to be accelerated.
• 21:12
  That's not a good thing.
• 21:13
  Where it can become a good thing?
• 21:15
  Not optimizing EMR,
• 21:17
  not optimizing your schedule,
• 21:19
  not optimizing technology,
• 21:21
  optimizing humanness.
• 21:23
  What can I put in place that allows
• 21:25
  my therapists and my doctors to be more
• 21:27
  humane,
• 21:28
  to spend more time with their patients,
• 21:30
  to go home at the end of the
• 21:31
  day without the externalities of pressures
• 21:34
  on them?
• 21:35
  I have an article that I've written with
• 21:36
  Tim Flynn on the use of AI agents
• 21:39
  and how five agents running simultaneously
• 21:42
  in a physical therapist background will
• 21:44
  really enable a therapist to be more
• 21:47
  compassionate, empathetic,
• 21:49
  and spend more time with their patients.
• 21:51
  Now, that is where AI would be underrated.
• 21:54
  Well,
• 21:54
  that's what you talked about being that's
• 21:56
  where the business actually,
• 21:57
  that's where the value part of the
• 21:58
  business is.
• 21:59
  Last one I'll ask, overrated, underrated,
• 22:01
  flat salary compensation.
• 22:05
  Oh, grossly overrated.
• 22:07
  Yeah.
• 22:07
  You should never pay your top therapist
• 22:08
  the same as your bottom therapist through
• 22:10
  top line compensation.
• 22:12
  And variable compensation is not bonuses
• 22:15
  and incentives.
• 22:17
  It is the maturity to say we have
• 22:19
  a doctoring profession where we have
• 22:24
  ethics and values and expertise,
• 22:27
  and they should be paid a percentage of
• 22:30
  the compensation or the net revenue or the
• 22:32
  collections that they bring in.
• 22:34
  That's what every top doctoring profession
• 22:36
  does.
• 22:36
  And physical therapists are way behind in
• 22:39
  that area.
• 22:40
  And now that you have such penny nickel
• 22:42
  margins that we've talked about,
• 22:44
  the biggest portion of the comp,
• 22:45
  sixty seven percent is your labor.
• 22:47
  And out of that labor,
• 22:48
  you have to have a variable compensation
• 22:51
  shared risk with your therapist.
• 22:54
  This will move most of the compensation to
• 22:57
  therapists.
• 22:58
  And guess what?
• 22:59
  They're the ones who generate all the
• 23:00
  revenue and hopefully move compensation
• 23:03
  and move the number of overhead away from
• 23:06
  central management.
• 23:08
  The PT clinic, the dental clinic,
• 23:10
  the primary care clinic of the future is
• 23:12
  going to have a lot less headcount in
• 23:15
  revenue cycle management, credentialing,
• 23:18
  management in general hr finance and that
• 23:24
  will allow the profit and loss statement
• 23:28
  of to be rebalanced to a better margin
• 23:30
  but only if you shift that compensation to
• 23:33
  the people who absolutely produce it i'm
• 23:35
  very proletariat i'm like uh you know
• 23:38
  that's why i'm a big fan of major
• 23:39
  league baseball and what they've been able
• 23:41
  to do where they reward the people that
• 23:44
  generate the revenues in physical therapy
• 23:46
  what we do is the opposite we generate
• 23:50
  for therapists that get out of therapy and
• 23:52
  move it more up the ladder towards central
• 23:54
  management.
• 23:55
  that leads to partly of the five
• 23:57
  dysfunctions of healthcare platforms when
• 24:00
  they go awry all right go deeper if
• 24:02
  you're building operating or investing in
• 24:04
  healthcare this is the stuff that actually
• 24:06
  matters and you should be paying attention
• 24:08
  to not the pitch decks they can be
• 24:09
  slicked up not the multiple the way
• 24:12
  business actually runs if this hit go read
• 24:14
  the full piece links in the show notes
• 24:16
  it's worth your time and if you're not
• 24:17
  already subscribed to the operator
• 24:19
  That's where Larry is writing this in real
• 24:21
  time, one problem at a time,
• 24:23
  and now available on all podcast platforms
• 24:25
  as well as YouTube.
• 24:27
  We'll see you next time here on The
• 24:29
  Operator.