EPISODE 494: Understanding and Improving Clinic Financial Metrics with Dan Wood

Hey, chiropractors. We're ready for another Modern Chiropractic Mastery Show with Dr. Kevin Christie, where we discuss the latest in marketing strategies, contact marketing, direct response marketing, and business development with some of the leading experts in the industry.

Dr. Kevin Christie: [00:00:00] Welcome to another episode of Modern Chiropractic Mastery. This is your host, Dr. Kevin Christie, and today I'm excited to bring Dan Wood on to talk about practice finances and analytics, and we actually dive a, a bit deeper than I usually do. I feel like there's a progression of practice, uh, finances that we all gr- go through, and it gets deeper and deeper, but very, very important, especially as you grow in scale.

Uh, Dan was kind enough to do a presentation to our East Mastermind group in Tampa back in April. He's been working with, uh, Mount Lookout Chiropractic, which you might know from, uh, Mark King, Donna Maloney, Jess Kowalski, and, uh, Eric Isel and others. Um, there's quite a few docs there now, PTs. It's a, a big operation now, as far as chiropractic clinics go, and Dan has been diving into how they can, uh, optimize positions and growth and things like that.

Um, and it's been very fascinating to learn some of the things you can do in [00:01:00] forecasting, and is this position paying for itself, and how can we, uh, improve the, uh, numbers here without sacrificing the patient outcomes, right? So we, we dive into a lot of that, and Dan brings a lot of knowledge to the table, which, um, we, we get into the weeds a little bit with, in this episode, but nothing that you shouldn't be able to handle and nothing, frankly, that you shouldn't start thinking about, right?

No matter how big or small your practice is, this type of information is vital in strategic growth. Before we dive into that, I wanna make mention, mention of one of our MCM collaborators, that is Crossfields Interiors and Architecture. They do a great job from everything from designing from the ground up to chiropractic practice workflow, like patient flow and how it should be designed, to renovating an office and just making it a first-class office.

So check them out at crossfieldsdesign.com.

Here is my interview with Dan [00:02:00] Wood

All right. Excited to have Dan Wood on our episode today, and it's, uh, you know, a topic that I keep on diving further and further into, and that is gonna be a lot of the financial metrics of a practice. It's, uh, always something that's challenging, especially as, you know, business owners that are chiropractors by trade and, and so we're not necessarily trained in this type of stuff, so I always try to bring in experts.

And so here we are, Dan. Tell us about yourself, uh, personally and professionally, and we'll dive into it

Dan Wood: All right, perfect. Thanks for having me on again, Kevin. Um, so name's Dan Wood. I live in Philadelphia. Uh, s- background's a l- a little different than most, uh, finance experts, I'd say, but I actually, uh, spent four years in the Marine Corps.

Um, and then after getting out, you know, was always drawn more towards the finance world, uh, and spent the last eight years now in corporate finance for a, a Fortune 50 company. Um, and what that basically means is kind of spans all different areas of, of kind of the inner workings of how does a company make money, and, and then also how do we understand when there's, um, variances [00:03:00] in kind of what we expected, you know, month over month.

So I've done a lot of different things for this company from managing a budget for, you know, different sales regions and sales leaders, forecasting out what their customer growth might look like, you know, reviewing their P&L with them monthly and quarterly. Um, and then I've also had roles in underwriting and, you know, working through how to manage a book of business and think about profitability versus growth and how those trade-offs happen.

Uh, and then I've also worked within the business themselves as, as a chief of staff and kind of understanding strategy and how will that impact the future and what do we need to kind of forecast out based on, on what our, our strategic goals are for the next, you know, one, two, three years.

Yeah, you mentioned forecasting and, and that's, I think- Oh, man, I've, I've been practicing for 21 years.

I've been either in partnership or own my own practice for I think 18 of those, and forecasting is still the hardest thing. Uh, obviously it's hard for everybody. Uh, and I always try to give chiropractors some grace and realize, like, look, there's CFOs that make millions of [00:04:00] dollars for billion-dollar companies who mess it up, and then that's when you see- Mm-hmm

like, uh, you know, 1,000 people laid off. So- Yeah ... you, you gotta have- There's, there's definitely some art as well as the science. It's not a perfect science, and it's kind of understanding where your, your gaps are and, and kind of... You know, that's, that's what I like to do, is figure out how accurate can we get, but then caveating it with where are the gaps and where are the risks so that we can mitigate them if possible.

Yeah. That's perfect. I love it. And, uh, you know, a lot of things have been kinda discussed, not that it's been the last year or two, probably longer, but the term scaling always gets thrown around a lot, and I think there's a lot of, um, you know, I think there's a lot of misconceptions around that. But a big part of...

You know, 'cause a lot of times I think people think of scaling and they just think of, like, top line, right? Like, how do we grow- Mm-hmm ... revenue? How do we go from one clinic to 10? Like, they have these kind of conceptual ideas of what, what scaling is. But what was fascinating, you spoke, uh, to our East Mastermind group in Tampa, [00:05:00] uh, back in, back in April, and it was really good to see how you're looking at the financial metrics that ultimately Uh, translates into, to scaling and, and you, you need to get those right, otherwise you're building a, a house on quicksand.

So, uh, tell us a little bit about... 'cause, you know, you've been, uh, you've got a, an intimate, uh, relationship with the, with Mount Lookout Chiropractic on, on many fronts. And so you've been really working with their clinic, which is obviously a great example of a clinic that has scaled. Like one clinic that has scaled to quite a few providers, quite a different types of providers, and it's, uh, it, it's just an amazing practice that's been built over, over some time.

But you've been diving into that. Uh, so let's start out. Like what, what are some of the things that you kind of talk to our group about in Tampa? Wherever you wanna start, we'll, we'll take it from there Sounds great. Um, yeah, so like you've said, I've, I've known, um, Mount Lookout for a while now. Uh, and, you know, as we've [00:06:00] talked through, they understand my background and everything, and, and as some of these questions started popping up, the, the conversation just turned into, "Is this something that you think you could, you know, help us out with?"

Um, obviously I still have a full-time job, but they were just curious of my capacity, and I was, you know, more than happy to jump in. I've been working on a big corporate client for a while, so it's nice to work with a smaller business where I can kind of see the impact some of this analysis has in helping the, the decision makers.

So, um, one of the earliest kind of projects I'd say that they, they wanted to bring me in on was they were looking at their incentive compensation and, and how were they thinking through bonusing, um, their doctors and, and, you know, did it make sense in the current environment as they were kind of going through some changes as well with leadership and, and ownership.

It was kind of a good time for them to revisit that. Um, so we, we looked at the data, how were they currently paying the doctors, and saw that it wasn't really tied to individual contribution at all. It was tied to the overall office, which was good. It kind of gave everyone the buy-in of, of making sure that the [00:07:00] office was, was performing.

Um, but it wasn't really giving them the individual incentive to kind of raise their own, um, you know, performance. So we dove in. I created a very simple model that then built some tiers in. So it still had the office dynamic in. If the office hit certain thresholds, the bonuses would go up, but it also then was tiered individually, um, where the doctors had their own individual tiers.

As they brought in more collections each month, they could earn a higher bonus. Um, and then we played with the numbers to see what would make sense. They had some metrics that they wanted to make sure they kept kind of the, the overall pay within. Uh, and then once we got on a number, you know, a, a scale that we thought made sense, I took their previous like three to six months of data, um, for the office performance, individual performance, and did a back test and showed them, "Okay, this is what you paid each doctor over the past six months.

Here's what this new system would look like if you would've implemented it six months ago." And then showed them where the differences are. You know, [00:08:00] where did your high performers now get better rewards? Where did maybe low performers, maybe they got a slightly less reward than they would've, but you have the data behind it to kind of explain and then show them, um, you know, where they could earn more, kind of give them a little bit more buy-in to the company, uh, give them a little bit better, you know, risk/reward set up as well, um, for, for their own performance going forward.

So that was a, a quick one that we kind of worked, worked through together over a week or so, um, and it gave us a good kind of working relationship. One, for me to even start to learn how they run their business, what their business looks like. You know, every business is slightly different. Obviously within an industry there's gonna be a lot of similarities, but, um, you know, people kind of structure their businesses slightly different, so it's nice to, to get a smaller project at first to, to really start to understand how they run the company.

Y- yeah. And, and you're- tackling just like a, a massive, uh, disconnect in the profession i- in general, right? It's that, uh, how do we work together as a team? I know, uh, uh, four or five years [00:09:00] ago I kinda put together a compensation structure that I thought was good because I had, I had fallen into the problem in previous years where it almost became a competition within associates in our office, and I wanted to get away from that.

And so I tried to do more of like, okay, if we hit revenue goals as a clinic, all the doctors get bonus a certain perspec- or a certain amount or a certain percentage and, and, and certain, uh, tiers of that. And, and it worked until it kinda didn't. Mm-hmm. Um, and so it seems like you can kind of fall into different categories where you can obviously go too much to where, uh, you make- you cause infighting or competition if, if you're fighting for new patients and your structure is solely based on eat what you kill.

Mm-hmm. That could be harder to scale, I guess, and without causing problems. And then on the other end, if everybody benefits the same on a group situation but you got a few that are [00:10:00] really carrying the weight, that's gonna cause its own set of issues. So you're trying to essentially thread that needle of we all benefit as, you know, a rising tide lifts all ships, but then yeah, if you are, you know, doing really well as an individual doctor within this model, you can benefit more.

Or if you're struggling, then this is where it's gonna cost and th- it's, it, it, it's almost like an education... Are you guys l- are they using it as- Mm-hmm ... like a kind of educational tool also? Yeah, I think for sure. Um, and like, and like you said, the way that it's structured I think, um, is, is really well where the rising tide still will lift all boats, you know?

If, if those high performers are kind of carrying the rest of the practice, it's still gonna help those, you know, lower tiers hit- Mm-hmm ... some, you know, slightly higher bonuses. Um, so I think it, it's a, it's a good way of, of kind of selling that structure. Um, and, and again, like you said too, it's, it also depends on the individuals you have within your, you know, your business.

[00:11:00] Everyone's kind of a little different. You might have some that are really, um, have that entrepreneur spirit and they really want to, um, you know, eat what they kill, and others who like a little bit more safety and might like to have a higher floor, but they know that they'd also don't have that high of a ceiling and they might get capped at a certain area.

So I think it also just depends on, on the actual individuals you have working within your business and understanding kind of what drives them and, and making sure you're structuring however you incentivize them appropriately to get the best out of them.

Dr. Kevin Christie (2): Now, you know, there's different styles of what a chiropractor might wanna do and, and, and some can get really good results in a short period of time, and that's their style.

And others, they might wanna spend a lot more time, and that's their style. But there's obviously always financial, uh, give and takes w- with that. Is that something you guys have looked at as well with saying, "Okay, yeah, if, like, if you're gonna wanna spend X amount of time and do these things with the patient, these are the financial metrics of that," and why that's, [00:12:00] uh, a little bit of an uphill battle, but are you okay with that?

Is, is that accurate?

Mm-hmm. Yeah, no, that's accurate. Uh, not

Dan Wood: something we've dove into too deeply right now, but it's one that we have had conversations around which metrics are you focusing on? Is it just total collections, or are you focusing on, you know, patients seen per whatever metric, day, week, month?

Um, and then, you know, factoring in what is the average, um, visit, you know, reimbursement or, or, you know, collection that we're getting and, and do we focus on that and try to increase the profit margin per patient we see? You know, there's a lot of different ways to, to tweak it, um, based on, you know- How, how your doctor likes to operate.

Like you said, if they like to have that longer personal touch, is there a way that we can then make that, uh, maybe more of a premium service that we're offering and then you can actually get a higher, um, per visit average, and therefore you don't need to see as many patients because you're still bringing in the same amount of collections as somebody who's really trying to just get in there and grind it out day over day?

Um, and, and like you said, [00:13:00] structure it in a way that, that kind of fits each of their working styles.

Dr. Kevin Christie (2): Yeah,

and I think it's also good to note that, uh, what I love about what Mountain Lookout's doing, and I know a, a lot of the docs there and, you know, and, and Mark and Donna and Jess have, have been in the, uh, mastermind for a while now and, and they're...

And everybody, you know, like obviously with Motion Palpation Institute is the, the clinic is very patient-centered. It's very clinically outcome-based, and it doesn't mean, and I think this is one of the misconceptions a lot of chiropractic practices have, especially on the evidence-based side, is that it's almost like a taboo subject to dive into the financial metrics too much because alls you should be worried about is providing care.

Well, I, I'm here to tell you, um, you can do, do, really care about the patients and have great patient outcomes and still care about what the metrics are, especially as we keep on getting squeezed and squeezed. And it's not that you're dictating, uh, care and things like that based on it. You're just... You're, you're measuring metrics and [00:14:00] where can we improve?

Where can we keep the same level of clinical outcomes, but let's improve our financial situation with this? Even if we're a great c- clinic like Mountain Lookout already is, it's okay to get even better. Uh, or if you're a clinic that is struggling and you gotta figure it out, there's, there's, there's a lot in between there.

Um, so I just wanted to kinda make that go because as we dive deeper here into, into the numbers, like it, it, it does know, matter to know that it, it, it does boil down to, to outcomes.

Um, now I wanted to segue a little bit, and we'll kinda go back and forth, uh, and I know one of the things that we talked about in Tampa, which was fascinating to hear you talk about, was kinda the physical therapy department.

Um, and just like, I, I, I'm using the physical therapy department not that a lot of chiropractors have physical therapy, but I just thought it was a great lesson in understanding, like is this worth it? Is this position worth it? Is this, is this service, uh, worth it? Is the ROI there? How can we improve it?

So can you tell us a little bit about, about the physical [00:15:00] therapy side of things? Yeah, definitely. Um, so it was, it was a couple projects that kind of all then morphed into one, like you said, of, of more of an overall, um, review of, of that side of the business. So similar things started at looking at the, the bonus structure as well, and then we realized they didn't have a separate P&L.

You know, they had one P&L for the whole business, um, and it was a little harder then to understand, well, is this piece of the business profitable or is the other side of the business kind of carrying it? Um, so first we did, and you know, you can break out P&Ls, you can work with your bookkeeper and actually do that, but it's probably a lot more time-consuming, costly.

This was just a quick analysis we wanted to do, so I was able to walk them through, okay, how would we kind of get an estimate of what the P&L is for just the PT department? You know, talking through what are the difference between direct costs, what costs are tied just to that department and aren't, you know, being incurred by elsewhere, versus what costs are kind of the overall business costs, and we need to think through how would we allocate them or spread them out across the different, you know, areas of the business and what percentage makes sense, and is it [00:16:00] based on how big of a office they are versus the rest, or is it based on labor and who works in different offices?

So we kind of started there, walked through just breaking out the P&L so that we could get a, a better accurate view, a snapshot of do we think this business is profitable right now, you know, why or why not, and then start to dig into those different variables. Is it, you know, due to just the top line, like you said, are we not bringing in enough revenue or, or do we have too high of expenses and maybe there's areas that we could cut down on the expenses to get profitable?

Um, so that was the first thought that we started walking through as a, as a, as a, um, you know, exercise. And then during those conversations, the thought came up, well, if we shifted this business model just as a hypothetical and did purely just cash services, what would that look like? Would it... How would it change the economics of our, you know, the whole practice and the business?

Um, so obviously a lot of assumptions have to go in there and, you know, we did some research. What are the, you know, in the area as well as nationally, what's the average, you know, cash visit for a PT, you know, [00:17:00] visit and, um, breaking down kind of all of the different business, um, dynamics that might change in a cash versus, you know, a business that's accepting insurance as well as cash and, and everything else.

So, um, walking through that whole scenario then brought up more questions that we, we, we had to dive into, but it ultimately kind of informed the both of us on, one, what would actually be required for us to do this, you know? Mm-hmm. It's not just a simple light switch we can flick on and off, so there's gonna be a lot of upfront costs, potentially a lot of lost business when you're trying to convert patients who probably are gonna end up paying more than they were when they were utilizing their insurance and co-pays.

What would that look like? Um- But ultimately we'll be, be bringing in, uh, a higher profit margin per patient to kind of offset that loss in seeing patients. Um, as well as then because we are offering, like I said earlier, like a more premium service because we're charging the cash only, we probably have to see less patients.

What would that look like? Do we have the right capacity in doctors to see patients longer [00:18:00] each day? Would we have to hire another doctor on to be able to, you know, keep up with the current patients we have, et cetera? So it, it was a good exercise. It, it, you know, at the end of the day, I think we're still discussing it.

You know, it, it was- Yeah ... it was a good informative exercise for, for the business owners, um, and at least just gave them, you know... It, it's something I think they had thought about tons of times, but they just didn't have the tools to really, like, think through it, uh, a little bit more critically. Uh, so I think it was a good exercise with us to then give them a little bit more confidence when they, you know, were deciding is it a go or no go and why.

Um, and does it make a, you know, economic and financial sense for us to pursue that right now, or is there other ways we could maybe improve the profitability of that side of the business? Yeah. And I, a- um, I wanted to bring up that PT because I'm gonna relate it to chiro, 'cause I get a lot of people asking, you know, "I, I want to go from being in-network to being a cash practice."

Do you feel like by going through that exercises you've gained a good grasp on for, like, a chiropractic clinic if it, you know, if, let's say, a chiropractic clinic was to call [00:19:00] you. They have a couple doctors. They're in-network with insurance. They want to go cash. Do you feel like you've gained some insights on how you'd be able to guide that clinic on this is the probab- this is what your margin is gonna be potentially.

This is what, uh, you're gonna lose this amount of pa- patients potentially you have to prepare for. But, you know, are you able to- Mm-hmm ... kinda start forecasting that now? Yeah, it definitely, you know, gave me a lot more foundational knowledge, I'd say, for, for that exercise. Um, and then the way that I structured it for them and, and you know, definitely I liked the way I did it and I would do it for others, uh, was a little bit more of like scenario-based planning.

Mm-hmm. Um, 'cause it, it's like we said before, it's art and a science. You're, it's never gonna be exact. You know, if you... You're never gonna be 100% accurate on your forecasts, um, but it's minimizing that kind of variance off of it. Uh, so the way that we looked at it was, you know, based on our just own historical knowledge but then all the research we did, what is kind of the baseline we assume we would be able to convert to the cash business?

Um, but then also what's our downside? Like in the worst case [00:20:00] scenario, we're not converting, what would that look like? How many would convert? As well as the upside. You know, let's say we knock this out of the park and, you know, we have such a good relationship with all of our clients that we convert more than we thought we would, what would the upside look like?

And then mapping out those three different scenarios and being able to show a little bit better of a, of a, you know, confidence factor, I'd say, around what could happen if we go this route. Um, and then making sure are we comfortable with that kind of range of outcomes. You know, like- Mm-hmm ... we expect probably 85 to 90% of outcomes are gonna fall inside this bucket.

Are we okay with that? If it is closer to the downside, are we protected enough that we can grow out of it and get back up towards that baseline? Um, and then vice versa. If, you know, we hit the upside, then we have a lot more capital potentially that we can, you know, reinvest into the business to continue that scaling or, um, you know, if we weren't profitable before, now we're actually getting more closer to profitability because we hit the upside.

So I think putting it a little bit more in scenario-based helps us business owners to say, "I can't just tell you here's my estimate, but [00:21:00] there's a 50/50 shot of it hitting. But I can tell you, okay, here's my worst case scenario, my best case scenario. I think you're gonna be in the middle, but I know I'm pretty confident you're gonna be within these ranges and, and does that make sense to you and does that, you know, give you a little bit more confidence when you're making decisions?"

No, I love it. So you, um, you're able to gauge a clinic's level of protection as well. Is that, is that accurate? Yep. Yeah, a little, a little bit. You know, I think it just helps to understand- Where's our floor at? Um, and then we can, you know, mitigate the risk off of that. Maybe we're not converting the whole practice, we're just trying to push more towards the cash side, and we see how that goes over a trial period, and if we're converting more than we expected, we kind of go to the next step.

So I think it, it helps build like guardrails and, and, um, m- you know, maybe thinking through the decision differently than just saying a go or no go. Well, how could we structure this maybe that we could test out our theories and assumptions without completely flipping that switch so that if we decide three months down the line this isn't the right move, we can go back, um, versus [00:22:00] completely like cutting off our prior, you know, way of doing business, I'd say.

On the topic of, of forecasting, are you able to... You know, 'cause a lot of things chiropractic practices will face is they, they want to hire an associate, or they, they want to, um, get a new office space, or they want to buy a, a Shockwave. That's a lot of money now. Uh, you know, maybe they'll finance it and stuff like that.

Are you able to... You kind of mentioned it earlier, okay, well, there's gonna be upfront costs, but then we obviously want to have an ROI of it. Are you able to forecast out and say, "Okay, it's gonna be this kind of outlay of money, um, or cost, but then this is what the ROI we need to look at to where we feel good about the decision is going the right way"?

Yeah, I'd say I definitely lean on the business owners 'cause they're gonna be the ones that have that, you know, a little bit more expertise when it comes to, well, what will this do for your business? What are you expecting this to drive? Is it higher patients or, um, you know, we can charge a little bit more for our services [00:23:00] because of this new equipment we have that we can provide.

Um, and then I can factor those into the assumptions and the financial modeling and say, "Okay, this is what the upfront cost is. This is the ongoing maintenance cost. This is the all of the costs we probably are gonna incur because of this decision, and then here's what we're assuming. Here's what, like, our break even needs to be for us to at least just be kind of a net neutral on this decision."

Um, and like, you know, where, what I'd say milestones or, or metrics are you hoping to hit, and what would that look like over the next couple of years? You know, if you're trying to increase your profitability by X, well, then we need to increase revenue by this much. This is what our cost is going up. Um, you know, we need to hire on a new doctor in order to hit that revenue goal.

Well, that's also gonna incur this much more labor costs and, and a lot of the overhead expenses. And, and giving them a little bit better clarity on the full picture of what's gonna happen, not just, "Well, if we do this, I think we're gonna be able to bring in, you know, X more dollars per month," and hopefully that's good without knowing that, oh, there's all [00:24:00] these other line items that are gonna go up on the expense side tied to it, um, that, that we're not really thinking through.

Yeah. I mean, it's kind of like if, you know, a lot of times, okay, I need to hire an associate doctor. Uh, let's say I'm gonna pay him $80,000 a year or whatever. Uh, a lot of times it ends with, okay, that's divided by 12 plus employer's taxes. They kind of... It's gonna cost me X amount per month. They kind of almost just end it at payroll.

Mm-hmm. Um, they don't consider in the other types of expenses and then, like you said, support staff. Is that something that you've really been modeling out as well? Yes, we're, you know, working actually through that right now, um, with them on, on thinking through hiring another, um, doctor for the physical therapy department, and thinking through, okay, like you said, what's the first year labor cost?

And then, um, what would they need to hit patient-wise or collection-wise, et cetera, for us to break even and basically be, be where we at, are right now, whether that's increasing... You know, whether we're profitable or not, where do we need to be [00:25:00] break-even wise for hiring this person on? Um, but then also thinking through they want to structure the pay differently in year two than year one.

They wanna give them that first year to build their customer book and base and have a little bit more of that safety. Um, but then tie them in similar to the other bonus structure of how can we build some more incentive, give them a little bit more of the reward tied to the business. Um, and thinking through that right now is good.

One, you can have the conversation with the person that you're interviewing and potentially hiring to make sure they're understanding and it's not surprises. But then two, it gives the business a little bit better understanding of in year one what do we need to do, but then in year two the, the economics are gonna change a lot.

You know, there's, there's a little bit less downside to the business if you're tying the person's pay to their performance because if they don't perform you're also not paying them as much. But if they do perform better, they're getting some of that upside. So the business's profitability, you're still gonna be profitable but maybe your margin percentage is coming down, but your overall dollar bucket is going up.

So helping them understand, you know, everyone says metrics, but understanding, [00:26:00] well, which metric are you trying to get? Do you just want to increase profit or are you trying to increase profitability and the margin of how much profit you keep for every dollar of revenue you come in? 'Cause I think those are two different things.

Yeah, they are and, and I know that we all get confused on that. I still sometimes have to remind myself. And chiropractors are notorious about just caring about revenue or collections they call it. You know, like, "Oh, what are your collections?" You know? And it's like, well, I, I've, I've known, uh, million-dollar practices that bounce checks, so it's, it's a real thing.

Um, now I l- I always liked how n- with Mount Lookout they... That first year is okay, you know, you get paid X and you got some stability there, let's get this thing rolling. Provide... It sounds like you guys are really providing a lot of clarity to that doctor of like, look, this is what needs to be seen for this to make sense, and then when you get into year two, if you do your thing, uh, you know, you're gonna be, you're gonna be fine.

I've heard Mark King and Art Mastermind talk about, uh, you know, like if you hire an [00:27:00] associate you need to be able to provide them with... The clinic needs to be able to provide them with new patients and what that looks like, and I know Mount Lookout does a good job of, of that, so it's not about purely that associate going out and, uh, eating what they kill, but there's definitely still performance metrics that need to be, need to be met there.

And so it sounds like you guys are really putting together a, a clarity, a path for the... Whether it's the chiros or the PTs. Yeah, definitely. And then I think one of the, you know, main things that I've been hearing from them as we have conversations is just the, the ease of these conversations now versus in the years past when they didn't have the data to back it up.

They had their gut feelings of why they needed to change something, and it probably was correct at the time, but trying to then discuss that with somebody of, "Hey, I'm making this change and it's gonna be good for you," but not being able to show them why it's gonna be good was harder. Yeah. Now when they're going into these conversations and they have some of this analysis that I'm providing and a little bit more of like, "Hey, here's a graph.

Here's exactly what you're gonna [00:28:00] make in a bonus if you hit these metrics." Mm-hmm. And it, it makes it a little bit more tangible and real for, you know, the associate or the doctor to, to then know, "Okay, well th- I, I have a little bit more clarity and a little bit more, uh, understanding in, in how I'm being compensated."

Um, and then that just also makes it easier on, you know, the work relationships and everything. You don't, obviously don't want somebody working for you who feels like they're, you know, stressed or anxious about not knowing how they're gonna be compensated for their performance over the next year. Yeah, you know, there's a lot of good, a lot of good information that you've brought so far.

I think that is like the overarching thing that I hope people also take from this, is that it improves your leadership as the owner. Um, and I... Actually, it's a little bit of a tie in si- sidebar subject. I just was on a coaching call with my clients and we were talking about AI and, and, and we were talking about you leveraging AI, uh, with your report of findings in the sense of like, you know, a patient comes in and they got a, a lumbar disc injury, and you go to, uh, you know, say Perplexity AI, which is really good for medical research, and you show, "Okay, like [00:29:00] typically with this type of disc injury, the, the research shows that it's gonna take X, Y, Z and this, this long to, to recover from it," uh, and, and have it in a very concise maybe one document that you print off for it.

Uh, I was just saying how like, you know- Historically, a lot of patients had to always just trust that the doctor's treatment plan was accurate, right? And, uh, who knows if it was, and unfortunately, a lot of doctors' treatment plans weren't. Sometimes just, you know, uh, not understanding what a good treatment plan would be or just sometimes making shit up, honestly.

Um, and now you could uti- utilize, say, AI to say, "Hey, look, this is what the research says. This is the, the, the, the objective situation, and then that's why I'm kind of marrying this treatment plan with this." I think that gives the patient a lot of confidence and clarity of path in their, in their journey, uh, to get better.

And it's the same way with what you just said, is that, uh, too often the, [00:30:00] the doc- the owner doctor or doctors don't know all the stats, are a lot of times i- in good faith trying to develop a path for that associate, but don't have all the facts. And then on the other end, the associate is just has to trust the fact that this guy or gal is, is telling me the truth or has all the facts and is, is, is, is, is doing me right in a sense of like what my year one and two and three are gonna look like But, uh, unfortunately, and this is a lot of businesses, this isn't just chiropractors, we're all, like, a lot of times just not working with all the facts, right?

Mm-hmm. Yes, definitely. And, and like you said, especially for smaller businesses, it doesn't make sense for them to have a full-time finance person. Um, you know, it's, it's not a huge complex business. You know, you, you, you have your bookkeeper, you have someone who's kind of tracking all of that, but you don't have someone kind of really digging in, doing ad hoc analysis.

Um, and that's where, you know, I think I've been bringing value to Mount Lookout, and it's something that I [00:31:00] enjoy doing, so it doesn't even feel like work as much for me is, is how can I help somebody get, you know, clarity from, from all of the noise, um, that they're seeing and, and help them with these more, you know, ad hoc analysis is, is always what I come back to.

It's the things where you don't have these pre-built reports and something you can just pull from QuickBooks to, to get a quick summary. It's, I wanna know what this might do to my business. Is there any way that you can help provide a little bit more clarity to that decision? Mm-hmm. Um, and that's where I think, you know, I come in and add the value.

Yeah. In a minute I'm gonna ask you kind of a few different things on the metrics and stuff, and some of the things you are really looking at for them, and, um, but I just, I wanna touch base before we do that on what you just kinda mentioned is, you know, the CPA is definitely kinda your postmortem oftentimes of like, okay, these are the numbers, and we're gonna file your taxes, and this is what you owe.

And, and then the bookkeeper is obviously just putting transactions into, into QuickBooks or whatever, and, and they're doing their, their job. They're doing a good thing. But usually the CPA is [00:32:00] not trained in, you know, forecasting and all that stuff you're talking about. The bookkeeper definitely is not, and, and that's where a lot of times almost every clinic I talk to, they, you know, usually have a CPA, and they usually have a bookkeeper, uh, but they're missing kinda that third component, which what you're kinda talking about is, like, really diving in and understanding it, uh, like a CFO essentially I guess would do, right?

Um, now- ... so I want our audience to understand that that's, this is kinda that, that layer that most practices are, are missing. And, and as, uh, chiropractic business owners, most of us don't know the information and, and I don't. I know some of it, but not all of it. Uh, but is there anything I missed as far as, like, some of the things you're really, like, diving into metric-wise for, for Mount Lookout and, and how this could also help other, um, clinics in their journey to start to understand the nuances of their business?

Um, nothing, nothing too much that we've missed. I'd say, like, our conversations going forward are, are how can we maybe build some systems that [00:33:00] help them get these answers on their own. Um, you know, don't wanna ever, you know, work myself out of a job, but it, it also makes it easier on me when, um, I can build something that's a little bit more efficient, whether it's a template for them to use that can pull data straight from QuickBooks and goes in there and, and it just gives them a little bit easier picture to read of what happened last month and why, or- Mm-hmm

you know, our, our profit went up, but we don't know why it went up. Where, what, what happened? Did we bring in more revenue? Did our support staff costs go down? Did the, you know, what, what happened the previous month? So, you know, I'm able to do that and pull things, but helping build something where a, a business owner can answer some things on their own, I think just, one, strengthens our relationship because it builds a little bit more trust in, in me when I can help them answer them, it themselves, and then it lets us get down into, um, a little bit more of the complex questions and ones that probably are gonna be more strategic in nature and things that, you know, I think I can provide better value to them.

Um, so we're kind of, kind of currently working through that. How can we optimize, you know, the things they're already utilizing [00:34:00] to, to allow them to help answer some of the questions on their own? Um, and then yeah, going forward it's kind, you know ... I talk to Mark and Donna quite often, uh, so, you know, whenever something comes up they kind of just ping me like, "Hey, this is what we're thinking through.

Is that something you, you know, have some time and you wanna jump on a call and talk through it and see if there's something you can maybe do for us?" And always happy to do that. Yeah. That's, that's awesome. Now I'm gonna, I'm gonna put you on the spot a little bit. Now, do you also take into consideration, like, economic conditions, just, you know, whether it's regional or, uh, national at all?

We did when I was, um... So, like specifically for that PT one, since it was such a big, um, kind of analysis we were doing, there, you know, I wanted to factor in as many things as we could. So like you said, using AI to research, you know, some of the things with the patient, like I was leaning on my AI agent a lot to do research, especially for regions that maybe I'm not as familiar with.

So- Yeah ... doing a lot of more analysis on, like you said, the macroeconomics, the overall region, what's going on, um, as well as then trying to understand maybe those specific market dynamics. [00:35:00] What is, what's the competition like around them? You know, for that one, I was looking at what other PT clinics were in that area that were also offering CAP services, and what were their prices at to make sure our assumptions made sense.

Are we priced way higher than them? Then I want to probably assume we're not gonna convert as many, versus are we more middle of the pack or are we priced a little lower? Uh, so definitely try to like expand as many, um, you know, background and foundational assumptions I can when doing that research to help.

I think that just gives myself a little bit more confidence when I'm presenting it to the client, but then I can present that information to them, and I think helps them get a little bit more buy-in in the analysis and, and feel more confident in their decisions. Um, but definitely still always expanding my tool set.

Like I said, you know, I've worked in corporate finance for a big company, but obviously what I do for them is a little different than what I'm doing for a, you know, fortune or a, a small business. So as I kind of continue to work on these projects, I, I've found myself, you know, continuing to grow myself and, and building my own foundational knowledge, which has been great.

Yeah. I, I, uh, I've been... I never, I just learned this term, [00:36:00] the K-shaped economy. Um, didn't really knew what that meant. Sort of dove into a little bit. Probably still don't know what it means, but, uh, I'm in Boca Raton, Florida, and I'm, I'm just always fascinated with trying to keep up with the economy and then the local economy, and it's definitely been interesting down here.

Uh, Boca's a very affluent area in South Florida, and the last, you know, I've been down here for 16 years as far as my practice. I'm, I'm originally from down here, but, um- It's been fascinating, uh, 'cause I'm also hearing from other clinics about, you know, is the economy acting a little bit weird? What's going on there?

The thing I've noticed, uh, over the last six years, i- in particular where I'm at, is we had a influx of people. We had a b- a lot of people, a lot of money came in. Um, a lot of money came in down here. Uh, things have gotten super expensive here, and it's fascinating 'cause I guess the overarching theory of, like, a K-shaped economy is you got some people going up, and a lot of people that are asset rich, uh, which a lot of people moving down here, they're doing fine.

Stock market's [00:37:00] going up, their houses and their second houses and, and things, and office real estates have a- appreciated. They're b- a lot of times they're business owners, and that's appreciated. And so you got a certain, uh, sector of the population that really is carrying the economy, and can buy stuff, and come in my office when we're out of network insurance.

And then you got the other half, like say, middle class and, and working class, like, they're going down, and can't afford anything right now 'cause of inflation and all that, and so they're kinda tightening the belt a little bit. And I speculate that a lot of chiropractic clinics thrive on the middle class and working class, and yeah, definitely dip up into the upper middle and, and upper class.

But, uh, I've been trying to see what, what that's doing and, and if that's causing any weird things for particular practices. Uh, I could be completely off base, Dan, and you can tell me I am, but, uh, that's just something I've been reading up on. No, I think that's an interesting kind of thought experiment and, and a way to, to, one, like look at, um, help [00:38:00] explain maybe some of the dynamics and, and what's going on with your practice.

If you're seeing different, you know, I'd say like growth rates for the different areas. You know, thinking through right now, like, you know, how many of our patients are Medicaid versus traditional insurance versus cash and all that, and then how has that shifted over the last year or two? And if you're seeing these big variances between those and, you know, one's dipping a lot and you're seeing, you know, growth in the other, I think then doing that further research like you said.

Like, can I explain this a different way than just what I've been doing as a business owner? Is there, you know, macro, um, environment aspects that are, that are kinda dictating this, and it's not necessarily something I've done wrong or right? Um, and I think that's good then when you're factoring in decisions for the future of let me make sure I'm not thinking that I did something that caused this success, and maybe it was something in the macro environment, and I shouldn't just go all in on that same aspect.

So I, I agree with you. I think it's good to, to look more broadly than just, you know, the individual business 'cause there is a lot of outside factors that are gonna dictate, um, you know, whether you succeed or not, like it does anything. Yeah, there's a lot of things. We just had a recent one 'cause we just got focused shockwave.[00:39:00]

We had radio shockwave. Um, and you know, the focus has a higher price point, and so we were looking to increase our shockwave rates, and we were kinda going back and forth on what we should do and, and ultimately settled on kind of an in-between of like where we're at now, what a high end would've been.

But I was like, well, over the last eight months, we, we're, our volume has decreased. Now our office visit average, like dollar amount per visit, has gone up like $15 over this eight months, which has been great, but our volume has dipped. And sometimes I find in our chiropractic practice is that as you get more expensive, your volume could...

There could be an inverse relationship there, right? Mm-hmm. And so your volume could go down, and I think that's something practice owners have to understand. And so right now we're not running into a office visit average dollar amount. We're doing well there. We, we got a little bit of a volume issue, and so it's like, let's go with the, say the, the lower price on our shockwave right now 'cause [00:40:00] we have room for volume.

Let's get the volume up. We could always increase the rates if we can get, if we get the volume up, and that was kinda my thought process, uh, on at least what I've experienced in the past, and that was kind of a, a microcosm of sometimes a decision-making process that you make Yeah, 100%. And I think that comes up a lot, um, you know, with P&L owners is balancing that, you know, growth versus profitability.

And, you know, sometimes you maybe don't wanna grow any faster and you'd rather focus on the higher profit margin and getting that the, the area you want it to be, and then refocus on, on growing your customer base and vice versa too. Sometimes, like you said, maybe you have really good profit right now, and maybe you, you could increase your overall profit bucket by adjusting that price point to get the volume up.

Maybe your profit doesn't drop that much and your overall profit grows. So there's, there's kind of that balancing act of where's that right kind of equilibrium- Yeah ... uh, of where we can maximize the amount of money we're bringing in, um, and, and what are we comfortable with doing? Yeah. It, it's a whole thing.

Like, we got the, uh, not to go on a tangent, [00:41:00] just a quick little sidebar and we'll go from there, but there's a whole, like, uh, sect of our, of our profession of, like, r- rehab chiros are spending a, a, you know, s- an, uh, let's call it 60 minutes with a patient and charging, you know, $400. Which I love the fact that, like, try to charge what you can, but what I see a lot with them, and, and sometimes they come to me to try to figure it out in a sense from just a, like a coaching standpoint of should I not spend an hour or whatever, is that, yeah, you're getting a lot of money per patient, like your OVA is awesome, but you have no volume now.

Like, you're so low on volume that y- you have n- you just don't have enough revenue, right? Uh, y- you have, you have not enough revenue and not enough profit. So even though your profit margin is good, the absolute m- um, dollar amount is not there 'cause the volume is so low, 'cause there's not enough people that can afford $400 a session, uh, at scale, right?

It's something that's fascinating. Mm-hmm. Yeah, and then you're, you're tied, you know, a lot more variance there, 'cause like you said, if you have only [00:42:00] one or two patients, you know, variance, then you're seeing a lot of variance in the dollars you're bringing in overall, um, versus a practice that has higher volume but a lower OVA.

They're gonna, um, you know, they're gonna be able to ride through the variance of volume a little bit because it's not gonna affect as much the bottom line, versus if you have a 10% drop in, in the, you know, the other practice, you're gonna see a lo- a large hit to your bottom line at that point. That's kinda like they always say if you're like a consulting business you don't want, like, one client to be- Mm-hmm

a huge percentage of your business, 'cause if they leave, you're toast. Yes. So, all right. Well, Dan, this has been a pleasure. Um, if any chiros wanna reach out and, uh, touch base with you and see how maybe you can help them out, um, if you're taking clients, uh- Yeah ... how can they reach out to you? Uh, yeah, so I, I have a, you know, simple little website, woodstrategicfinance.com.

Um, you know, just kind of get- goes through a lot of things we talked through here of different areas that I can help, whether it's ad hoc stuff. Um, you know, definitely willing to work with people monthly as well if, if they have that, that need. Um, and yeah, definitely [00:43:00] open to taking on some clients. Like I said, I still do work full-time, but I love doing this, uh, on the side and, and helping small businesses.

So, uh, have some more capacity right now and, and would love to work with, uh, some additional owners. Awesome. Sounds good, Dan. I appreciate it. All right. Thanks a lot, Kevin