How to 7X Your Profit With One Question

0:00What's up? >> Alex, thanks so much for having me on. Really appreciate your time. I've been watching your content for about 7 months now. It's changed my life, so I just wanted to thank you for that, everything you've done. Um give me more time to spend with my family, my daughter. So, uh about myself though, I run a multi-state online psychiatry practice for about 7 years. Uh we provide medication management. I have seven providers, about 1.5 million in revenue, looking to get to 5 million in the next 12 months. Uh I've got three constraints stacked, and I can't tell which one to break first.

0:32>> Okay. >> So, my first constraint is demand. That's the most immediate one. Comes All of my revenue, about 85% of it, comes from a single channel. I've been doing the same thing for 7 years essentially. I've maxed out on what I can do on that channel. I've got seven providers billing about 20 to 25 hours per week, which they're committed to, but I'm running into constraints where I don't have enough billable hours where I'm All their availabilities are getting full.

1:00>> Yeah. >> constraint is margin. So, I pay my nurse practitioners 50% of what they collect. So, that lands the NP right around market salary. >> Yeah. >> Can't go any lower on the split without losing them. If I move to hourly or salary, that puts me into cash flow constraints, so that's risky. >> Okay. >> 1.3% is my net margin. So, the problem is if I scale from 7 to 20, I grow revenue, but I don't necessarily grow profit. And then my third constraint is onboarding. So, we take insurance, about 89% comes from insurance, 11% from cash.

1:38I've about hit the ceiling as far as the credentialing goes, as fast as we can do the onboarding. So, that kind of caps a little bit how fast I can add people, cuz it takes about 3 to 4 months. So, my question to you is what would you address first and why? >> So, it's a holistic issue. So, instead of saying like there's three constraints, I think the issue is fundamentally you have a model that has a channel, the insurance companies, right? Who define your pricing.

2:07>> Yes. >> And so, if you're in the insurance business, it's kind of like a regulated industry. It's like functionally, right? It's like you have a price cap. >> Mhm. >> And so, the only way to win in those industries is that you have to you have to eat it from the bottom. Which means it's all cost driven. So, it's like unfortunately, you have to think about your business like Walmart, which is like we actually have to save every single penny because demand shouldn't be an issue for the business because you should have enough insurance clients that you always are filled up. But, like this is a very classic problem for insurance-based health care.

2:40Is that they have revenue, they have almost no margin, and that's because insurance prices at the point of a normal operator barely making enough. Like that's that's where they price. They continue to lower until people go out of business, and then they they don't have enough. So, they have to like price you right where right where they, you know, right where they know that you're going to barely stay alive. And so, uh you basically have two you have you have one choice to make, and then there's downstream from that, which is if you want to stay insurance, you become you become a pure operator.

3:10It's all about driving down costs everywhere. And the biggest lever you have is you have NPs, right? Is there any other person or way that we like like the novelty of the model right now, the problem with the model is you're giving 50% of all your revenue to to to labor, which is really tough. Um and so, we'd we'd want that cost to be closer to like 20% of the cost of insurance. And so, it's like is there a way that we can move people through faster so we can get more, you know, more out of each either NP, or is there another person who's not an NP that can still do the job? Um that's on the cost driven side.

3:51The other side is you just turn into a normal business, which is just cash. And then you just learn and then you can sell whatever you want, right? And then you have you have no rules. Um Which one of those feels more like aligned with your skill set? >> I would say both. >> Well, we got to pick one. >> [laughter] >> Well, if I were to pick one, I would say uh we've already maxed out efficiency. This to talk about I've got a I built the own software program. We've got 99% collection rates from insurance, very low stuff sitting out there, 2 months sitting out in AR. So, I I feel like I've maximized a lot of the efficiency.

4:24I have very low staffing costs. I've outsourced that. So, it's got to be going to a cash pay base rate because we know insurance rates are going up. And so, it would have >> going down. >> Well, the cost of of of getting I mean, for the patients is going up. The insurance rates are going up about 11 to 13% a year. So, >> Are you getting paid more 11 to 13% a year? >> Pay Patients are paying more in premiums and their benefits are going down, which means they have to pay more out of pocket, meaning their costs are less predictable. So, give people a sub I I was thinking go to a a subscription-based cash-based uh where people have predictability and start cutting out the insurance, a hybrid approach where people can use their insurance, but then do subscription-based.

5:06>> Yeah. The the the bridge from where you're at to cash um is less risky than you think it is. Um So, the way that you would the way that I would do this is that you're going to have this flow of insurance as customers, right? In the sales process, I would ask one sorting question up front, which is are you here for the best thing or you here for just what insurance covers?

5:31And just by asking that question, you will unlock the people who are willing to spend more to get the thing they need. And then that basically opens the door to selling cash services and say, "Look, listen, we'll bill your insurance to everything that it can cover, but this would be the access." And then just making that one change in your business, you've got, you know, 1 and 1/2% margins like if we add 10 or 20% of the business, it would 10x your your profit. >> Absolutely. What I'm seeing is there needs to be something we offer that other people don't that they see the value inherently, right? For

6:01>> Right. >> And so, what I really see is I see the problems every day, you know, I've been doing this for about 15 years now, so I know I know what the problems are, and a lot of it is is people just aren't don't feel fulfilled. They go into psychiatry, they hit a plateau, they get the medications, and then they kind of level off, right? >> Yeah. >> And so, I'm thinking, how can I integrate AI into this? And I that's what I've been building out as a a solution to this where we can integrate what they're doing with a therapist with what they're doing with us, have them hit one or two outcomes every time they meet with us, add in more or less a coaching component to this where the healthcare provider is kind of meeting the needs where they go to the therapist, and they go to us for the medications, and then we have a coaching component. That coaching component is in fact the app where we can now solve that communication problem between the medical provider, the therapist, because right now it's very siloed in healthcare. They go to the therapist, they go to us for medication management, and that's kind of across the board.

6:53Whereas, if we could solve that problem, so that's what I've been spending a lot of my time and energy on is is putting that into something that the patient will be able to to use. So, imagine they see us, they pick one or two outcomes. What is it that What is your What do you want, essentially? How can we best help you? What does that look like? They see the therapist, the therapist gets to see what their outcomes are, and essentially we can bridge between the therapist and us, which then pulls the therapist into refer more patients, and then we could essentially cross-refer between online therapy practices, and uh so, if we can get more

7:24>> I'm not sure what the AI thing does. >> What's Well, I would look at it really simply as the patient has an outcome, they don't know what they want, they're focused on symptoms. These are my problems, but what they really want is they want to, you know, have a better life, they want to feel fulfilled, they want, you know, there's things that people want, right? But they're so focused on just overcoming these symptoms and they're so focused >> do?

7:47>> I would see it as helping them uh they they quite simply they see us and we thought the provider logs their outcomes of what they want and then here are one or two easy things that you're going to do for 10 or 15 minutes a day to get there. >> What does the AI do? >> It solves the communication barrier. >> Let me say it differently. Does Do they chat with it? Do they text it? Do like what is it Like what do they How are they interacting with this thing? >> How do they Yeah. >> Exactly. Okay, got it.

8:13>> So, it's the uh the provider that interfaces with it and puts the information and then the patient just gets the information as a care plan which then goes to the therapist. So, it's basically a a streamlined form of communication. >> So, it sounds like you just want to make AI plans and then sell them care plans on top of their medication stuff. >> I would add in other value-added things like videos and things that are proven strategies that are really going to help people beyond medications to help them get better as part of a subscription. So, they get that information after the visit as a care plan information tailored to them.

8:46>> What's the subscription Like why is it consumable? Cuz I'm going to get a plan, right? >> Yeah. >> So, why do I need to get another plan? >> Well, because most of the time when people see a provider they're just talking about what they're going to do. They're talking about the problem. It's very clinically based, but it doesn't really get at the root cause. It doesn't get at the outcome. It's not outcome-based. Health care is currently outcome-based. >> I get that. But I go I'm going to I'm going to say the customer journey. I go to a therapist.

9:15>> Yeah. >> Therapist says you need drugs. I go to you and then you say here's how we balance these drugs. >> Yes. >> And then you get paid for insurance to do that and then I go back to my therapist to keep doing my therapy. >> Mhm. >> Wouldn't the therapist feel like you're inter- you're interfering with their plan that they have for the the the patient? >> Uh no, because the therapist often times will be the one that tells the patient about 80% of the time that they need medications anyway. So, the therapist is mostly on board because most of our patients that come to us are already seeing a therapist and the therapist wanted them to come to us for medication management. So, when we provide supportive therapy to them, we're integrating in with what they're already doing in therapy. So, they're not siloed.

9:59>> [sighs] >> Cuz why do they have to be separate? That's the >> No, I I I I understand what the problem that you're trying to solve. Um It I I'm I'm I'm I'm It's not It doesn't have It's like it doesn't have a lot of teeth. Right? I'm Like, I think that if you Like, basically, if you just said, "Hey, you need more help than your therapist. Here's a very low-cost version of this, which is we'll send you a video every day, which will give you a practice that you can do in addition to the medications, and it'll decrease and it's towards these specific outcomes, and the AI is just sending the videos." I don't think you're going to get Like, how many patients a week are you are you bringing on?

10:38>> Uh we're bringing on Well, let's see, 1255 new patients uh a month. So, divide by four, essentially, that's what we're we're getting. And then, um per month, we're getting around total patients around 5 100 5 to 600. >> What was the new patients again? 1 >> About 155. I spend about 6,000 on ads a month. >> Okay, so 155 new patients a month. Um

11:05>> Yeah. >> What you're going to want to do cuz you're 1 and 1/2 million a month, so it's like what, 120-ish a month, somewhere in there? >> Yeah. Yeah. >> Yeah, so 120-ish. So, it's like if we can get an extra you know, for every every every $100 we get from there gives you another 10% increase in revenue. >> Mhm. [clears throat] >> Um Honestly, I would rather instead of selling a subscription, I think you'll have a better bet just selling to the goal.

11:34>> Okay. >> And just saying, I mean, you could test it, but like my bet would be something in the I was probably around five or six hundred dollars is what I would want as my price point cuz that's a that's a impulse purchase for consumers um typically in that in that range. Um call it three to six hundred. Uh and so I would I would say like your you know your your plan's going to take 16 weeks. We'll we'll basically sell you this automated personalized plan.

12:00Uh which is three hundred dollars or six hundred dollars. If we can do that, you could probably I mean, every 10% for you is like a 7x in profit. So like if we get So I just want to keep this simple because the way you explained it, I think would drive anyone insane. Uh and so like way too much. Uh it's just it's two things that you do. Number one, sorting question. Are you here for the best outcome or just what insurance covers? If they say best outcome, then you say cool, most people don't want to be on medication forever. And so what we're going to do is try and like you're not here to take medication, you're here to get an outcome, right? Right. Okay, cool. And so we found there's tons of research to support this is that these practices support these outcomes. And so it's a one-time thing, we plan it, and if you can track this would be helpful for you, the people who buy our plan versus the people who don't have slightly better outcomes or they decrease their medicine, whatever thing that you can track um would then make that like then what ends up happening is that the the value exchange becomes I'm going to pay five hundred dollars to take 20% less medications in six months from now.

12:58>> Okay. >> And I think that's and as soon as you can just make that equivalency um within compliance and all that, uh that would be the pitch. And so I think if you could just do that, that probably will help. >> So would you offer two two tracks for people? People who want more interaction that want to use their insurance still, and we'll apply the visits towards their insurance, and then the second one is people who want less visits but more information, and kind of just strike a balance between consumer mindsets?

13:25>> I want to max out insurance, and then I want to have something that's on top of that. >> Okay, so it's Do we want to increase the number of people percentage that are cash paid paid because they're only 11% right now? >> Yeah, it's it's less about like increasing the percentage of cash paid and just saying like you come in, you've got insurance, insurance covers you for $100. I'm making it up, 100 bucks. Uh my thing is $200. The first 100 is going to go towards we're going to do the insurance deliverable. >> Got it. >> And then we're also going to add this on top.

13:53>> Got it. And you think I'm constrained as far as the what I pay the providers cuz I know the market rate and the the split. I don't and I did the math. I could do it in a tiered fashion, but then when I do when I looked at the gains given my operating expenses, it didn't really make sense to do it that way. I was constrained at 50% I think. >> Well, I mean you have a cost-driven business because you have insurance, which means you cannot control price, which means you can only control cost, and you're saying you can't go go above 50%. And so the only way that you can do that is that we either get way more out of them or we find a way for them to do it cheaper. Like that's it.

14:23>> Okay. And that makes sense. >> Like I'm taking what you're saying at face value that like there's no way. I think that's false. So I would just stop saying that cuz it's not true. [clears throat] Like you're running 1% margin. There's no way that like cuz I've seen other businesses that are insurance, you know, in the space and they don't run 1% margin. So like >> Yes. >> you for sure can save more money than you currently are, but in terms of ease of getting into a world where you don't have to purely be subject to the regulations and the pricing of insurance companies, shorten question and then one plan that you can sell to those people that's on top that's low operational drag.

14:56>> Got it. Thank you. That's very helpful. >> You bet. >> Appreciate your time. >> Thanks Tran. Appreciate you. If you like this video and you're a business owner who wants to break through your current revenue ceiling, I just stole every lesson from scaling 10 businesses past 10 million and three businesses past 100 million into a completely free scaling roadmap that I've used to go from zero to one, zero to 10, and zero to 100 plus. And so you can click here and you can check it out. Again, absolutely free, and since you're a business owner, I appreciate you, and uh enjoy.