Our guest Shawn McVey of Pathway Vet Alliance joins us to cover the keys to effective process implementation in a veterinary hospital, the importance of structure in the workplace, and the five main issues experienced in veterinary practices.
Welcome back to Consolidate That. I’m very excited that we get to have a repeat guest today. We have done it a couple times, and it’s always something where people have listened to the episodes and especially us sitting down even while doing and we know that we need to have someone back to keep learning from them. I’ll let you go ahead and introduce or reintroduce Shawn to the listeners.
Very excited, Shawn. I’m very excited to have you back. The exciting topic that we discussed last time, it was about the culture and the lack there off, individually a domain and how the disparate teams and the communication issues. I really appreciate that I was listening to that this morning. I wanted to take it next step. I think that the instruments that you applied in Pathway are very much connecting that process and culture. I wanted to talk about the process. Every console leader that we’ve seen, it’s a plane that you build while flying. It’s just such a fast organization to be built. How do you scale the process? How do you establish the process? What instruments you use? Then, how do you loop it back into culture?
You asked how process and culture intertwine and how that happened at Pathway Veterinary Alliance. As you remember from the last podcast, I talked a lot about the resistance I got from employees over simple instructions, simple things. It occurred to me that process wasn’t the original problem. Veterinary medicine has always tried to put in place process, but they failed miserably, I think, in the last 40 or 50 years, because there were not cultural, or strategic reasons for the process.
In other words, the big process sounds one of these HR big company things that we have to do. When people that are in medicine hear the word process, what they think is, a man is going to tell me how to do my job, a woman’s going to tell me how to do my job. There’s this genuflect response of, “I’m not doing this. We know how to do it, etc.” We came at the back way around, which is, when people started to talk about cultural issues in the practice, most of them were around conflict. Our bad cultures, because we don’t handle conflict well. Then we look at where does the conflict come into play. Almost always, outside of just normal, interpersonal squabbling, almost always the conflict was around, what is the right way to do something? What’s the wrong way to do something? How long does it take to do this? Should it take two people? Should it take five people? Who should be involved in this?
Historically, in veterinary medicine, veterinarians have called the shots in all of that. Veterinarians, while really usually pretty keen on process for other people, are not keen on process for themselves, because they’re entrepreneurs at heart. What they firmly believe is that I know how to do it better than everybody else. It’s not out of arrogance that they come by that if you’ve read Gino Wickman’s book, Traction, he talks about how all entrepreneurs suffer from this curse of I had to build the business from the ground up, I had to do everything myself. Therefore, they rightfully own the mantle of, “I know how to run this place from the ground up.”
What they fail to realize is that they never studied scalability, and they never, until they get into veterinary practice, have never worked – and it’s not going to be popular to people that aren’t veterinarians, but I think it’s the truth. They’ve never worked with people who have less intellect than they do, and with people that have less life experience and systems and process. Most veterinarians come out of process systems, whether it’s the university where you get scored and measured. If you don’t measure up, you’re asked to leave, or you’re made to go somewhere else.
The vast majority of our paraprofessional employees come from home settings into the workplace. The word process and accountability is just stuff that babysitters say to them to keep them accountable. We needed a way to talk about how we get things done without causing fights. That was shocking to me, because I was not used to – I wasn’t used to working in an environment where people fought over and not fought over the right way, the wrong way, but interpersonally, emotionally had reactions to things.
This is what I always say to veterinarians. If you don’t put processes in place, you will have emotional outbursts instead. When we would do SWOT analysis with the employees, you all know what that is. Strengths, weaknesses, opportunities, problems and threat, or strength. Almost always, what would come up is double standards. We don’t know what the rules are, the rules change from day-to-day. One day we charge for this, the next day, we don’t. One day, the doctor’s pissed off because we didn’t wrap the packs right. The next doctor comes along and says, “Wrap however you want.”
There were all of these mixed messages around what is processed and what is good. What we can all agree upon was that we wanted good, or excellent medicine. What we could all agree upon was that we wanted a workplace where people weren’t pitchy and didn’t complain to one another. What we all could agree upon was we want to have an opportunity for people to be able to move forward, not only academically, intellectually, but hopefully, financially to the practice, which all equal good medicine.
To start with, back to the culture piece, we and this is the message for entrepreneurs, you must train yourself and other people on how to communicate directly, eliminating triangulated communication, and work with people on the team who don’t have the internal fortitude to manage what is normal workplace conflict. Normal workplace conflict is I sometimes think that you’re wrong, and you sometimes think that I’m wrong. We are mature enough to be able to talk about it in a way that doesn’t set people off, and to depersonalize it.
Now, that’s all the cultural stuff I talked about last time. If we can get there, we make these huge jumps in productivity, we make these huge jumps in profitability, because gone is the focus on self. With process focus, what happens is we return to doing things the way the clients want them, and they respond to that. For us, to make our employees buy into the idea that process was not the man, or woman telling them what to do, we had to convince them that process was the answer to all the things that bothered them.
Because process wasn’t what bothered them, because in their hearts, they knew that they knew how to do this. The real problem was the other person doesn’t know how to do it, or this person does it differently. Or they all saw it from a different angle. Getting everybody together and helping them understand what the main priorities are in the practice. In other words, what the employees create, it’s hard for them to resist.
When you’re managing people that need psychological paychecks at work, which is what we have to put up with within better medicine, because we certainly don’t pay enough for people to get their psychiatric needs met somewhere else. It’s got to be a comfortable place. For that to happen, people have to feel like they have some input and say. When you have 22 people on a team and 20 out of 22 people say, “My biggest problem is we screaming at each other at busy times of the day.”
Now, there’s some buy-in to what are we going to do to fix that? Because I can keep coming back to, but you said you were tired of this. Giving them reasons why you have to follow one, two and three steps and not doing it your own way. The reason is, you said you wanted to eliminate X out of frustration. When that occurs, you have several teaching moments, because whenever you try and implement process in a hospital, or I would assume, in a restaurant, or wherever, you’re going to have six weeks of literal and quantifiable resistance to that process.
The resistance comes up in many forms, fear, because I just don’t know something new. This won’t work this way. I’m going to be found out as not competent. Other people will laugh at me if I don’t do it right. I just don’t like change. I mean, some people, it’s called you stress. When you get different than distress. Bridezilla happens, because we’re excited about getting married. People break down at the closing table when they buy a house for the first time, because the stress of doing something that great overwhelms them.
You can have stress, even in a good environment. That stress can erode your ability to perform. I often would talk to the staff about what responses you’re getting back from the clients about our current processes. Inevitably, employees would say, our clients love us. True. I told you in our last podcast that the deal we made with the public until recently, is we will provide you with absolute shitty inconsistent service every single day.
In return, we will love you more than your family does. We’ll love you more than your pet does and will give you shit for free. That became how we manage process in a veterinary hospital. The results are where we are today, which is we can’t find enough people, nobody’s happier at work. It’s distressing. People need, like dogs need and children need, people need structure at work. Entrepreneurs are a very rare breed of people, that can just get up every day and create what they want to create. There’s a certain somebody that does that. It’s not 90% of the population. They need structure. It’s our job to provide that for them.
What I would say to my employees all the time is you are an excellent nurse. You’re an excellent doctor, but you don’t know jack about structure. Confronting the elephant in the room, which is if you can’t get off your high horse about you know everything and everybody else knows nothing, then this isn’t going to work. We go back to the value of, there’s the core value, if you ask the veterinary hospital, what are your core values, buzzword from the 90s and early aughts? They’re going to say unity, compassion and respect, teamwork.
Okay, well, so how is this teamwork when you butt up against each other? Or when five CSRs check somebody else out a different way every single time? It’s not teamwork. Appealing to their emotions and values as the reason for paying attention to the strategic thrust. Because in their mind, it has nothing to do with animals. Then, you get some performance, because you track and you measure all of that, and you start to see that was a couple of tweaks. You can bring your truck and supply costs down dramatically. With a couple of tweaks, you can change your labor numbers dramatically. With a couple of tweaks, you can change your staffing, if you will, to be more effective. Winning, or doing right, or doing better, gives people confidence to try it again.
What we did is, all we would do is look at the top five problems in their practice as identified by them. Again, off the top of my head, I can tell you that 90% of veterinary hospitals have the same top five problems. They’re going to be some form of, we don’t monitor or understand our finances very well. We don’t have control of the flow of our day. It seems like, sometimes the day takes us over, instead of us dictating the day. We do not understand HR. We hate HR. We think that any kind of people problems are HR related, and they should just go away. I’d rather be in denial. There’s something wrong with our business, if we have to deal with HR issues. That comes up over and over again.
Then, lack of advancement, lack of financial stability for the employees is one thing that comes up, and then quality of life. You can throw that into any blender you want, but the mix of how to work. Those things come up over and over and over again. We would look at those and say, through the coaching of traction, which we call Pathway Planning, we would look at that and say, “All right, we can’t tackle the whole business at once.” Which is the mistake that most entrepreneurs make, which is, I know I have a lot of problems, and there’s so many of them that I just can’t address them, so let’s just survive for another year.
You do that at 10% EBITDA. After six to 10 years, you’re burnt out, you’re resentful, you’re angry. The truth is a business needs to reinvent itself every five years. Because just like our own personal lives, I don’t know if you’ve noticed, you might not be old enough yet, but I’ve noticed that every five to seven years, other than my family, people transition in and out of my life. Every five to seven years, who might have been my best bud right now maybe isn’t my best bud seven years ago. There’s something to that flow of five to seven years that says, “Okay, I’ve mastered it. It takes 5,000 hours, which is about two years to become an expert at anything.”
You master it and then you have to reinvent it. The reinvention is continuous looking at operational problems. I mean, process problems and fixing them. What is process? Process is how we get things done, from A to B to C. What does it take quantifiably, we’ll need to check a client in? There should be three or four steps that are not missed? What does it take for me to intubate a patient? There should be six or seven steps, and you must follow all these. What does it take for me to talk to a client about euthanasia of their pet? Well, there really should be three or four things that we touch on. Even though you might be giving the conversation, or I’m giving the conversation with different personality, we have to touch on those three or four things.
What happens in veterinary medicine is everybody does it how they want. The client, with good intentions, that’s where we’re all common. We have good intentions. The client walks away with if you don’t have process, the client walks away with a completely different experience, depending upon the day, or the provider. I will say, imagine going to Starbucks, or McDonald’s or your local hotel, or whatever. Depending on what server, or person you get, you get a shitty room, or you get a nice room. You get a burger that’s cooked, or a burger that’s raw. You get coffee that’s hot, when you ordered it cold and you get coffee that’s cold when you ordered it hot. One or two of those kinds of experiences means you’re not going back to that place again.
You come to expect it. In veterinary medicine, we just accept people put up with that. I think, it’s the primary reason that our clients complain about prices, is there’s not a direct correlation between what it costs and the service they’re getting. There’s only a correlation between what it costs and the outcome. What you find in veterinary medicine after a $7,000 bill is even if the animal is well, if the process wasn’t good, they’re still resentful that they had to pay it.
Just like, you go to a fancy restaurant. In the end, you might get a great meal. Tasted good and everything was as advertised, but it took longer, or the server was rude, or you’re resentful about having to pay for it, even though you got what you pay for. Process is getting them to understand that in the heat of the moment of delivery of service, combined with their own emotional intelligence competencies, that’s where process often fails. That’s tying it back to EQ.
It’s not that you’re not smart enough to do these things. It’s proving to them that you get so overwhelmed in the heat of the moment, that you’re not thinking. You’re just feeling and responding and trying to put out the fire of customer service, instead of seeing the bigger picture. How do we know that? Because we take customer surveys, we know that because our new client numbers drop, we know that because whatever. I mean, all the measurement of the P&L will tell you whether or not your efforts are effective.
Once there is buy-in to the idea that we have to do it right for the client, not we have to do it right, because I’m going to get in trouble if I don’t do it right. That’s the big cultural shift. We all agree that we want to serve the client. If you ask any employee, they’ll say, “Yes, we do.” When I asked that employer, they’re not serving the client. I can look them in the eye and say, which will it be? Do you want to do it your way and feel comfortable? What do you want to do and how we’re supposed to do it, and the client to be happy. It’s there where employees have to make choices.
What I say to people who embark down a process-oriented practice, is you’re going to lose 50% to 70% of your employees, the first six months you try to implement this. Why? Because these people are so psychologically broken, that they can’t handle being told. Go ABCDE. All of their self-esteem comes from knowing ABCDE and doing it how they want and being a star for the doctor. It doesn’t come from being a team player who helps execute things.
Like a professional sports team, if you’re going to – Tom Brady might be the exception. If you’re going to win the Super Bowl multiple times, you’re not going to do it by yourself. You’re going to have to build the whole team up and you’re going to have to learn how to run some plays, no matter what kind of player you are. Process is how we check people in, how long it takes to be in the exam room. If you’re the cue 30-minute appointment, and it’s going 45, 50 minutes, there’s a process problem.
Spays and neuters. If you ever time that in a veterinary hospital, it’s shocking. One doctor can take two and a half hours and the animal will be under anesthesia for three hours. Another doctor can do it in 15 minutes and nobody talks about it. Like, oh, I got slow doc, today. Let’s say that we just charged $250 for we lost $400 on this doctor, and we made a $110 with this doctor, and processes the reason why.
What you have to say to a doctor is, if you can’t do this in under 20 minutes, then you’re not qualified to do this surgery in this hospital. Or, I’m happy to charge them $790 for when you do surgery, because you like to do it two hours longer.
With the client, we’ll pay for another $90 for your three hours of love, by all means, do it. The responses are, well, that’s just stupid. Then what I say to them is, so you want me to pay for you to work slowly, is what you’re saying to me. You want me to be responsible for your inability, or unwillingness to improve your skill set. I’m not going to do it. We all agreed that this is what we’re going to do with the hospital forward. We did a preliminary analysis and found out that of the 70 spays and neuters we do a month, if we could decrease the time by 15 minutes for each one, we could fit in 100 spays and neuters in a month.
That’s the rationale. That’s business. If you don’t like, that, then you still want to practice like mom and pop, and that’s perfectly fine. I’m happy to have you as a competitor. Go out and open a hospital right next to me. If you can out love our process, then you deserve to win the war. What I know, because this was back in the 90s when VCA first started, everybody said, “Oh God, corporate medicine is going to overtake veterinary medicine. It’s all going to fall to shit.”
I was among the people who said that might be true. Now, I firmly believe that all the corporate medicine has done is take an advantage of the hole in the profession. That corporation wouldn’t come in here and scooped all this up if we were running our ship the way we were supposed to. Because there would be nothing to improve. There wouldn’t be a way for them to quantify, they make it better. What most corporations know is that just through a simple process, like measuring my P&L, watching my labor costs, watching my drug and supply costs, doing some basic training, doing some projections for business, doing some basic marketing and analysis of customers’ needs, all of that stuff is the difference between 10% EBITDA and 15%. then you add the EQ communication component on top of it. now you get to that lovely 20% EBITDA.
Then you dad the EQ communication component on top of it, and now you get to that lovely 20% EBITDA mark. Most consolidators have great faith in the fact that they can turn a 10% practice into a 20% practice in a matter of two to three years. They can, and they do, and that’s why everybody’s rushing to buy them in the hospital. There’s a broad overview of process, but maybe now we can get down in the weeds a little bit more with it.
There’s a lot of weeds. I would love to get down to all of them. I keep writing down things. Maybe at a very high level. I mean, I agree with every word you said there. They’ll argue that the consolidators do, because at Pathway, you may have done it, but I’ve seen it over and over and over. When you add 10, 20, 30 practices, then you look back as many do and go, “Oh, shit. What do we do with these now?” When they didn’t plan like you guys did?
The interesting thing is that I love how you convert their opinion and their understanding of the problem into a solution. Then it becomes a process. I took the M&A course. It was an interesting thing. We were working with a – He was at Harvard. The professor was the guy who was doing airline mergers, and to mass and not vet clinic. There was 18,000 people merging with 11,000 people. Go figure that one out. He actually said that when people say about culture, they actually see process. When you merge two cultures, how do you do stuff here? How do you do stuff here? How do you do stuff here? You pick one of the better ways and then you merge that one into another one.
It was another interesting thing that they talked about. It’s not always like, you’re an acquire, you’re being acquired, and then all the processes move over, you actually cross check the synergies, and then you add them together. That was interesting to me, because he actually used the word culture for the what you described as a process. Now, I love the approach of saying, “Okay, what are our problems? Let’s articulate them, and let’s fix them, and let’s make it consistent.” How do you do that at scale? Because I know, I can see how you can walk into the hospital. Then when you walk out 20 minutes later, they’re going to at least think about different something, differently. How did you do it in Pathways at scale? What is that division in a consolidator? Because when you’re building it, your PE is looking at your corporate overhead.
They’re saying, “Okay, you have to be under certain percentage of corporate overhead.” When you go and talk about, okay, we need to build inventory management, we need to build the HR department, finance, all the bean counters, which is 10s of them there. Then you go in and say, “Now, we need a cultural department to convert the culture.” How do you sell it to your board? How do you actually do that? Then how do you do it at scale?
The Culture Department, how we scale that. Again, well, let me preface this with, I think now Pathway is probably not the best example of the way that we began to scale, because we’ve had to change. What we noticed is once we got over about 200, practices, the way that we – there’s 600 now. The way that we were scaling didn’t have to change, but let me address the – because I doubt, there’s going to be a lot of consolidators that get to over 200 practices. When you get to that size, you now have Morgan Stanley, or Mars, or whomever who is saying, there’s some things that we have to dictate.
Let me be very clear that putting together processes that must be followed by all in the admin department is very different than putting processes together that must be followed by all on the frontlines in the hospital. The behind the scene stuff, you won’t get as much resistance, because it’s basically, corporate kinds of employees who understand innately that that is their job. The resistance comes from frontline care providers. How do we scale that?
What we said to them was, “I don’t care how you get to this place, as long as it’s legal and ethical. I don’t care what you do to get to this place, as long as it’s legal and ethical.” I do you care about the why. The why has to be process-driven, and values-driven. You as a hospital, individual hospital, we trained our managers and our medical directors in this way. We gave them the tools for doing what we call Pathway Planning, which was a system of quarterly meetings and bi-monthly meetings, whereby, they identified essentially, their mission, their vision, and their values, which you’ve all heard about.
Every single hospital really wants ownership over that. What we said was here’s the two values that Pathway has, so incorporate those values and add three of your own, that are unique to your little town in New Hampshire, or your little town in South Carolina. What they didn’t know was that almost every other hospital has the same values as they do. They just call it something a little bit different.
That right there allowed them to feel a little bit of ownership. Then they decide what their big problems are. Here’s the mystery to those of you that are consolidators, whatever your employees are working on is probably going to improve the bottom line. Because there’s only two or three areas you can work on something in a veterinary hospital. The delivery of medicine, customer service and expense management. That’s really three pots that you can work from. I don’t care if they choose marketing. That’s mean some customer service and the delivery of medicine. It’s probably going to improve the bottom line in some way, shape or form.
What you focus on, all management schools teach this, what you focus on and measure becomes better. That’s a universal truth, right? I don’t care what the employees came up with. What they almost always came up with was a drug and supply cost need to be better, because I want a raise and that’s where the money is. They always came up with we need to communicate better, because that’s where we fall down on our process. Not that I didn’t know how to check somebody out, but I forgot a step.
The person next to me needs to remind me. In most veterinary cultures, that doesn’t happen because people fight over situations like that. You go to a hotel, or a motel, or a restaurant that’s well run and one server will tell the other server, “No that’s not how we do it here.” If done this way, because our customers expect that. Every person at the Ritz Carlton says, “Good evening, ma’am. Good evening, sir.” They don’t say, “Yo, what’s up?” Because they feel like it. That’s their product. That’s their culture. That’s how they do it at the Ritz Carlton. You decide what your Ritz Carlton is, even if it’s a Walmart. Say it the way you’re going to say it, and everybody has to do it.
What they did was they would pick these top five problems, and they would come up with a list of literally, 10 goals for the year that they would attack one or two big goals for each one of the big problems, right? We would look at that and go, “Okay, now these 10 problems. What can we do this quarter to eliminate these problems?” Come up with one to five things that the whole hospital could work on, whether it’s revamping this pamphlet, or it’s painting this room, or it’s adjusting our chart of accounts, or new uniforms, or whatever it is that came up.
Every two weeks, the leadership team would meet and talk about, have we hit those goals? Have we not hit those goals? Just like you have team meetings of your coach. We didn’t hit those goals. We didn’t hit those goals. Then every quarter, we would get in front of the team for 45 minutes. That’s all. Just 45 minutes. We would say, and this is scalable, because the people on the ground are doing this. The medical director and the practice manager are doing this and my management team is teaching them how.
Through VGP, we have annual four to five times a year, conferences and workshops that support this education. Employees can come back, even after initial training, and get more training. It’s iterative learning. The more you learn about Pathway Planning, the better you get at it. The more you learn about communication, the better you get at it. We provided the infrastructure of training, but insisted that they hit these numbers. You must have 18% to 20% EBITDA or more. Your labor costs have to be here. Your drug costs have to be here. How you get there? I don’t care. That was the really big thing is most employees don’t want to be dictated to. They really want some structure. Then, they want to be allowed to succeed or fail on their own merits, until they fail, then they want another chance.
The real deal with the culture is you’ve got to move those people on, because their failure is not because they lack intellect ever. It’s almost always, because they lack the emotional intelligence to work in a team environment. Or they’re so steeped in being an entrepreneur that they can’t let go and let other people do. We would say to people, you have three months is a picture, six months is a concern, or a blessing. Nine months is a problem or praise. After nine months, if your problems aren’t starting to go away, now we the management team are going to step in and take over your Pathway Plan.
Then we would send in a regional manager, or a district manager, whatever the title was at that time, or we even had a hotline team, which were basically, this practice is crashing. We do need to send in these three or four management teams, and we’re going to do their Pathway Plan for them. We’re going to get them back on track. We’re going to start to hire and fire for them. If you don’t do this in nine months, we will come in. In three months, we will write the ship. That’s the message that we give to all of our practices. You can do it your own way, if you could do it. If you can’t do it, then we’ll give you a chance to prove that. We’ll come in and take over.
Can I ask you about that? I apologize for interrupting you. It’s very interesting. You have your KPIs, or metrics that everybody agreed that that’s where we want to be. Then you allow them to come up with ways to get there by identifying the problems and they tackle them within the given period of time.
Then if they don’t, then you come in and help them. When your team comes in and help them, do they help them to deal with the problems that they identify, or they go to ground zero?
We go back to ground zero. We go back to zero, because we assume there’s the problem – what we know is, what we assume going in is the problem is the leadership team on the ground. It’s simple to follow the process. We’ve given them a really, the Entrepreneurial Operating System, which we call Pathway planning is really bulletproof in terms of implementation. If they cannot do that, we assume it’s because they can’t. Often, it’s really because they said, “No, I still want to do it my way.” I’m not going to stick to the discipline of meetings. I’m not going to have these conversations with employees. I’m not going to hold people accountable.
What that tells us is, you are not a good cultural fit from us, because this is our culture. Some practices, we offloaded. We literally sold back to the owner and said, you can have it, because if you’re not going to – they didn’t make any money on that sale, mind you. If you want it, you manage your own problem. Or fine, we’ll sell to another consolidator who thinks that they can manage this particular hospital. Either you go or you do it how we do it. I’m happy to say, of the hundreds of practices that we’ve acquired, that’s only happened to three practices, where they’ve set and they’re all specialty emergency clinics.
I could figure that one out.
Bigger processes, bigger egos, they refuse to submit. They just say, “Screw you, and we’ll do it our own way.” Okay. Fine. We’ll part as friends, because we can’t make you do this. The thing with process is, it has to be culture, because no culture survives dictatorships, or no culture survives this oligarchic, my way or the highway, especially with younger employees. That’s getting worse and worse and worse. I’m 58-years-old. I was raised by big generation, or by the silent generation and baby boomers who said, “Shut up. Do your job, or I’ll backhand you. Be lucky you get a paycheck.” It’s just stuck with me that way.
If the boss talks, you do what you do. Younger employees are like, if the boss talks, I get to retort. My parents taught me I’m special, and I’m unique. I will show you how unique I am. You have to go through those conversations with employees now, whether you like it or not. Just like 50 years ago, you could slap an employee on the ass. Now, you can’t do that. You can’t slap an employee on the ass and tell them they’re fat, or they’re short, or they’re ugly, or any of the things, atrocious behaviors that happened in the workplace in the 50s and 60s. You just have to change.
That actually happened in the old days?
If watch Mad Men, I mean, look at how they treated those women. Just how they would treat anybody that was other than, or men in general, how they treated female veterinarians throughout the years. It’s just, we had to adapt. The same thing is happening now. People in veterinary medicine have to adapt to process. Or, the answer is they can go to a small, one-doctor, two-doctor mom and pop practice that will eventually be acquired anyway for pennies on the dollar. Because they refuse to do process. I don’t fight with employees about how – if they don’t like this culture. What we say is just go. Just go. We’re never going to fine you. We’ll give you a good reference, because you actually are a great nurse. You’re a great doctor. You just don’t want to do it the way that everybody wants to do it, which is a sure sign that you should not be working in a large group of people. You should start your own thing.
“Well, then it costs money, and I don’t have a risk tolerance.” “Then shut the hell up. Get back on the bus and do it how we ask you to do it.” Because you can’t have it both ways. Processes were literally, things like, everybody in the hospital must know how to check a person in it. It goes like, this, did I do that? I think I took you through that whole thing in my last podcast that you spend, you walk out and you say hello to the client, you shake their hand, you give them your name. You escort them back to the exam room. That takes about three minutes. You sit them down in the exam room, tell them the doctor will be with them.
You have 12 minutes with them as a nurse to get a history, the doctor has six minutes with them, and that’s all. Then you clean up and you take them to the front desk and you ask for them, where a successful financial conversation is had, and they booked the next appointment. That all happens in 30 minutes.
A, if you can’t do that in 30 minutes, you’re not qualified. B, if you can’t tell me what those five steps are, get the hell out of my practice. You can’t be here. You have to at least understand that these are the five steps, and this is what you must do. Every CSR. You can say a different way. You can love them a different way, but you got to get these five steps in. If you want to take nine minutes on the prelim and only three minutes with a doctor, that’s fine, but you can only take 12 minutes.
Drilling in that the result of this is an experience for the client that is insistent, and I keep telling my employees, “But that’s hard for me.” You are not part of the equation. You are, because you’re here, but we’re not measuring how easy this is for you. We’re measuring what it does for the client. By easy, what you mean is, I could do the way that’s easier on me, not a way that’s more efficient. Because if in their resistance, they tell me, and this is the process of Pathway Planning allows for this. Shawn, that process of checking the client out in five steps, I think we can do it in four, and we should eliminate a step. Amen, bring it on. Let’s talk about that, how we can do that. Or Shawn, we’re really missing the mark here at our customer service. People ar3e telling us we’re getting treated a number. We probably need to add a step of love and offer them a cup of coffee, or something. Put something in there, because we’re coming across as too political.
We are open to all of those kinds of suggestions, but it has to be based on something that is quantifiable from the customer’s experience, not from the employee’s experience. Now, if the employee says, “I can’t do this fast enough,” then that’s a whole other issue. Okay, we need to add another person to the process. Now, let’s look at how much that cost to deliver this and you want to charge a $129 for an emergency examination. We could do that, instead of $99. You know, when it goes over $100, people bitch a lot. Do you want to have that conversation? “No, maybe we’ll just eliminate this step and stick to the $99.” It’s that kind of collaboration that allowed us to scale.
Once we got over 200 hospitals, what we learned is we can’t have 200 hospitals doing different marketing. We can’t have 200 hospitals having different pay rates. We can’t have 200 hospitals who have a different Chart of Accounts, or a different jogging supply budget. Scalability comes in the form still of how you implement process and which processes you choose to look at. The bigger you get, the more controls have to come from the top down. They have to be specific, administrative infrastructure controls, where there’s still room for scalability and diversion, or individuality is with the medicine and the customer service and the marketing.
Any front facing thing, they can do how they want to do, but at the end, we have to say, this is what you’re going to buy this from. This is how much you’re going to buy it for. After we get past that certain size. Why? Because it was our administrative cost would have been too much to support the individuality of each one of those clinics.
There is a definite drop off in entrepreneurial energy opportunities, we found after 200 units. That’s just not a medicine, and maybe we could find a way to do it better. We’re still stuffing that all out. One of the ways we did look at cleaning it up a little bit is having processes for practices that do a million dollars a year or less, versus processes that do 1 to 3 million and processes for practices that do 3 to 5, and then 5 million and over. Because oftentimes, the 1-million-dollar practices were like, why do we have to do this step?
In a 5-million-dollar practice, it was really necessary to do that stuff. We have cut out some of the processes for smaller practices, and added to bigger and vice versa. That’s taken off some the thing of corporate is telling me how to do it. Now, we’ve had multiple, like five, six years now, seven years. God, it’s been a while. Seven years of practices that we brought along from the very beginning that get it. They are evangelists now.
Our older practices go out and say, “Look, I’m still less like animal hospital. My clients still know my name. They don’t call me Doctor Pathway. I’m still Doctor Surgeon, I was like Animal Hospital in Austin, Texas. The only difference is my P&L now shows this, instead of that. The only difference is we actually get rid of people now who don’t perform. We work with a lesser staff. I’ll say that about process too, the beautiful thing about process is, you can still serve your clients with lesser people and lesser resources. It just means you have to spread that out over a bigger timeframe, and only see maybe six clients in a day, instead of 10 clients in a day.
The truth is, your costs have gone down too, because your labor costs aren’t as high. It’s confronting the bullshit of, because entrepreneurs tend to just say, when a problem comes up, I’m overwhelmed. Let me revert back to what I can measure, which is medicine and wellness. Instead of looking at it as a process problem. That process does not – If I’m talking about process does not mean that I have an issue with you as a human being. Your inability to due process does not mean you’re a bad person. It doesn’t mean that I hate you as an employee. It just means that we have to learn a new way of delivering the service. Some people don’t want that. Off they go.
Yeah. What’s really interesting that I learned a lot through Lean and through Cambon, and what I’ve seen in management is that when you are managing process, it’s very easy to step away from people, because people are afraid to being judged. When you really manage the process, not people, which is one of the principles of Cambon, then you’re really not saying you are better, I am bad. We have our own process. We have our own definition of done. We have our own definition of ready.
Then, if we didn’t define that together, let’s go back and define it again. Then if someone is going out of line of process here, okay, so should we change the process? Or should you change and comply with what we’ve designed? It takes it away from talking about people and how good or bad they are.
Absolutely. Again, if you ask the question of people, where is this resistance coming from? I’d coach my managers that if we implement, we’re going to charge X for this now. You’re going to get some pushback. When they see somebody cheating and not charging it, or being shy about it, I asked, coach them to pull them aside and say, “Where is this resistance coming from? Why do you not want to do this?” It is rare that they say, “Because I feel we’re ripping the client off.” It’s rare that they say, “Because I think it’s not good medicine.” It’s almost always because they have an emotional discomfort. It just doesn’t feel right. I don’t feel safe doing it. It’s uncomfortable for me.
What I can say at that point is, you hear yourself. What you’re saying is how you feel about this is more important to you than doing it the way we asked you to do it. I don’t know how to manage that.
It’s hard to manage.
What to do with that? The right people, they look at me and just go, “Oh, shit. I haven’t looked at it like that.” Yeah, come on. Can’t we get past this? You’re having a feeling right now that this is scary? Why don’t you just walk through it and see if you can do it, and then let’s talk about feeling afterwards. Guess what? You want to practice three or four times, because we can do that. We can do some role playing. We can do all of – people in veterinary hospitals, probably all over the world is skew role playing. It’s one of the most effective tools for managing process ever.
That is you sit down in the back of the hospital, and somebody plays the client, and somebody plays the nurse, and somebody plays the doctor, and you walk through the processes. Just like acting on a stage, or singing in front of people, the more times you do it, you get comfortable with the script. You are in command over your material.
Nothing. I never get thrown talking in front of an audience, because I know my materials so well that you can’t throw me a curveball. I might get distracted, and then go, “Oh, wait. We have to come back here.” When you don’t know your material, and you don’t know your process, you’re easily distracted. When you are distracted and don’t have a process, or competency, or something real to fall back on, you fall back on your feelings.
Shawn, I hate to interrupt you. I think, that we exhausted our promise to our listeners.
How long we go?
We usually go 20 minutes. That’s our promise. We’re at 45, which I really appreciate. This is wisdom that I can listen to.
Can I come back again?
I would love that. If we can have you again, I think it will make that trio connecting culture process and maybe a little bit in finance and how this all work together. That would be amazing. If we can do that, that would be fantastic. I really appreciate you coming in again, and then hope to have you here soon.
Thanks. I was so long-winded.