How to Run a Business When You Can't Set the Price — Transcript

Full transcript

1. 0:00What's up?
2. 0:01>> Alex, thanks so much for having me on.
3. 0:03Really appreciate your time. I've been
4. 0:05watching your content for about 7 months
5. 0:07now. It's changed my life, so I just
6. 0:08wanted to thank you for that, everything
7. 0:10you've done.
8. 0:11Um give me more time to spend with my
9. 0:13family, my daughter. So, uh about myself
10. 0:15though, I run a multi-state online
11. 0:17psychiatry practice for about 7 years.
12. 0:19Uh we provide medication management. I
13. 0:21have seven providers, about 1.5 million
14. 0:23in revenue, looking to get to 5 million
15. 0:25in the next 12 months. Uh I've got three
16. 0:28constraints stacked, and I can't tell
17. 0:31which one to break first.
18. 0:32>> Okay.
19. 0:33>> So, my first constraint is demand.
20. 0:35That's the most immediate one. Comes All
21. 0:37of my revenue, about 85% of it, comes
22. 0:40from a single channel. I've been doing
23. 0:41the same thing for 7 years essentially.
24. 0:44I've maxed out on what I can do on that
25. 0:46channel. I've got seven providers
26. 0:49billing about 20 to 25 hours per week,
27. 0:51which they're committed to, but I'm
28. 0:53running into constraints where I don't
29. 0:54have
30. 0:55enough billable hours where I'm All
31. 0:57their availabilities are getting full.
32. 0:59>> Yeah.
33. 1:00>> My second constraint is margin. So, I
34. 1:02pay my nurse practitioners 50% of what
35. 1:05they collect. So, that lands the NP
36. 1:07right around market salary.
37. 1:10>> Yeah.
38. 1:10>> Can't go any lower on the split without
39. 1:12losing them.
40. 1:13If I move to hourly or salary, that puts
41. 1:15me into cash flow constraints, so that's
42. 1:18risky.
43. 1:19>> Okay.
44. 1:20>> 1.3% is my net margin.
45. 1:23>> Yeah.
46. 1:23>> So, if the problem is if I scale from 7
47. 1:25to 20, I grow revenue, but I don't
48. 1:27necessarily grow profit. And then my
49. 1:30third constraint is onboarding. So, we
50. 1:32take insurance about
51. 1:3489% comes from insurance, 11% from cash.
52. 1:38I've about hit the ceiling as far as the
53. 1:41credentialing goes, as fast as we can do
54. 1:43the onboarding. So, that kind of caps a
55. 1:45little bit how fast I can add people,
56. 1:47cuz it takes about 3 to 4 months.
57. 1:50So, my question to you is what would you
58. 1:51address first and why?
59. 1:54>> So, it's a holistic issue. So, instead
60. 1:55of saying like there's three
61. 1:56constraints,
62. 1:58I think the issue is fundamentally you
63. 1:59have a model
64. 2:01that has a channel,
65. 2:03the insurance companies, right? Who
66. 2:06define your pricing.
67. 2:07>> Yes.
68. 2:08>> And so,
69. 2:10if you're in the insurance business,
70. 2:11it's kind of like a regulated industry.
71. 2:13It's like functionally, right? It's like
72. 2:15you have a price cap.
73. 2:16And so, the only way to win in those
74. 2:18industries is that you have to you have
75. 2:19to eat it from the bottom.
76. 2:22Which means it's all cost-driven. So,
77. 2:23it's like unfortunately, you have to
78. 2:25think about your business like Walmart,
79. 2:26which is like we actually have to save
80. 2:27every single penny because demand
81. 2:29shouldn't be an issue for the business
82. 2:31because you should have
83. 2:33enough insurance clients that you always
84. 2:35are filled up, but like this is a very
85. 2:37classic problem for insurance-based
86. 2:39health care.
87. 2:40Is that they have revenue, they have
88. 2:42almost no margin, and that's because
89. 2:43insurance prices at the point of
90. 2:47a normal operator
91. 2:49barely making enough. Like that's that's
92. 2:51where they price. They continue to lower
93. 2:53until people go out of business, and
94. 2:54then they they don't have enough. So,
95. 2:55they have to like price you right where
96. 2:57right where they, you know, right where
97. 2:58they know that you're going to barely
98. 2:59stay alive. And so,
99. 3:01uh you basically have two you have you
100. 3:03have one choice to make, and then
101. 3:04there's downstream from that, which is
102. 3:07if you want to stay insurance, you
103. 3:08become you become a pure operator.
104. 3:10It's all about driving down costs
105. 3:13everywhere. And the biggest lever you
106. 3:15have is you have NPs, right? Is there
107. 3:17any other
108. 3:19person or way that we like
109. 3:21like the novelty of the model right now,
110. 3:23the problem with the model is you're
111. 3:23giving 50% of all your revenue to to to
112. 3:25labor, which is really tough. Um
113. 3:28and so,
114. 3:30we'd we'd want that cost to be closer to
115. 3:32like
116. 3:3320% of the cost of insurance. And so,
117. 3:36it's like is there a way that we can
118. 3:39move people through faster so we can get
119. 3:41more, you know, more out of each either
120. 3:43NP, or is there another person who's not
121. 3:45an NP that can still do the job? Um
122. 3:49that's on the cost-driven side.
123. 3:51The other side is you just turn into a
124. 3:52normal business, which is just cash. And
125. 3:54then you just learn and then you can
126. 3:55sell whatever you want, right? And then
127. 3:56you have you have no rules.
128. 3:57Um
129. 3:58Which one of those feels more like
130. 4:01aligned with your skill set?
131. 4:02>> I would say both.
132. 4:03>> Well, we got to pick one.
133. 4:05>> [laughter]
134. 4:07>> Well, if I were to pick one, I would say
135. 4:09uh we've already maxed out efficiency.
136. 4:11This to talk out loud, I've got a I
137. 4:13built my own software program. We've got
138. 4:1499% collection rates from insurance, a
139. 4:17very low sub sitting out there, 2 months
140. 4:19sitting out in AR. So, I I feel like
141. 4:21I've maximized a lot of the efficiency.
142. 4:24I have very low staffing costs. I've
143. 4:26outsourced that. So, it's got to be
144. 4:28going to a cash pay base rate because we
145. 4:30know insurance rates are going up. And
146. 4:33so, it would have
147. 4:33>> to be going down.
148. 4:35>> Well, the cost of of of getting of I
149. 4:38mean, for the patients is going up. The
150. 4:39insurance rates are going up about 11 to
151. 4:4113% a year. So,
152. 4:43>> Are you getting paid more 11 to 13% a
153. 4:45year?
154. 4:46>> Pay Patients are paying more in
155. 4:47premiums, and their benefits are going
156. 4:49down, which means they have to pay more
157. 4:51out of pocket, meaning their costs are
158. 4:53less predictable. So, give people a
159. 4:55I I was thinking go to a a
160. 4:56subscription-based cash-based uh where
161. 4:59people have predictability, and start
162. 5:01cutting out the insurance, a hybrid
163. 5:03approach where people can use their
164. 5:04insurance, but then do
165. 5:05subscription-based.
166. 5:06>> Yeah.
167. 5:08The the the bridge from where you're at
168. 5:09to cash um
169. 5:11is less risky than you think it is.
170. 5:14Um
171. 5:15So, the way that you would the way that
172. 5:17I would do this is that you're going to
173. 5:18have this flow of insurance customers,
174. 5:20right?
175. 5:21In the sales process,
176. 5:23I would ask one sorting question up
177. 5:24front, which is are you here for the
178. 5:27best thing, or you're for just what
179. 5:29insurance covers?
180. 5:31And just by asking that question, you
181. 5:33will unlock the people who are willing
182. 5:35to spend more to get the thing they
183. 5:36need.
184. 5:37And then that basically opens the door
185. 5:39to selling
186. 5:41cash services, and say, "Look, listen,
187. 5:42we'll bill your insurance to everything
188. 5:43that it can cover, but this would be the
189. 5:45access." And then just making that one
190. 5:47change in your business, you've got you
191. 5:48know, 1 and 1/2% margins like if we add
192. 5:5110 or 20% of the business, it would 10x
193. 5:53your your profit.
194. 5:55>> Absolutely. What I'm seeing is there
195. 5:56needs to be something we offer that
196. 5:58other people don't that they see the
197. 5:59value inherently, right? For
198. 6:01>> Right.
199. 6:02>> What I really see is I see the problems
200. 6:04every day, you know, I've been doing
201. 6:05this for about 15 years now. So, I know
202. 6:08I know what the problems are and a lot
203. 6:09of it is is people just aren't don't
204. 6:11feel fulfilled. They go into psychiatry,
205. 6:13they hit a plateau, they get the
206. 6:14medications and then they kind of level
207. 6:16off, right?
208. 6:16>> Yeah.
209. 6:16>> And so, I'm thinking how can I integrate
210. 6:18AI into this? And I that's what I've
211. 6:21been building out as a a solution to
212. 6:22this where we can integrate what they're
213. 6:24doing with a therapist with what they're
214. 6:25doing with us, have them hit one or two
215. 6:27outcomes every time they meet with us,
216. 6:30add in more or less a coaching component
217. 6:32to this where the healthcare provider is
218. 6:34kind of meeting the needs where they go
219. 6:36to the therapist and they go to us for
220. 6:37the medications and then we have a
221. 6:38coaching component. That coaching
222. 6:40component is in fact the app where we
223. 6:42can now solve that communication problem
224. 6:44between the medical provider, the
225. 6:45therapist because right now it's very
226. 6:47siloed in healthcare. They go to the
227. 6:49therapist, they go to us for medication
228. 6:51management and that's kind of across the
229. 6:53board. Whereas, if we could solve that
230. 6:54problem, so that's what I've been
231. 6:56spending a lot of my time and energy on
232. 6:57is is putting that into something that
233. 6:59the patient will be able to to use. So,
234. 7:01imagine they see us, they pick one or
235. 7:03two outcomes. What is it that What is
236. 7:06your What do you want essentially? How
237. 7:07can we best help you? What does that
238. 7:09look like? They see the therapist, the
239. 7:10therapist gets to see what their
240. 7:12outcomes are and essentially we can
241. 7:14bridge between the therapist and us
242. 7:16which then pulls the therapist into
243. 7:17refer more patients and then we could
244. 7:19essentially cross refer between online
245. 7:21therapy practices. And uh so, if we can
246. 7:23get more
247. 7:24>> I'm not sure what the AI thing does.
248. 7:27>> What's Well, I would look at it really
249. 7:29simply as the patient has an outcome,
250. 7:31they don't know what they want, they're
251. 7:32focused on symptoms. These are my
252. 7:35problems, but what they really want is
253. 7:37they want to you know, have a better
254. 7:38life, they want to feel fulfilled. They
255. 7:40want you know, there's things that
256. 7:42people want, right? But they're so
257. 7:43focused on just overcoming these
258. 7:45symptoms and they're so
259. 7:46>> AI do?
260. 7:47>> I would see it as helping them
261. 7:50uh they they quite simply they see us
262. 7:52and we thought the provider logs their
263. 7:54outcomes of what they want. And then
264. 7:56here are one or two easy things that
265. 7:57you're going to do for 10 or 15 minutes
266. 7:59a day to get there.
267. 8:00>> What does the AI do?
268. 8:02>> It solves the communication barrier.
269. 8:04>> say it differently. Does Do they chat
270. 8:06with it? Do they text it? Do like what
271. 8:07is it like what do they How are they
272. 8:09interacting with this thing?
273. 8:10>> Yeah.
274. 8:11>> Exactly. Okay, got it. So it's the uh
275. 8:14the provider that interfaces with it and
276. 8:15puts the information and then the
277. 8:16patient just gets the information as a
278. 8:18care plan which then goes to the
279. 8:19therapist. So it's basically a a
280. 8:21streamlined form of communication.
281. 8:23>> So it sounds like you just want to make
282. 8:25AI plans and then sell them care plans
283. 8:29on top of their
284. 8:31medication stuff.
285. 8:33>> I would add
286. 8:33>> If you like this video and you're
287. 8:34business owner who wants to break
288. 8:35through your current revenue ceiling, I
289. 8:37just told every lesson from scaling 10
290. 8:38businesses past 10 million and three
291. 8:40businesses past 100 million into a
292. 8:42completely free scaling road map that
293. 8:44I've used to go from zero to one, zero
294. 8:45to 10, and zero to 100 plus. And so you
295. 8:47can click here and you can check it out.
296. 8:49Again, absolutely free and since you're
297. 8:50business owner appreciates you and
298. 8:52enjoy.