Cliff Carey: Nobody likes to work for a slave driver. And I think there is difference between passion and stress. I mean, passion is like working your ass off for something you believe in; stress is working your ass off for something you don't. So we want to create passion, and a lot of times, taking your foot off the gas is going to help more than bearing down. Sometimes bearing down with the right individuals is what you need to do. And I think you need to learn and understand who each one of your team is so that you can do that. But doing a check in, a psychological check in with your team is really important too. And then with that daily cadence, you're going to understand who are the head nodders who are saying, I got it, I got it, I got it. And then each day, you're just like, oh wow, we're still falling behind on this specific metric here.
Josh Schultz: I think every operator is shaking their head right now like, oh, I got the name in my head of who that is.
Welcome to the SMB Ops Show, an exploration into the mental models and decision processes of operators. I am Joshua Schultz, and with me today is my good friend, Cliff Carey. Today, we are going to deep dive into the operations of an audiology office. Cliff is going to cover his data driven operations, how he optimizes appointments and uses timing and cohorts and energy management to optimize his practice, and how to build a healthy team that operates well. I'm looking forward to today because I've known Cliff for a number of years, and he is one of the best operators that I know.
All right, so welcome back to the SMB Ops Show. I'm really excited today, I'm with a very close friend of mine, Cliff Carey. I met Cliff I think five years ago now, possibly even longer, back from my hometown, Syracuse, New York. Cliff was an entrepreneur long before I was. He's worked in a few different industries. He's tried a number of things, some have worked out better than others, which is I think the true mark of an entrepreneur, just trying stuff out and having those failures and those learnings. But the reason I'm really excited today and the kinds of people that I like to talk to are the ones that really go deep and go niche into industries that not many people focus on. And Cliff has a very long, a very interesting, a very deep understanding of basically the hearing industry, of audiology offices, of how they interact with sports, how they interact with manufacturers, what it looks like on a global scale. He's done operations, he's done consulting, he's done sales, he's built a business that sold, and now he's building a second business. All that to say, Cliff is an expert, I'm really excited, and also a really good friend from my hometown, like I said, Syracuse, New York. Cliff, thank you for coming, man.
Cliff Carey: Happy to be here. Man, with an intro like that, I'm going to do my best not to let you down. But I will say, just to briefly talk about having things that maybe don't work out for you, I don't necessarily trust anyone who doesn't have a couple of failures on the resume. I think it is the greatest learning tool out there, failure.
Josh Schultz: Yeah, exactly. I mean, I've certainly had them. And it's those, in my opinion, it's those learnings that you tier to the next one that help you not to fail on the next one. You're like, oh, last time I did this, it did not turn out well, I'm going to tweak this or add an extra buffer or not make some assumptions that I made last time. So right now, why don't you tell me about, you don't have to mention anything you're not comfortable with but this is more about the industry itself, what type of business are you working in? What's your role there? And then we'll dive into kind of how it works.
Cliff Carey: Sure. So, we have three locations, specialty medical practice. We focus almost exclusively on adult hearing healthcare. We do have a division of our services that are offered for pediatrics. But for the most part, it is an adult population skewing into the senior population, hearing healthcare, we dispense hearing aids, we perform wellness screenings, earwax removal. We do almost everything in hearing healthcare up to perhaps diagnostic and prep for surgical intervention. And we're here in central New York. My title is Operations, but I've got my hands in just about everything here. I've consulted in this industry for over a decade. I've run marketing for larger competing firms in the industry as well as sales and also soft skills of HR and training and development. So, I try to bring some of that background and perspective to whatever I can in our business here to make sure that we can be a category leader in our space in our region and continue to grow.
Josh Schultz: Yeah, I mean, that's why I love ops. You truly are touching everything. I mean, just operations I feel like is the jack knife, Swiss Army knife of business. And the more you learn about the interrelated skills, the better you are at operations, the more you understand how a flick of the number in Excel is going to impact your team and the stress on them and how that impact of stress is going to change the brand and how the brand is going to change the quality and the sales enablement. I mean, it just, it all affects each other. And that's literally why I love operations because I'm never bored. You can dip into whatever part of it you want depending on what kind of mood you're in that day. It's perfect for people that are bipolar like myself and all over the place and just ready to go.
Cliff Carey: And one of the neatest things to be sort of in this space at this time is we've been handed one of the most sophisticated experiments ever in terms of taking a scenario and then changing all of your leverageable variables in the pandemic here. So the way we were doing business prior has been forever changed. And there are things that we do today very well that we owe to the constraints that were placed on us because of the pandemic. And we continue to learn on a daily basis what we can do to continue to refine our approach.
Josh Schultz: Now, I want to get into that, and I'm assuming things, trends like telehealth and remote type of diagnostics is part of that. But first, I talked to you quite a bit, we've downloaded with each other quite a bit over in Strathmore. But for those of you, for the people that aren't as drilled in, and I still have a ton of questions because it's an industry that I don't understand. And it's typically- it's honestly a demographic I don't fully understand. Let's start with what is the most common type of appointment you're seeing inside of your facilities? Why are people showing up? And again, you listed earlier a bunch, but what are the majority of appointments for?
Cliff Carey: Well, it really falls into two buckets. One would be a treatment appointment. And this would be evaluating whether someone actually has need of our services and delivering those services to them. And then there's service appointments, which sounds a lot like treatment, but it's a much quicker appointment. We block out our schedule in 15-minute increments. We may have an evaluation or wellness screening, that could be a 60 minute or four block appointment. That helps us to understand through case history, diagnostic testing, and discovery exactly what the challenges are for a specific patient, and then how we can meet those challenges through a treatment plan. And then we're going to deliver that treatment in another subsequent 60 minute, if not another 60 and then a 30 minute appointment. And then after that, it is maintenance, and those are going to be 15 minute or 30 minute appointments. And I would say on average, we're seeing our patients anywhere between two and four times annually. There are outliers. We've got patients that have more needs than others, tricky types of hearing loss. We deal with an aged population many times, so we might have folks who have either cognitive issues or mobility issues or dexterity issues or visual impairments, they just move slower. And those folks, we may see them more often. But we've also got on the other end of the spectrum, we've got more and more people in their 30s, 40s, and 50s accepting treatment than ever before. And these people, if we can get their treatment dialed in early, we may not see someone for 12, 14, 18 months in between specific needs that they have for our professionals.
Josh Schultz: I have lot of questions from what you just said. First of all, what's making them come in? Is it they noticed that their hearing is not as good? Or is it a loved ones saying hey, you're struggling more and more, I don't think you realize it? So, question one, what is driving them to come in? If it's somebody else, are they coming in with them? Or are they just kind of showing up saying I've been told this is wrong? I mean, paint a picture for us of what- and again, there's a range, I get that. But what's kind of the average patient look like coming in?
Cliff Carey: Absolutely. And one of the things that we're going to do in this industry, like almost any other, is we're going to break our target population down into different cohorts. And as far as intent, consumer intent, it really falls into three buckets. And those three buckets are not distributed equally. I'd say that there are a lot of folks who are education seeking, want to know, they themselves may have some questions about how well they're doing in certain dynamic listening environments. Maybe they have family history of hearing loss, occupational or lifestyle choices that may lead to noise induced hearing loss, and they come in wanting to know more. These would be probably akin to an early adapter, self-starter, somebody who's really interested and wants to age as well as possible and just live their best life today let alone 20 years from now. We've got another cohort who's driven in by medical referral, and they've been in to see their doctor. They may be complaining about things specifically related to their hearing healthcare or their anatomy in or around the ear, certain irritations, certain drainage, feeling of occlusion, which means a clogged feeling in the ear. They may have sudden onset hearing loss, or they may have just been interacting with their doctor, and their doctor noticed that they were asking he or she to repeat themselves several times, or they're of an age or have a certain list of comorbidities that tend to travel alongside hearing loss. And the doctor said, this is something you should think about, you're of the right age, seems to be something here you're having some challenges with, so we're going to send you a referral over to a specialist. And then there is the third cohort, and those are the people who are dragged in by their spouse, their adult children, someone who cares about them, someone who loves them, kind of it's a grudge purchase for them. They're coming in saying I don't want to do anything about this. They're more than likely struggling with some degree of denial of the actual condition itself.
Josh Schultz: So, do you just look at them and the mouth the words with no volume to help drill in that there might be a problem?
Cliff Carey: Well, there probably is some room to have some fun. But we do, whenever possible, try to make it as evident as possible, by not creating the perfect conditions to demonstrate the challenges and the extent of the hearing loss itself. But I wouldn't say it's necessarily a dark humor that exists in the industry, but our patients come in with a lot of cynicism at times and a lot of sarcasm, and we hear a lot of the same jokes almost every day from folks. At the end of the day, you've really got to love people, understand how much they're struggling, and know that at the end of the day, if they're having trouble hearing, it's impacting their most close and sincere relationships. So how they interact with their spouse, their children, their grandchildren, anyone in their homes on a daily basis, or perhaps anyone that they're working with on a daily basis, which could impact their ability to earn, their productivity, those sort of things. So, it's a serious thing, even though most people develop all sorts of compensatory behaviors and sort of delude themselves into thinking that they've got it handled.
Josh Schultz: Yeah, absolutely. I know you and I have talked about this before. I've struggled with hearing my whole life and didn't realize how many, what’d you call them? Basically, ways of dealing with it, coping mechanisms, until COVID hit, everybody wore a mask. And I realized how often I read lips. I mean, constantly. And I had my wife helping me a lot as we were traveling. What did they say? What are they talking about? What are they asking? I mean, stores, and I mean, all of a sudden, it was like I got cut off from the world. And again, I don't- I'm not deaf. But I’ve always struggled with hearing, and I always watch captions on. I have all these different things that I do. And I really- I've been reading shows. And so I forget if shows are in different languages that I watch because I'm reading it anyway. So, when COVID hit, all of a sudden, I was like, wow, I was really crutching on lip reading. So I can imagine, as you get older, just developing all of these slowly over time, not realizing it until you're really separated from the world around you and your loved ones in your interactions.
Cliff Carey: Right. Well, it's a gradual progression. It is a chronic condition with a gradual progression, degenerative gradual progression. And humans are highly adaptable. I mean, people normalize, I don't know, living in the desert, living in prison. You can live with- yeah, you can live with a hearing loss by making a lot of assumptions. I mean, to be honest, the way that we collect data through our sensory organs, especially the ears and the eyes, is we take these small snippets of information, and then we string it together, similar to the way old movies were filmed on cellulose. It'd be these small pictures that would then over time get moved through quickly, and you can see the story that was being told. And we do the same exact thing. And when things work well, the gaps are very small, and we're processing it very quickly. So, we've got the organ itself, the ear, the outer ear, the middle ear, and the inner ear, that collects the data and sends it to the- and this is a very gross oversimplification, but that data is then analyzed, interpreted, processed in the brain. So, you might have a problem hearing because there's something going on in the ear organ itself. Or you might have a problem hearing, you're collecting all the information well, but you're processing that information in an incomplete or incorrect manner. And that's something that needs to be diagnosed for you. But to get back to something you mentioned, how wearing the masks in the pandemic really brought to light for you some of the challenges you are having, we saw that across the industry. In fact, we grew in 2020. One was because we were able to innovate and adjust our delivery system and our business model. But the other was that the need and the perceived need within our patient base and potential patient base was greater than ever. And it was really threefold. So, you mentioned one, and that is visual cues of lip reading. It is no doubt that from, and you know this, I've got a seven and a half month old baby, he's reading everything with his eyes. When I talk to him, he's staring right at my mouth. We've been reading lips since we came out of the womb. So this isn't something that you necessarily just picked up as you started losing some of your hearing range or feeling disconnected. This is something that you've been doing your entire life. You just rely on it more now than you might have earlier in your life when maybe you were hearing a little bit better. So, the visual cue is the lip reading. The mask also muffles the voice. So whereas in previous, prior to the pandemic, in other situations, someone could speak up louder, and you’d do fine even if you couldn't hear or see their lips. So, the visual cues are gone, the muffling of the voice is gone. And then the other thing is that if you had a hearing loss, you could just, if you started to realize that somebody was onto your hearing loss, you could just avoid them and go hang out with people that didn't know you couldn't hear well. But because of the pandemic, people were locked in their homes with their spouses and their families. And they're confronting this challenge, this communication barrier, over and over and over again. So it really just, through these three different mechanisms, increased the need and the desire within our patient population. And as long as you, one, had the will to keep your doors open, which we did, and there are many offices that did not, and then, two, had the will to start changing and trying things new, and you talked about remote care and telehealth. And we can certainly get a little bit more into that. As long as you were willing to try new things, it really was a bit of, I don't know, I don't want to say- there was a lot of- there were a lot of people that you could help. And we were, we were able to.
Josh Schultz: Yeah, I mean, apart from the individual details you just shared, I think one thing that's obvious is that you know this industry, and that's something that- it's one of the reasons I love talking to you about this stuff, because lots people go work in an industry and they just learn what they need to learn to operate and make money. But you've dove in – I don’t know what the right past tense is there – but you dove in, obviously, on the medical side, on the human side, and on the business side. And that just makes you, I think, all the better of an operator. So I'm going to use to that, and I'm going to pivot over to business now, because what you just described was the business. And you also described kind of some of the tailwinds that you've had in the industry over the last few years. But I also know that as these tailwinds were happening, you were already thinking about it's not going to be forever, what's going to stick and what's not going to stick? And what does this business look like in 5, 10 years? And how do I both take advantage of the now, setting up for the later. And so, let's start to dip into that. A couple of things I want to clear up too about- just putting us all in this mental space where you can picture your office to the best of our ability. When people come in, you said earlier that they come in for a service appointment, I'm sorry, for a diagnosis or a kind of a diagnostic type of appointment and then a service appointment later if they need it.
Cliff Carey: Again, kind of 30,000 foot level oversimplification. There are buckets inside of those too, but it's kind of treatment and then service.
Josh Schultz: Yeah, I'm sure. I mean, disclaimer, all of this is going to be generalized. It's one hour, so don't go buy an audiology office based off of just this. But when they come in, I'm picturing there are like two different types of diagnosis or diagnostic type of approaches, and again, two being generalized. But there's the ones where you can basically- almost like you go to an eye doctor, you do a couple of quick tests, they go yeah, you have some eye problems. You can say, oh yeah, you have some hearing problems. And then I can imagine that there's some specialty rooms and tests that take longer, almost like thinking like you go to a doctor and he says, oh, you need an MRI, you need a CAT scan. It's a whole different setup, it's going to take longer. Do you have kind of those quick tests you can do to figure something out and then those longer deeper tests where you might need to reschedule and that person is now going to be on appointment two? Or how does that work?
Cliff Carey: Well, without really getting over my skis too much here because I'm not an audiologist, what I can tell you is there are initial treatments, there are verifications that can be done to make sure that what you're seeing on those preliminary tests is in fact what's happening. Or if on the preliminary tests, you're seeing things that don't quite make sense, you can do some secondary tests to triangulate what might be happening. Again, is the hearing loss happening in the ear, outer ear, or in the brain?
Josh Schultz: You go in and I hear fine. But then all of a sudden, I don't process. Does your office have the testing equipment or the means to test for this is a processing issue? Or are you sending to someone else, somewhere else?
Cliff Carey: Yeah, so the interesting thing for us is that we are- So we're going to- we talk a lot about the minimum effective dose. We don't believe in overtreating or undertreating patients. We want to find the right ratio that allows us to spend the least amount of time to effectively – and that is a very important word. Sometimes you talk about minimal effective dose, and people get hung up on the minimal and don't hear the word effective. We want to get our patients back out into their lives. So we are using a battery of tests and best practices that are the minimum amount to find and to treat close to 95 to 98% of patients with hearing loss. For those that we can't treat, we refer out. It's also important to understand that there are two different ways to identify a hearing loss. One is an objective test. And it's going to be through diagnostics, that's going to be through things like pure tone tests. So can you hear this tone at this frequency at this volume? You might be able to hear that tone at that frequency when I turn it up really loud, but when I have it at a certain volume, you can't hear it. These are lay terms. Again, I'm not an audiologist. You're also going to be testing for how well can you perceive sound through your conductive hearing. So not just the sound that you're capturing through your ear organ, but we also perceive sound by the way that it vibrates our skeletal mass, which is really interesting. So, we're looking to see if the readouts of your hearing based on pure tones and the ones based on your conductive hearing, which is the vibrations, are giving us some similar readouts. If those are off the mark, we've got to actually refer out to an ENT at that point. Another objective test to find out if you hear well is we do word lists. We read the word list to you, and we ask the patient to speak it back to us, and then we score them. So if we give you 15 words, and you get 70% of them right, that might be a passing grade in high school, but you're missing out on 30%, a significant portion of the words that are being read to you. And those are individual words, not in the context of a statement or with a bunch of competing background noise, or you hope not too many other stressors that might be related to being in a social environment. So, it's a pretty clear indication, objective. The other bucket is subjective. Do you think you have a hearing loss? So, let's talk about that. And a lot of times, we are looking to the family members of that patient to give us their take. And one of the things that we do measure when we talk about metrics, we're measuring how often do we have a spouse or a caregiving child or close companion in the office with that patient for the initial diagnosis and treatment. It's essential. One thing that we say here in our office is that an individual has a hearing loss, and a family has a hearing problem. And many times, that patient will externalize that hearing problem and say, it's not me, my wife mumbles, it's okay, as long as I'm by myself. I just turn up the TV louder. I just ask people to yell at me. It's like all of these things are making other people work harder and putting strains on that communication. So, we're always trying to bring in this mix of what are the objective facts? And if you've got any sales background, you're going to know that objective facts, statistics, they don't move the needle much. It's emotional evidence and stories that really do it. So, we're trying to always weave those two things together.
Josh Schultz: And I'm going to skip ahead a little bit.
Cliff Carey: I’m not sure if I was way off on the question you asked.
Josh Schultz: No, that helps me picture these appointments a lot more. And then what is your- and like I said, whether these are short tests or referring out. So now we have the ones that stay that you can fix. Like you said, you're going for 98%. 2% you’ve got to send out, maybe a little more, maybe less. But the ones that stay, you set them up for a service appointment. I'm assuming that there's some kind of small flat fee for the initial appointment or something with the insurance company. And then depending on the solution, how does that- I would think that revenue model is a little more complex. Can you talk about that at all?
Cliff Carey: Yeah, absolutely. And it's something that is very much in flux both in our office and in the industry in general. Hearing loss, much like- well, hearing healthcare, much like dentistry, is in this quasi medical model, also quasi retail model. So some of the treatments that we offer and some of the products that we offer and to certain segments of the population that we serve, insurance will cover those in specific scenarios. For everything else, the patient has the responsibility to take care of the rest of it. For dental, you can imagine that your cleaning’s covered by your insurance carrier, but if you want to have your teeth whitened or you're going to have a coinsurance for any fillings that are going to come up, something like that. So, we're always looking to understand what is the most effective treatment plan for this patient? What is their willingness and ability to reasonably afford their responsibility? And then what are the options that we can come up with that will effectively treat the majority of their need without shortchanging them too much but also having somewhat of an aspirational push to say you can do a little bit better if you can come up with a little bit more resources for this? So, by and large, the diagnostics are either going to be covered by the insurance, or they're going to be offered free of charge. And then the instrumentation is, for the most part, not covered by insurances, except for some specific patient cohorts. But then we'll offer a bunch of different options to help them reach their desired outcomes.
Josh Schultz: And just to be clear, instrumentation for the many times is a hearing aid?
Cliff Carey: Yeah, there's also you got to imagine, as you probably do and your listeners probably do, is that it's not something where we're turning people out the door after meeting them once and never seeing them again. In fact, the average patient, we're going to see them for four visits. And again, I mentioned the average was two in a year, and that's after we've got those initial treatment visits done. So we're really looking at meeting them for the first time, discussing what their needs are, seeing them for probably two more appointments to fit the hearing aid, and then an initial follow up to make sure we continue to fine tune it, and then two more within that year. So that's four visits outside of that initial visit, which would be five. So we're actually bundling in to the cost of the devices the revenue that we need to capture for those five visits. It's called a bundled model. And there's certainly room and a lot of offices that will unbundle service appointments and will have a much different price point on the instrumentation itself. But then the patient is responsible to pay for all the service. And where we choose to live in a bundled model here is that we believe that if you put the responsibility back on the patient to pay for every one of those service appointments, many of them are going to opt not to come in for those subsequent service appointments, and that is really where a lot of the magic happens. You've got it, and it's not just satisfaction. I mean, satisfaction is certainly important. But a big part of satisfaction is effective treatment. So it’s like from an ethical medical standpoint, it's like if the patient's not going to do what's in their own best interest, if I make them pay for it, in sort of this nickel and dime stringing them along, well, I'm going to bundle it in there. And the perception for the patient is I paid for it already, and now I'm going to come in and get this right. And it's not going to be something where I have to decide to pull out my credit card.
Josh Schultz: I'm also thinking just through the psychology of it. Finance days, we used to always say you give all your bad news at once because it helps people process it. And then you spread the good news out over time. So in this case, when you are giving them a fee every time they stop by, they are like 20 bucks, 100 bucks, 150, 200, a thousand for the hearing aid, back to 200, where you're just like 4 grand or whatever, and I'm just making these numbers up, but 4 grand. And then every time they just keep stopping in for free. You're not asking for money. And I would think that it has a better psychological effect of kind of like all the bad news was at once and then the good news is kind of getting the spread out as you're tweaking and talking and they're more relaxed. They're not anxious for this bill that just keeps coming every time they see you on the caller ID.
Cliff Carey: Yeah, I mean, I guess, to use another sort of econ phrase, at that point, the cost is sunk. They've already paid for it, and they might as well just sit in the saddle and ride their treatment out. To our eyes and I think to many of our patients’ because we have great satisfaction numbers and people accepting treatment well above industry standard for both, it is a desirable model for the markets that we serve and the patients that we're targeting right now.
Josh Schultz: These are why I do this podcast, so I can learn concepts like that and think about how I can apply them where I'm at. So that bundled model, I like the psychology of it, the fact that you can get better, I'm using the word satisfaction, simplistic, but better effectiveness actually helps with a lot of different parts of the business and the brand even. So, okay, I think I got a little bit of an understanding now, and I mean a little bit, of kind of what's happening. Patients are coming in and seeing these audiologists, they are going through the needs, they're going through diagnosis, they’re going through service and potentially fitting them with instrumentation, they are doing follow up. You're also, like you said earlier, you're hitting- you're taking maybe balance, there's a lot of other effects that come from the inner ear that are related to what you're doing. How do if you're running a good practice or a bad practice? I mean, what are- what does an office that is well run look like specifically in terms of ratios and metrics? And I mean, don’t share anything that you’re uncomfortable with, but I'm going to go start with gross margin, or how fast is it growing? How fast is too fast for the care drops? Thinking about how much vacancy you have, so you talked about these 15 minute appointments. How many of the possible 15 minute slots do you want filled by each position? And how much are they in the office looking-? I mean, can you walk me through kind of some of the things that are important to you, and if it's not important to you, don’t bring it up. But what are the things you're looking at where this is a poorly run or a well-run office?
Cliff Carey: Well, profitability is the number one thing we're looking at. The most ethical thing we can do is stay in business to continue treating our patients. Especially if we bundled in service appointments, we owe it to those patients to run a good business with talented staff, so that we can continue to live up to the obligations that we made when we sold that bundled service package. So, the P&L is our scorecard. And we make no bones about it. It's something that we are very excited about. When we do well, it allows us to reinvest into the business, to reinvest into our team, and to deliver ultimately a better and better patient experience with better and better patient outcomes, as well as great employment experience. That's something that we talk about all the time. I think when you work in healthcare, you'll hear this, and we could probably have a whole nother conversation about branding, marketing, and how disingenuous things like mission statements are. But the average healthcare brand is going to tell you that like we're patient focused and the patient comes first. We don't say that. We are a team focused organization. We take care of our people, and they take care of our patients. Now, that doesn't mean that we're not looking at patient outcomes and patient experience. I've already mentioned that several times before I even brought up team; that's a very big part of the equation. But when it comes to who we're going to backup and support, it's going to be our team member first. And I like to think about it this way. And sometimes you have to be a little bit ruthless in the way that you perceive things. You have to start to understand things in black and white before you engage in the nuance of a thing so that you know exactly where you stand. And the way I like to think about it is we can mess up with a number of patients, and our business can still thrive. And we don't want to mess up with any patients. But chances are, we're going to mess up with some. I mean, it's just the way that things go whether personality conflicts, mistakes are made, human error, or who knows, any myriad of things could have us either discharge a patient or have them decide not to do business with us anymore. But you can mess up with a lot of patients and your business will still survive. You mess up with a bunch of your employees, and you're out of business. It's just not a viable option to say the customer is always right. And the minute someone wants to bring up something that might be unreasonable or untoward, and you immediately say, you're absolutely right, Mr. or Mrs. Patient, and you admonish your team member, it doesn't work. At the same time, we're pushing for excellence at all times. We're learning from every adverse situation we can. I think critical thinking, curiosity, resilience, those are the things we're looking for in our employees so that they're always striving to deliver a better patient experience and patient outcome. But they need to know from me, and I say it all the time, that we're a team first organization, and I'm a team first leader. And I think about authors like Ken Blanchard who wrote The One Minute Manager and then revised it a couple years ago, and Trust Works is another great book that he wrote, but he talks about servant leadership. And he's not the only person and I'm not sure he invented the term or the idea, but it's something that when I had a chance to work with him in a working group that he discussed and made an impact on me. I work for everyone on my team. Those are my employers really.
Josh Schultz: Can you bring that from concept to some examples? Like, what does it- What do you mean you serve your team? I get the concept, I take care of my team, my team takes care of the customers, we all win. But what does that look like? What do you do on a daily basis? What tradeoffs are you making that you're choosing them over the customer at times?
Cliff Carey: Oh, I mean, look, it'd be great to sit in my office and just look through my P&L and click through spreadsheets and count the cash, but the tradeoff I make is that I'm out asking them how things are going, asking them where they feel successful, asking them where they feel like they're having some challenges, finding out where those barriers or disconnects are, and exhausting every resource that I have at my disposal to remove barriers for them. That's my goal. In fact, one of the metrics that I measure as a professional, and this is outside of the business, but as a professional, as a leader, one of the metrics that I measure is did I have at least one uncomfortable conversation today? And by putting myself in that position, to get uncomfortable, to spend my time to make their lives or jobs easier, that's how I'm serving them. And then, of course, when they're feeling more confident, when they're feeling more successful, if I found creative ways to incentivize them, if I found not so creative ways monetarily just to incentivize them, and they're performing better, then the business does better. So it really is just looking for the gaps and understanding can I give my patient care coordinators better verbiage, so that when they're explaining an often misunderstood, frequently misrepresented, and most importantly, unwanted delivery of services and treatments to a patient who has a lot of questions and is just waiting for that person to slip up and give them any reason to say, “No, not today, I'm not going to make this appointment. I don't believe you, I don't trust you.” If I can give them better verbiage, if I can help them to simplify things for our patients, if I can simplify things for them, then I've done a great job. It's a lot of soft skills work. It's a lot of trying to understand the psychological reasons that people make high dollar purchases, trying to understand the reasons that people won't make that high dollar purchase, and really narrow that down, understand the psychology of hearing loss itself, what happens to the human experience when you start to feel more disconnected, more vulnerable, less productive or capable, what does that do to someone? And how does that manifest in a three minute phone call or in an in-office appointment that could go right or could go wrong? And how do I get out in front of that and give my people the right skills and tools so that they can steer those conversations in a way that helps that patient to their better outcomes? I mean, that's one of the best things about this industry, is that when we win, the patient wins too. Everybody wins. Our goals are all in alignment. It's not this, and sometimes and maybe it's the world of finance, and maybe it's some other places, my goal as the technician is to take the money from your pocket and put it in mine.
Josh Schultz: Zero sum game, yeah.
Cliff Carey: Listen, when we effectively navigate a series of diagnostic tests, evaluations, and discussions that get that patient to accept treatment, everybody wins. Most importantly, the patient. They're the ones that are going to win the most. So, in a lot of ways, that should make it easy. But it ain’t. Just, it's not.
Josh Schultz: You said in the beginning, I want to restate it, you have three locations. So you're going to each of these locations on site how often?
Cliff Carey: Weekly.
Josh Schultz: Weekly, engaging with the team, talking to the team, watching. Do you watch actual appointments? Are you allowed in the room not being an audiologist or-? Okay.
Cliff Carey: I've try to observe as much as I can. Quite a bit of it can either be observed while I'm in the room or overheard. Imagine that many people walking in with any challenged hearing, our professionals an administrators might have to speak up. So, there's a lot of opportunities.
Josh Schultz: Yeah. And so you're just mentally taking notes, I want to talk to them about that, I want to get training for this person, oh, we need to have an uncomfortable conversation, oh, I need to congratulate that person, that was really well done, I want to whatever. They're probably underpaid. And I see that they fixed whatever- whatever the reason I didn’t give them a raise, they fixed it, I want to give that raise now. Is that kind of your mindset, and you're just iterating over and over and over at these locations, trying to just up your team, knowing that upping the team’s going up the patient outcomes, which is going to up the company, the brand, and the revenue?
Cliff Carey: Yeah, you have to, at least in my mind, you have to be thinking about not just making withdrawals from sort of the trust bucket or the trust bank, you have to be making a lot of deposits. So I'm more often than not trying to catch them doing something right, and I'm air quoting here, instead of catching the employee doing something wrong. And I think that's a big failure of leadership or management for many professionals early in their leadership careers. Of course, you want to measure, of course, you want to redirect when you need to, you want to offer insights and developmental solutions for your folks. But you certainly want to congratulate them for having a successful conversation or a hard conversation. I mean, just yesterday, we had a patient who came in, and they're destitute because of a number of healthcare conditions or concerns hitting at the same time. And they have an outstanding balance with us. And they came in and they're crying at the front desk. And you can imagine how hard it is for a patient to be in that situation. It's also hard for our patient care coordinator to be standing in front of that patient and say, what do I say? What can I do to alleviate some of this pain and suffering? How do I even just absorb this energy and not have it kind of become a distraction or derail me for either the rest of my day or the next hour or whatever it might be. And when you can see your team making human connections, navigating these things successfully, those are the moments that I want to jump right out and say, man, that was fantastic. Or, you know what, that was a hard conversation, and I really appreciate you hanging in there. We don't see it a lot. But we see it from time to time. And how are you feeling? How are you doing with it? Here's some strategies to try to rebound from it quickly. You don't ever want to stop empathizing with your patient. You don't want to ever start to dehumanize them. I think that's how you really start to lose touch with good patient outcome. There's this idea in business that you never want to become more in love with your solution than you are with your customer. And for us, we love our customers. We also run a very, very good business. And I think those things go hand in hand.
Josh Schultz: Yeah, you know what I'm picking up, and maybe it's because you're emphasizing it, maybe it's because it's one of your strengths, or maybe it's just actually true, that's kind of what I want to ask you. In my business, people is a huge part, but also managing- like, there's an engineering component that's a huge part in making castings. And there's a supply chain issue, talking to vendors, managing equipment. There's like three real big things happening all the time. It sounds like your business, the- and I don't mean to oversimplify it, but just in general, the audiologists are coming in trained, they went to school, like that was taken care of beforehand. You're not like training audiologists. And the solutions are kind of set. There are a number of solutions that go with certain diagnosis. And there's kind of protocols that are standard, and maybe you've tweaked them. It sounds like the majority of your time is best spent and should be spent on people, both patients taking care of being there besides them. This is a difficult time for them, being empathetic. And like you said, the caregivers because they're going to be in a lot of uncomfortable situations. They have the technical knowledge, but maybe not the bedside manner. Maybe there's some sales techniques where you don't want to sell so hard because there's something going on. It's like, hey, now's not the right time. And it sounds like there's a lot of people management, culture management, EQ going on in this business. Is that a generalized correct statement?
Cliff Carey: I mean, with broad strokes, absolutely. What I can tell you is we've got fantastic technology partners. Our supply chains have been disrupted just like many other industries, but we're not buying and processing raw materials. We are buying wholesale product that's ready for distribution and then effectively applying it for the best outcomes for the patient. So there's not a significant amount of interaction with the technology that needs to happen in between when we place the order and then place it onto our patients’ ears. I mean, we're managing the software so that the device is performing in the way that we want it to, specific to that patient's hearing loss, the type of loss, depth of loss, lifestyle, their specific needs. So, all that's part of the management. But there's a people to people aspect of that as well. There's not a lot of time spent in some backroom clicking battery doors together or something. I mean, these things are coming in more sophisticated than ever, more ready to go than ever before. But there's vendor management without a doubt. They're certainly systems management. I mean, that's a huge part of what we do. But of course, we're asking people-
Josh Schultz: Systems meaning what?
Cliff Carey: So most importantly, our schedule.
Josh Schultz: Okay, I wanted to get into this with you, and you just brought me there. So why don't you dive in a little bit on systems and how you're running this place?
Cliff Carey: Yeah, absolutely. And one last point that I'll make just because we painted it with a little bit of a broad brush that folks are coming in trained. We've got great diagnosticians in our industry, and many of the providers are clinical doctorates or, at the very least, they've been licensed within the state in which they provide care in order to provide that care. And they've gone through a two year apprenticeship in most cases. Some states have a less strict or stringent certification process or licensure process. So, the diagnostics are there. But nobody is coming out of a four year AUD, 8 year program, including four years of audiology school, with the bedside manners, with the soft skills, with the ability to lead a patient to treatment. So that's a big piece. So yes, a ton of education, a ton of soft skills on a daily basis. Weekly basis, we have scheduled meetings and development. And we’ll probably circle back around to that. But once you take the people out of it, the schedule is the number one thing that we're looking at to make sure that our business is being run well. One, we want to make sure that our providers, our entire team is in a position to deliver the right types of services as seamlessly, effectively, efficiently, and frequently as we can without losing momentum. So, we plan our day to see certain patient types for large blocks of time. So, it could be three or four patients in a row coming in for a first time evaluation for whether or not they have hearing loss. This is one particular type of conversation. This is one particular mindset. Of course, we talked about the different cohorts of why they might walk through the door, but they're coming in to learn more about what's going on. And we're going to walk them through a battery of tests. We're going to use specific equipment. We're going to use our soundproof booth, we're going to use some different things we won't use later on in the day when we've got a different type of appointment. Not to mention, I don't necessarily want someone who's a current hearing aid wearer, who's having a bad time with their hearing aids, something's malfunctioning, something's going on, their chargeability is somehow not working, and they wake up in the morning and the things not charged, and they can't hear. And they walk through the door and they're upset. Well, I don’t necessarily want a patient having those type of concerns, which are very real concerns, we're happy to address those concerns, but I don't necessarily want them in my waiting room at the same time as somebody who has no idea what's about to happen, whether they have hearing loss, if they have hearing loss, do they need a hearing aid, if any hearing aid, can I afford them, are hearing aids even right for me, and then listening to this user concern, which is somewhat common, but it's not something I want them to be confronted with at this point in their journey. So, the separation of two cohorts is really important. But there are also certain types of appointments which are heavier lifting either from a cognitive standpoint, an energy standpoint, an emotional standpoint, that I want to make sure that I'm getting the best out of my team. So for example, an opportunity to meet a stranger and to help them to take the next step and accept treatment in their hearing loss journey, that's going to impact our bottom line more than the fifth or sixth service appointment for someone who's in a bundled service package where we're not collecting any money from them today. So I want that first type of revenue generating appointment, more times than not, to be in the morning when my providers are fresh, they had their coffee, they had a good night's sleep, they've had less interactions with stressful situations, whether it could be husband and wife arguing over who has the- who's mumbling and who has hearing loss or whatever it might be, someone just outright saying these are too expensive, and how can you get away with charging people these prices. It's like these types of conversations and situations can accumulate throughout the day. So suddenly, I don't have an effective provider, as effective of a provider as I did the first thing in the morning. So I want those revenue generating appointments, I want them bucketed, and I want them front loaded. Then when we come back from lunch, that's when we're going to work on the service appointments and some of the other treatment appointments and some of the other types of appointments. For example, if we're going to have a diagnostic evaluation with a child, a pediatric appointment, those can be pretty harrowing for an audiologist to execute. One thing is the child could be all over the place. You’ve got small children. Trying to get what you need from that child in order to effectively diagnose a healthcare condition can be really tough, not to mention, and I think anyone who's listening to us who are either parents or possibly teachers might know that sometimes the parents of those kids are going to be driving more of the stress than the actual kiddos are. So, we put a lot of our pediatric evaluations late in the afternoon. And it's not necessarily because we don't want our providers to be at their best, we do. But we also don't want what can sometimes be a really tough appointment, and sometimes they go long, we don't want it to necessarily have a negative impact on our schedule for the rest of the day.
Josh Schultz: That's really interesting. You're using your schedule strategically. And so when you say one of the systems is the schedule, you're not talking about vacancy versus fill, you're talking about what appointments are where?
Cliff Carey: Well, so it starts with where do you put the appointment? And then once you have an idea of where you're putting the appointment, you're talking about how many appointments we have open, how many appointments do we have filled.
Josh Schultz: I was going to say, how do you manage that? Like, do you have rules of thumb, scheduler and you have all the different rules, or do you have like color code on a calendar? What does it look like to make that happen when you're not telling somebody what to do?
Cliff Carey: Well, we have to train to it, and we have to monitor it, and we have to audit it frequently. Because let's say a patient, and a lot of times patients believe that they can dictate their own treatment. And for all of their skills and their Google PhD, they do not have a clinical expertise to treat a hearing loss. But they may call up and say I want to be seen in the morning. Well, service appointment, I just got done giving you all the reasons why we don't do service appointments in the morning. You're going to be in the afternoon. And they may press our administrators hard enough to where that administrator might just placate the patient and put that patient in the morning. So, we need to audit and make sure that the right type of appointments are in the right slots. Then we have to understand that we have today, tomorrow, and the day after, that is all that we can really count on. We're closely monitoring things like no show rates and the rate at which we reschedule appointments. Because just like the airline industry, you do not want a plane to take off without every seat filled. We do not want to execute a clinical day without having every one of those clinical 15 minute blocks accounted for. So we are constantly- we have a very sophisticated confirmation process, appointment confirmation process. We are utilizing new technologies, new certainly in our field but not so new in some other fields, text messaging, emails, phone calls, to make sure that that patient is coming in. Not to mention, I already told you that we want to have a caregiving spouse or an adult child or companion to come with that patient so that we can better triangulate the impact of the hearing loss. That's the number one reason. A close second is that if we have not just the patient but their spouse committed to that appointment, chances are they're going to show up. So, it cuts down on our no show rate.
Josh Schultz: Do you have like an email that goes out a week beforehand and say, hey, here's some things to remember about your upcoming appointment. One, please come with a spouse if possible, two if you're not going to show 24 hours, let us know. I mean, do you have kind of a thing that goes out with all that?
Cliff Carey: Yeah, so we got a couple of things. One, we're sending, we're texting and emailing video introductions for our providers and then also reminders of the appointment, remember why it's so important that you bring your spouse with you. We've got text messages that are going out, and then we've got phone calls that go out. And Mr. Smith, I see here that Felicia is coming with you. Is she still going to be available? Does this time still work for you, for both of you, or would you like to reschedule? That's the conversation we're having 24 hours out to make sure that the patient is showing up. And we've only got three days because what we see statistically is day four, there's about a 40% drop off in the rate at which people show up. Day seven, it's about an 80% drop off. And day ten, good luck. So yeah, but we do have people scheduled on six month returns, annual returns. So when we start looking into the three, four, seven day outlook, we've got appointments that are out there, and we can pull appointments forward. So, I mean, I will tell you that aggressive schedule management is something we're focused on every day. So, if we get a cancellation at 8am for a 3pm appointment, we're trying to fill that. If we have an opening tomorrow for a new evaluation, but we have someone booked the day after tomorrow, we're calling that patient and inviting them to come in. We keep a cancellation list of people for whom we scheduled an appointment and say, would you like to be on our callback list in case something opens up, and if something opens up, they're getting a phone call. Something opened up, we actually have an appointment for you 90 minutes from now, can you make it? It's worth a phone call if they can show up because not only do we get to treat that patient, but then we free up and open up that schedule a couple of days out to where we can now schedule a patient that either needs service to get better outcomes, or they need actual treatment where we can drive revenue. So, it's aggressive. So, we're looking at things like opportunity creation every single day, and we have a required result. We require results for the month.
Josh Schultz: Okay, I'm guessing, so you've got fixed costs including the salary of the audiologists. And so, you're paying that no matter what every day. So basically, you want to get as much revenue in the door in those time slots as possible. You made a comment, aggressive scheduling, I think is what you called it. Is that correct?
Cliff Carey: Schedule management, aggressive schedule management.
Josh Schultz: Aggressive schedule management. I like that. And I'm thinking about, I've seen it with home service industries. As you were talking, I was thinking about barbershops, spas, personal kind of places that don't do that. If there’s a no show, the barber or the hairstylist kind of goes in the back and sits down. And I'm thinking about how much aggressive schedule management would probably help. Because I forget where, but I was traveling, and I got a haircut. I had scheduled it knowing I was traveling, and they called me and said, hey, actually we can move you up if you want to come in early. And I'm sure that's what they were doing. They were pulling stuff forward. And I did. I was like, I'm traveling, and that'll be great. And they probably maximized the revenue for that day and then pulled other ones forward into my slot. So just want to make that comment. This is the kind of interesting things that I learn when I'm talking to great operators.
Cliff Carey: Yeah, well, and it's necessary, if you want to drive the types of resources you need to be competitive. I mean, there's cost to acquire a new patient. So, you need resources in order to pay for that. There's costs to differentiate yourself. So, you're going to need to drive resources so you can meet those costs. You haven't even paid your staff yet. And that's the number one cost in your business is your personnel on your payroll. Not to mention, your overhead and your utilities. So, it is important. So you talked a little bit, and it might be a good time to get into it. But before we do, so we're looking at opportunities created every single day. So every single day, everyone on our team understands that we have a goal for our practice in general but for each one of our locations of creating new revenue driving opportunities, and those can be made a number of different ways. If we have active advertising or marketing, we might get inbound phone calls that are driven by those activities. And you schedule an appointment, an appointment gets scheduled, there's one. Now you only need one less than you did before. You might get a referral in from our local physicians, networking that we're doing. Fantastic. Take it off the list. Well, what happens if you don't happen to have active marketing and the local physicians are on vacation? We have to have an active patient communication strategy that is generating revenue, generating appointments every single day. So to give you an example, we generate about half of our revenue from current patients who are seeking additional treatment or upgrading their technology, a new set of hearing aids, and most of those are incentivized. We incentivize the behaviors, which could be combing through our database, who's about to come out of warranty? They're combing through the database, who haven't we seen in X amount of years? They're combing through the database, who when they were in here last said, “You know what, Doc, I know I should do something about it, but now's not the right time.” Well, then it might not have been the right time, but maybe tomorrow is the right time. So, let's call that person and invite them in. So, we're generating appointments. So if we do get a cancellation or a no show that we can't fill, well, that time slot now becomes a block of time in which we are generating opportunities. And we incentivize the behaviors that keep the schedule filled, because you made the point yourself, I'm paying these professionals to be here. And every moment they're sitting there without a patient in front of them, we're losing money.
Josh Schultz: I think what you're saying is really important. And I want to make sure everybody hears this and thinks about it as pertains to their business. Combing through your database of sales, of people, of customers, of whatever it is that you're putting in your database is an enormous opportunity for lost sales. And it's usually very easy. Once you have the data, you can create an automated report, or you can create a macro that puts it in Excel and does all your filtering and sorting. And there's all different ways to mostly automate it. But it usually comes down to six or seven types of filters and sorts, and you just described yours. At Chess Group, we had one where basically, we would look at a part. And so Chess Group was basically a distributor of metal parts. And we would look at parts that were sold every month, two months, three months, and if it had been double the average sale, in other words, we're expecting- we should have expected an order by now, we'd reach out. Hey, usually you order this part, what's going on? All the time, we’d get oh, actually, the engineers changed that part. It's in quoting, let me send you over the new- we would have lost that part. And then we get it, we get the new part. It's like great, thank you. Or, hey, you know what, you're right. I forgot to order that, can you- here, I'm going to put an order in tomorrow, I'm going to get some extra too. I mean, there was always different reasons and scenarios. But that was stuff that could have been lost, or a new buyer comes in and doesn't know that we're the supplier, and they're about to go somewhere else to whatever name they know. And it's like, oh, no, we've been supplying that for 10 years, we'll get that, we have it on the shelf. It's just there was always something. And just that call was- that was 20% of revenue every year right there in just combing through the database, looking for things that didn't make sense, that looked like it had been a while, like you said, customers that haven't been in a while or warranties going. And it sounded like four to six different scenarios. But I just want to emphasize that.
Cliff Carey: It's so interesting too, like I said, we're a 50/50 split, and I'd actually like to be driving more revenue from meeting strangers. I'd like to be activating folks even more because new business is the lifeblood and the longevity of any business. But you cannot, you cannot take for granted the people you're currently doing business with or you helped in the past. So, one of the things we take a look at, people will buy hearing aids in a very similar way to the way people buy houses. It's like your first home, your, quote unquote, starter home might be just finding something that's within your budget. You don't necessarily know what you want. You don't necessarily know what you need. Your family's not that big. You don't necessarily know what sort of neighborhood you want to be in. You're not thinking about school districts for your kids. So you buy something where price is the number one indicator, and that happens, I can't even give some statistics. But anecdotally, we're seeing somewhere probably around 40, 45% of first time purchasers, they say cost is the number one thing that's going to dictate the selection of the devices or the treatment options that I'm going to accept from you. All right, well, now they get into those devices for a while, and they start to use them, they get out into some common and sometimes diverse or challenging listening environments. And they go, man, I wish there was a capability here that I don't have right now, or I wish that there was a feature set that I gave up because I selected the cost effective option. So you've got all these current wearers that bought- that moved forward with the treatment specifically or predominantly based on the cost. But now, they’re starting to think about value. What's the value of performance of my hearing system, my hearing aids in every environment I'm in? Now that next conversation is going to be more about like, okay, let's take you from tier three in terms of treatment and price point, let's take a look at what tier one can do for you. So another thing we're trying to do is to not just get our- not the look for more business from our current patients, but how can we excite them even more and bring even more value and increase their treatment and their outcomes and their experience through instrumentation and fitting that well. So that's one thing to think about. The other thing is that every person we meet, I'm thinking about three potential transactions. That individual, their spouse, because if they're 75 and their spouse is 75, well, what are the chances their spouse also has some hearing problems? So, we're going to test them. We're going to give them a wellness screening on the way in, and if they can be treated, we want to treat them. And then we're going to get a referral out of that. We're going to ask them, who else can we help? We can see that we've changed your life. I mean, I don't want to overstate this. And I don't want it to sound like a hyperbole. But the things that we deliver are life changing. People will put on hearing aids, and they will suddenly hear the change jingling in their pocket for the first time in 15 years, or they'll hear the birds outside, or they'll hear their clothes swishing together when they walk, and they're just like, oh, my word, I've been missing all of this. Not only have I been missing all of this, but I've been giving my wife a hard time when she's telling me that I could be doing better if I would accept treatment and go do something about my hearing, and I've been blaming it on her. And oh, my gosh, it was me the whole time. So we have people that break down, and they get very, very emotional. And those are the moments where we say, look at what we've been able to do for you. This is fantastic. This is why we do what we do. Is there anyone else in your life that could possibly benefit in a similar way that you'd like to introduce us to? So, we meet that stranger, that's three transactions right there. And what that does is it takes your acquisition cost, and it cuts it in to thirds. So it's important to understand how you can maximize the cost side of your P&L through these soft skills and through incentivizing certain behaviors in your business.
Josh Schultz: And I wrote that. I don't mean to diminish what you just said, I love that idea. I’m all about the efficiency. And I love that you are thinking about how to take one transaction and turn it into three and lowering the cost to upside ratio. I'm assuming you're measuring cost of acquisition of a customer. Do you measure that? Or try to get close? Yeah. What else are you measuring?
Cliff Carey: Yeah, I mean, I measure the aggregate and then I measure it by referral source. So I know every single type of activation strategy that we have, I know how much money we're deploying there, I know how many people we are helping, and even more sophisticated this year, I started to take a look at, based on the referral source, how likely is that patient to accept a premium level technology that's going to reach all of their needs or go for that low budget price point. And what I was trying to test was does direct mail marketing bring in a more price conscious patient and consumer, whereas a physician's referral is going to drive in, which is in certain ways cheaper for me to acquire a patient that way, but we still have to do really good business, and that certainly is an expensive thing to do. Helping every patient every single day the best we possibly can, that's an expensive thing. But on our P&L for a given month, the acquisition cost is much lower. But is that person going to say, you know what, my doctor told me to come and see you. So, I believe you, I trust you because I trust him. And you're an extension of his service to me. And I believe you, and not only do I believe you, I'm going to reach up to this higher price point, I'm probably also more likely to have an insurance policy that may cover some of the out of pocket costs, and they'll reach into a higher pricing tier. I don't know. And I'm still looking to discover that. But yeah, so we measure acquisition cost on our overall activation strategies and marketing. That's more of a quarterly thing that we're looking at, patient acquisition cost. On a weekly basis, we're looking at how many people did we help? What was the average selling price per patient? What was our help rate? How many people came through the door who could benefit from our help? And how many people accepted treatment? And how many people said, “No, not today”? And then we're having a discussion about why, was there something we could have done differently? Is there soft skills development that we could deploy? Or was it that this person just simply wasn't ready? And we have to understand that there is a striation of good outcomes. And if your pinnacle good outcome is that person said yes the first time we met them, we're able to be as efficient with the time, and they reached for the highest price point that most adequately fit their needs. So we don't want to overtreat people. I’ve said that already. In fact, that was one of the first things I said. We don't want to oversell them either. But if that's the pinnacle, well, then you start thinking about what are other good scenarios or outcomes for those appointments. And it doesn't take long to get to a point where the patient did not move forward. But we were able to position the data about their condition in a way that they understood. They've decided not to move forward, but they walked out of here with a better understanding of how this condition, this chronic health care condition, individualized, specific to them, is impacting them on a day to day basis. That is now a more informed patient and a more informed consumer that is more likely to seek out treatment early. And the reason it's important for them to act early is that there are long term impacts on cognitive decline when someone has a hearing loss and is not treated. So us delivering what can sometimes seem like bad news but in a way that can be internalized and accepted by the patient usually means that we're cutting the decision making timeline down considerably. And even if it's not with us, we think it's great that they move forward somewhere. They’re not going to get treated anywhere better than with us. But if it's got to be with someone else ,we'd rather have them get treatment than not.
Josh Schultz: Yeah, absolutely. Yeah, weekly and monthly. Sounds like a lot of them are around patient satisfaction and care, productivity, maybe is the wrong word, like care per employee, appointments per audiologist, that kind of thing.
Cliff Carey: Yeah, I mean, revenue per clinical hour, you have to know that number. You have to know that number. I mean, that is a huge key for us. And when we fall below it, we need to address it.
Josh Schultz: I was going to ask you what your key number was. For us, it's what is the one thing that really drives the sales? And for us, it's mold, mold count. For you, it sounds like clinical hour.
Cliff Carey: I think it's important to know that, but to be honest, the answer to almost every- it's a bit of a lagging indicator. For me, I want to know what the leading indicator is. So, for me, it is the number of revenue generating appointments booked. I want to know, yeah, I want to know what our goal is. And for us, it's 243 appointments per month aggregated across all three of our offices. And we want to hit that 243 or go over. And when we know that we're seeing that amount of revenue driving opportunities, we know based on our average help rate, we know based on our average selling price, which is something we also monitor very well, what is the average cost of the treatment package that the patient elects or accepts, that we know we're going to hit our revenue goals because most of our costs are fixed. And of course, the ones that aren't fixed, the things like performance incentives in our payroll, well, that's going to rise or fall with our revenue output, our cost of goods is going to rise or fall with the amount of instrumentation we actually need to put on our patients’ ears. But since everything else is fixed, we know where our breakeven point is. We're looking at year over year comparisons all the time. And it's my goal to hit our annual breakeven based on our budget sometime early in the third quarter so that everything after that is profitability.
Josh Schultz: The more you talk, the more questions I write down. And at some point, I have to just scrap them and end this because we have to end it at some point. But I've got questions on how you gather feedback and how you store it, what software you use. And we'll have to maybe get into this again. But there are three more questions that I would like to ask. One of them is you mentioned earlier about other ways to incentivize people besides money. Do you have any examples of some of the creative ways that you keep people incentivized?
Cliff Carey: Well, one of the things that we've learned through trying to understand generational psychology is that younger generations, specifically millennials, would actually like more personal time in most cases then they would a performance incentive and a bonus. And that's a gross generalization. A lot of times, it comes down to, do they have a family? Do they have a pension for traveling? Do they like the beach? Whatever it might be, if they want more time, we can give them opportunities to earn more time off. We certainly have ways of increasing or at least trying to maintain what we believe is an optimal work culture here. And that's something where we're constantly talking about what they can do to feel better about how they're improving their job and their performance. I think people want to know that they're doing well. People want to feel capable. I think there are a lot of people who want to feel challenged in their roles, but they want to know that those challenges are going to be met by the skills and the resources that they have at their disposal. If you put people into positions where they're just floundering, they're not going to like it, and they're going to go find work somewhere else, it doesn't matter how much you pay them. We keep our offices looking as beautiful as we can, and there are costs associated there. One, we want our patients to know when they walk through the door we're serious about helping people and it's something that we don't take lightly. We don't have stacks of paper hanging out everywhere. We take their privacy and HIPAA seriously. We are not only healthcare professionals, but we are technology experts. I mean, these are highly sophisticated, in many cases, most cases these days, dual processing computing medical devices that need to optimally meet their specific needs. So, we need when the patient walks through the door for them to understand that we're healthcare experts. So that healthcare field, what we feel to what we do here and how it looks and what we deliver for them, but there's also a technological aspect. So we want our employees to show up every day and go, man, this place is beautiful. It’s clean. It's feels cutting edge. It's not a dump where I'm going to do whatever. We do a lot of off campus stuff. We've got a couple of different annual calendar events where we take people out of the office, we keep them engaged in each other's lives as much as they'd like to – we can't mandate anything. But we try to get them interacting in more humanistic ways than just the work. We give people the ability to work remotely. At times, we've actually just developed some of our first complete work from home roles for our organization, which is certainly attractive to certain employee types. And I must be missing something here. Yeah, I mean, I think, at the end of the day, the opportunity to develop themselves, to be rewarded both financially and verbally and in front of their peers, is something that goes a long way. And then we just lead with our hearts and our mission. At the end of the day, I'm not going to make any bones about us being a profitable company and wanting to maintain our profitability. But it's all rooted in the fact that we want to help more people hear better. And when you're a mission driven company, you attract mission driven employees, at least you hope so.
Josh Schultz: I think that's really helpful. I know there's a lot of talk about maintaining labor right now, getting labor, keeping labor. And I feel like the conversation always just bottoms at more money, throw more money at it, but that's really not doing much. And I think you hit at it because a lot of the people that are coming in now, the younger generations, to take a cliche term, aren’t necessarily looking for money, they're looking for a better life, a different kind of life. And so optimizing incentives around that, not that you pay them crap and give them a great life, but that you don't just keep raising the bar on the money thing and then go unprofitable. You give them a fair wage, but then you make it so that they can live an actual life outside of work and work supports that life and maybe is integrated in a fun, conductive and developing way, not a stress inducing, extra questions after hours way.
Cliff Carey: And there's more we can do. And it's more I’d like to do. I mean, we've got a lot of young professionals with young children, and I'd love to come up with a strategy to offset childcare costs. I'd love to take a look at our folks who are servicing more than one of our locations because we do have a cohort of our team, about 40% of our team that travels between the offices, and I'd like to think about are there ways that we can offset some of their travel costs? We've got, again, young professionals that are interested in furthering their education, can we come up with strategies that can help them to pursue additional certifications or education even if it's not related to our field? Sometimes that's something you see at a lot of organizations, like as long as that new certification is going to help you to do your job here better, then we'll pay for it. But anything else that interests you, you got to foot the bill for it. Well, screw that. What if somebody wants to have an experience or life related to the arts, or they want to go out and learn how to code software, but they're in a caregiving role. It's like help that person to become a better version of themselves, and they will repay you with loyalty and performance.
Josh Schultz: Absolutely. Well, thanks for going over that. It was really helpful. That's a question I'm always asking people, what are you doing with your people? So thanks for sharing that. And I hate to cut around so much. But one thing I wanted to get in, if you don't mind sharing kind of your cadence and specifically meetings and reports, what are the reports that you like to have go out on a weekly, monthly, quarterly basis? And what are the kinds of meetings that you think are key to keeping the trains running?
Cliff Carey: Yeah, well, I mean, it starts with a daily team meeting, we call it our huddle. And we make sure that we're going over key metrics, what are the openings in the schedule? Like I said, today, three day outlook, five day outlook. What are we doing to fill it? Do you have needs? Do you have questions? What can I do as a leader? Can I have someone assist you in filling your particular schedule at your location? Can I move resources around throughout the organization to fill that location? Where are we at for companion rate? Where we have for overall revenue? How many people have we helped so far this month? Where are we at running compared to this month last year? There's a seasonality to our business, so measuring month over month doesn't always give us great data or great feedback as to where we're at. And even more than metrics, what is the mindset of my team? Who's dialed in? Who's checked out? What's going on with everybody? And then you can ask some follow up questions individually after the fact so you can get the most out of your people. Or someone just doesn't have it today. It's like let's give them a break. Like maybe you give them the morning off, the day off, or maybe at least you take some responsibilities off of their desk so that they can handle that stuff. I mean, you need to always be thinking about wellness, mental health. Nobody likes to work for a slave driver. And I think there is a difference between passion and stress. I mean, passion is like working your ass off for something you believe in; stress is working your ass off for something you don't. So we want to create passion, and a lot of times, taking your foot off the gas is going to help more than bearing down. Sometimes bearing down with the right individuals is what you need to do. And I think you need to learn and understand who each one of your team is so that you can do that. But doing a check in, a psychological check in with your team is really important too. Then with that daily cadence, you're going to understand who are the head nodders who are saying, I got it, I got it, I got it. And then each day, you're just like, oh, wow, we're still falling behind on this specific metric here.
Josh Schultz: I think every operator is shaking their head right now, like oh, I got the name in my head of who that is.
Cliff Carey: And it's tough when it's like a middle manager too because you're like that person has just enough authority and plenty of responsibility to really slow down your whole process. So, being able to take a look at that. So, the daily thing, and you're talking about those metrics. On a weekly basis, I'm talking with my providers. We have a call which is all about, tell me about the tough patients you had this week, tell me about how you addressed it. Tell me what I can do to help, and we'll talk it through. Tell me about the wins you had this week, let's celebrate together. Tell me about the ones that you turned around. Tell me about that one we talked about last week and how you applied what we talked about, and whether it was a positive outcome or not. With my administrative team, it's all about, how does the week ahead look, how did the week behind look? What were some of the things that were significant challenges we overcame? What were the challenges that we threw resources or strategy at and we didn't move the needle at all? What can we do to move things along? So I'm looking at similar KPIs on a weekly basis that I am on a daily basis, but I'm aggregating it and taking a look at the big picture, marketing activities, community activation, patient engagement, making sure the soft skills and the treatment metrics are there. On a monthly basis, it’s the P&L. I mean, that's my scorecard. And I'm certainly in our QuickBooks every other day, if not at least a significant chunk of time once a week, but at the end of the month is when I'm looking at everything. So, I can catch some trends on a weekly basis. But I like to see where did we hit for what we're looking at. And the expense side of our business is relatively static. The revenue side of our business is the thing that's highly variable. And we need to understand where those revenues are at, can we continue to fuel our burn rate with enough leftover so that we can react to the marketplace effectively. And that's really important. That's where the P&L comes in. Year over year comparison, that month, year over year. Referral sources, on a monthly basis I’m taking a look at what's the diversity of our referral sources. I want to know that is in fact diverse because you never want to become over leveraged by one source or maybe a small handful of sources of new patients. Because if those sources dry up, you're out of business. So, you want to continue to diversify your referral sources. The same thing with your individuals and their contribution to revenue. You start to get over leveraged because you've got one provider that's contributed 60% of your revenue, it's like you either need to hire someone else just like that or start training the rest of your team to be able to perform. Because if that superstar walks away, retires, gets hit by the proverbial bus, opens up a shop down the road, all of a sudden, not only has the competitive nature of your marketplace changed, but your ability to respond to it has become severely hampered. So, I'm always looking at those matrices as well, key performance matrix. Quarterly basis, I'm doing performance reviews with every single person in my staff. We might do one on ones on a weekly basis, if not twice a month just to check in. And usually, that's kind of as needed. I've got a couple folks who are in specific roles where I've got standing one on ones with them, but there are other folks where it might be twice a week and might be twice a month based on their needs, their capabilities. We don't want people to get lost. On a monthly basis, I'm pulling out the KPIs that the team is responsible for. I'm taking a look at what they contributed specifically, where the gaps are, and how they thought about how things went, what can we do to improve our processes? What can I do to improve as leader? What can we do to help get the most out of them? And just overall, how are things going? It's important to make sure that you're delivering real time feedback. I think Jack Welch, maybe, to quote an old name in management theorem, feedback is the breakfast of champions. It's like you want your team to be looking for both positive feedback but also where are the areas- because they know the areas where they're struggling. They know where they're not meeting the requirements. When we talk about what our requirements are, as much as we talk about what our requirements are for performance, they know where they're not meeting it. So it's not just enough to say like, oh, you came up shy on the amount of people you helped or the amount of appointments you booked this month, let's do better next time. It's, well, what do you think's holding us back? What can we do to make it better? A lot of times, it's I can't seem to come up with enough concentrated time to meet that specific need because I feel randomized by these other things that I need to do. Okay, so now I know what I need to do as a leader is I need to either cut down on the amount of randomization, or I need to help to free up time. Or if I've reached max capacity, then I need to hire somebody. And that's kind of where we're at too because we don't want to over or under treat a patient. I don't want to be over or understaffed. So it's like we're running at capacity as much as possible before we add that additional person. One, it's really tough to find people. Two, it's really hard to train and retain people. And three, they're expensive. So, we want to make sure that we can be as lean as possible for as long as possible. So, we're monitoring things like burnout. We're monitoring things like- and it's tough to really quantify it, but you can qualify, are you hearing some cynicism within the team? Are you hearing like some snipey comments?
Josh Schultz: Engagement’s a huge lead on to burnout.
Cliff Carey: Absolutely. So we look at four different types of employees. So you've got your completely disengaged employee, and they're out there. And these people are actively undermining what you're doing, their absenteeism is through the roof, they just care about when their PTO annualizes and renews, and just they're not there. So we're looking for those folks. It's very difficult to turn those types of people around. You've got your only slightly disengaged people, which are really, really tough to sometimes identify and much easier to turn around. And you just got to find the triggers. It's like, why are they drifting? What can we do to bring them back in? And usually, it's we've been so focused on the business side of things and not focused enough on the human component. And as soon as we bring it back to the human component, we can bring them back in. Sometimes it's a compensation conversation. Sometimes it's stagnation in position. Sometimes it's that I just haven't been as hands on as I need to be, and I haven't had those- I've been having an uncomfortable conversation every day, I just haven't had an uncomfortable conversation with that person in a while. And so that's what you need to. Then you've got your engaged employees, and they are great. And the fourth kind, and these can be really troubling, but sometimes people don't want to deal with them, but these are your disruptive high performers. This is the person where the rules don't apply to them. I'm not going to work the process because I get results anyway. I do it my way. You can't argue with success. They're not team first, they are me first. Those are tough employees to remove from your team. And sometimes you need to. Sometimes there's addition by subtraction. So that's something you can deal with on a quarterly basis. On an annual basis, we're taking a look, did we meet our goals this year? If so, why not? It's coming up with our B goals for the next year. It's like what completely crazy scary thing are we going to do this year? Are we going to open up a new division of treatments? Are we going to open up a new location? Are we going to acquire a competitor? Are we going to take the team to Punta Cana? I don't know, what is it that we're going to do this year that's going to scare me to put my name on it, and then make me have to work to meet that goal? And that's on an annual basis. Definitely developmental check ins. We want to have an active developmental pipeline, including internal promotions. So, we had better be developing people well enough throughout the year that come the end of the year, we've got a couple of people who have either been promoted, are ready to be promoted, or are complaining to me because they want to be promoted. Those things need to be taking place on an annual basis, and you need to be thinking about it. Because if you're not willing to promote or incentivize your top performers, I guarantee you someone else out there is hurting, starving, not just for people, but for high performers, and they will gladly poach your people. So make sure you're focused on keeping your team thriving.
Josh Schultz: I feel like this, we should be selling this as a consulting session on how to run, monitor, and help your people in your business because you're just laying down so much stuff. I'm probably going to listen to this again and again. You just covered so much in those 15 minutes of going over your meetings and all the things you focus on and talk about and how you watch for it. I feel like that should be a whole nother conversation. Thanks for laying that down. I wrote a bunch down there. Last question. You buy an office, another audiology office, what are the things you're looking at that you're going to change? What are you going to add? What are the things that you know that you do that most people aren't doing, and that's how you're going to get your value add and multiple expansion or whatever you want to call it?
Cliff Carey: Yeah, well, so here's the ugly truth, sometimes embarrassing truth and embarrassment of riches about our industry. This industry runs extremely profitable low volume, so high margin, low volume is what our business is. So, for the most part, many businesses are slower than they could be because they're lazy, they're sort of drunk on a high profit margin. Our gross margin- well, I won't name ours, but for the industry, the average healthy gross margin is somewhere around 55 to 60%. And that certainly can make people lazy. So in acquiring a new practice, we're taking a look at what they're doing, how hungry are they, we’re taking a look at their staff. I mean, to be honest with you, the main reason for me to acquire a practice rather than a greenfield startup in that community, would be to acquire the talent. So I want people who are aware of, familiar with, and excited to help people hear better. If I'm just doing a straight asset purchase of a sound booth, some diagnostic equipment, and a database, and maybe a name that's been doing business in that community for 20 years, like probably not worth the valuation. In fact, the valuation is not going to be anywhere near what that seller wants. But what I'm looking for is I want to acquire the talent, and then I want to make sure that they are growth minded, they've got a growth mindset, they're willing to accept feedback, to take on the challenge of getting better at what they do so that they can help more people. And also, yeah, I'm peeking at the size of the database, how many people are in that database? How many people are three to seven years from purchasing their last set of hearing aids, those are going to be my prime candidates for- over seven years, probably already purchased somewhere else. In fact, quite a few of those folks in the five year range are probably going to have already bought somewhere else. What's your patient communication strategy? Are they using electronics for medical records, software, is everything in manila folders on a back wall? So, I'm really looking to acquire the database and the talent. Equipment, I can have that financed. The old laptops or desktops, I mean, those things are worthless. I’m probably better buying new equipment anyway. So it really comes down to if they've got a kick ass location, yeah, I'm probably going to be into that. But there's a chance that I might be moving that location anyway. So, it's really interesting, even if they weren't profitable, I can turn that around quickly. Even if there isn't a tremendous amount of cash flow, I can turn that around quickly. If they are profitable, and there is good cashflow, even better, but you and I both know, you're going to pay a little bit more for that business than you would for someone who's upside down. So yeah, we're looking for the diamond in the rough. We're looking at someone who's been engaged with the community, has a great referral network of physicians, and just an untapped resource, someone who just for the 10 to 15 years before they started retiring, they just got slower and slower. And we can just come in and step on the gas, apply our methodology and our system to what's already there, and ramp that baby up.
Josh Schultz: Wow, man, you just dumped a lot on us. Cliff, first of all, awesome talking to you, always like talking to you. Second of all, for those that know me on Twitter, I'm known as a good operator. But I will say that much of what I know comes from hanging around better operators. I would say Cliff is one of those better operators that I have been talking to for years, getting to know, learn things from him, hashing out ideas, having him talk to me about people, about strategy, about marketing. And there's many others like Cliff. So for those of you that know me, Cliff is one of the people that has been behind me for, like I said, about five years now and helping me. So I want to make sure that that's known.
Cliff Carey: And that's a two-way street. That is 100% a two-way street. So thank you for the compliment. But I owe you more than you owe me, that’s for sure.
Josh Schultz: Also, that you're taking the time to download all this. I mean, you kind of just gave away a lot of your secrets. But my hope is that as other operators and other businesses like property management and home services, they can find parallels, they can get ideas, they can run their businesses better, make them more profitable, and like you, help the customers better and help better life, everything from better toilet installs and less overflows, which nobody likes, all the way up to better medical outcomes for patients that could lead better lives. So Cliff, once again, a massive thank you for taking the time, for going through all of that, for explaining it. Like I said, the last 20 minutes there where you went through all of the meetings, I feel like there was a whole nother pod there. Maybe we'll do that, we'll get a chance to do that in a few weeks.
Cliff Carey: Yeah, absolutely. You let me know. And I don't feel like I'm giving away any secrets here. There's no intellectual property that has been discussed here. I mean, this is hard work. This is looking at what's important and trying not to get caught up in what's not important. And then just having the guts to execute.
Josh Schultz: I say it all the time. All the secrets are consistent execution of the fundamentals. None of it is complex.
Cliff Carey: Fundies, baby, fundies.
Josh Schultz: So Cliff, if people want to get ahold of you or reach out to you, what's the best way for them to do that?
Cliff Carey: You can certainly find me on LinkedIn. You can certainly find me on some of the more fun social media platforms as well. We run a business out of Central New York, Cortland Audiology PC, so you can find me at cortlandhearingaids.com. And you can also give me at Cliff at cliffpcarey.com if you want to email me directly. I've been consulting and coaching for, gosh, about 15 years now. There isn't a type of business that I don't think that I can help to improve, anything from a lemonade stand to, I want to say an ice cream shop, but something a little more sophisticated.
Josh Schultz: I can vouch for that.
Cliff Carey: By all means drop a line.
Josh Schultz: Cliff, thank you, brother. It was awesome. I appreciate it.
Cliff Carey: Thank you, brother.
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