The Business of Orthobiologics Podcast
Hi! My name is Ariana DeMers and I am an orthopedic surgeon and regenerative medicine expert. I have successfully integrated Orthobiologics into my busy practice and I wanted to share my experience. Integrating orthobiologics in your busy orthopedic or sports medicine practice is the most effective way to get more time in your life while improving your patients care. If you are looking to add PRP to your practice and you don’t know how to start, this show examines how to take these important steps in your practice. If you want to also make more money in less time, have happier patients and enjoy your life, then join me in The Business of Orthobiologics podcast.
The Business of Orthobiologics Podcast
Orthobiologics: How to Choose the Right Space for Your Medical Practice | Conversations in Regen Ep.18
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Are you choosing the right medical office space to scale your orthobiologics practice? Click here to discover how to select the best space for growth and success. Visit my Website : https://pxllnk.co/AD/BOBsite
In this episode, Dr. Ariana DeMers, the Queen of Business Orthobiologic, is joined by Dr. Alberto Panero, a seasoned expert in regenerative medicine, to discuss one of the most overlooked aspects of building a successful orthobiologic practice: choosing the right location. They dive into real estate for doctors, from medical office space planning to evaluating whether subleasing or owning a space is the best move for your practice. Dr. Panero shares his expert insights on how to select the right space that supports growth while avoiding common pitfalls that can trap you operationally and financially.
Whether you're just starting out or looking to expand, this video provides actionable advice on medical office building selection, scaling your practice, and planning for long-term success. Learn how to optimize your space, reduce costs, and set your practice up for sustainable growth in the rapidly evolving field of regenerative medicine.
Building a successful cash-based orthobiologic practice is not a single decision. It is a series of the right decisions made in the right order. The Business of Orthobiologics offers three distinct programs designed to meet physicians at different stages of readiness — whether you are just beginning to explore PRP, ready to build a full practice system, or committed to going all-in on a comprehensive transformation.
Learn More here: https://thebusinessoforthobiologics.com/programs-explanation
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This is something that's very important from lessons learned is contracts are nice and you want to have them and you want to have a good attorney review them. But the contracts are only as good as how can you enforce them. So unfortunately, I don't want to say we're a dying breed, but we're a little bit of a dying breed, right? And if we don't take care of ourselves and make sure that we're paying attention to the numbers, it's it's just not gonna work.
SPEAKER_01And we're gonna start and learn some actionable tips and tricks from my guest. I am so excited to welcome Dr. Alberto Pinero. He's one of my friends, but also a big player in our regenerative medicine field. He's board certified in physical medicine and rehabilitation, subspecifically certified in supports medicine, founder of BIOS Orthopedic Institute in Sacramento. He has another, I think a second location in Grandma Bay. You're faculty at UC Davis, PM and R Supports Medicine Fellowship. You're published and nationally recognized. You are the team physician of the Sacramento Rivercats and Sacramento Republic FC. Like, dude, what are you not doing? But welcome, welcome, welcome. So good to have you here. I'm so glad that you're here.
SPEAKER_00Thank you so much. And I'm pumped that we're actually not talking about any of that today and really going to be focusing on the real estate side. So I'm super excited. Thank you for having me.
SPEAKER_01Yeah, absolutely. For those of you who don't know me, I'm Dr. Ariana Demers. I am a board certified fellowship trained, sports medicine orthopedic surgeon and regenerative medicine aficionado. I love to train and educate both in orthobiologics as well as ultrasound. I have successfully moved my practice away from insurance and I am cash-based. We were talking a little bit about, you know, how to maximize uh the squeeze out of the insurance companies, whether it's Medicare or other companies. And what I'm most passionate about is helping doctors to import or orthobiologics in their practices seamlessly. So we are gonna get started because this is my favorite thing. I want to thank everybody for joining. We're gonna hear from a renowned expert in the field, and he's actually really thankful that he's not talking about orthobiologics, but maybe some more controversial topics, such as real estate and the nitpicky stuff about what you may think is simple, but maybe it's not so simple. And there's a lot of times where doctors get bogged down in these pieces of the puzzle. And he is here, he's been doing this a long time, and he's gonna hopefully share some actionable insights that you can implement in your practice immediately. And then we'll have a live Q ⁇ A at the end to get your burning questions answered. Please understand this is just an informal conversation, a fireside chat, and I might dig into this a little bit more just to get the real story on what's actually happening and what we say and what we actually do sometimes aren't exactly the same things. So we're gonna get the real scoop. So I believe that orthobiologics, which will be first-line treatment for musculoskeletal care in the next five years. The train is leaving the station, and if you're not actively offering these treatments for your patients, you gotta get on the train. So the problem is, is successful integration ortho biologics is something hard. It's not something you learned. It's what we know to be true is it is the best treatment for patients, but how to actually find massive success? Maybe you've tried some things, maybe you've said to yourself, ah, but I don't know the science, I don't know the techniques, maybe I don't know about cash business, marketing sales, real estate. And you know, maybe you thought I'm just not really good at this business thing. But here's the deal we didn't learn it in school, it's not your fault. We just weren't taught this. And so maybe some of us are struggling with how to be successful and capitalize on this four billion dollar for the biological market out there. Maybe you're thinking, I deserve more. Why is this so darn hard? So if you're struggling with something, please put it in the chat and we can really kind of delve into this at length in our QA session. So how do we win at this? Now, today we're actually gonna be not talking about science, but we are gonna be talking about something really important, which is where the heck do you practice, right? And we also have to learn how to talk about our patient and talk talk with us about our patients that we need our ortho biologic knowledge, we need a system. And clearly we're not gonna go over all this today, but we need to uh attract the right patients, create a cash-based business, have a place to actually practice, which is what we are gonna go over today. So we're gonna start with the considerations of where the heck we go practice this cash-based business of orthobiologics. So Alberto, we do have some questions, my friend. So when we are talking about location, right? How do we evaluate a location and a space so they don't outgrow it or get trapped operationally? You know, sometimes people say, okay, start slow, start low. Sometimes people like want to build out this whole amazing thing. Like, talk to me about things to consider that may either hem you in or hamstring you from a cash flow perspective early.
SPEAKER_00Got it. So, you know, for me, I'm a big fan, if you're just starting out, to sublease. Okay, I think that that's a really good start. You know, my three kind of key places I'm gonna look is gonna be a high-end physical therapy clinic, right? A potentially like a concierge, primary care doctor, or an orthopedic surgeon, you know, who is already involved and is very much into biologics, but maybe just doesn't have the bandwidth to do it him or herself, and can you know share some space. And I think that really gives you an opportunity to get your feet wet, not overspend, and kind of prove your concept, you know, is this gonna work or not before you really dive deep. What's nice about most subleases you can do month to month, so it's an easy out. Obviously, they can also kick you out really easy, but you know, you want to make sure that that relationship is nourished. But I think subleasing in the right place is you know a key first step. You mentioned about location. Obviously, you want to try to find affluent areas in your community. You want to do a little bit of research about okay, where are my competitors at? And there's nothing wrong with competition. And if you see a competitor to go into the same area, but make sure that it's the right area, right? Somewhere that it could thrive. Obviously, you know, with these being cash-based procedures, you don't want to go into potentially a high Medical zone, right? You want to go into an area where, like you said, you can attract the right patients and for better or for worse, that are gonna be able to afford some of these treatments. But that would be step one if you're early in a great.
SPEAKER_01I do have a question about that. You know, I get this question all the time like, okay, that's all good and fine. How do I know what's fair? Like, where do I even start? Okay, Alberto said sublease, check. Yeah, how much should I pay? How do you how do you determine that?
SPEAKER_00Yeah, so it's really based on you know fair market value. So what you want to do is look at similar areas or similar buildings and figure out, okay, what is the price per square foot, right? Let's say it's $2.75 per square foot. Okay, so now I'm gonna sublease in a, you know, for instance, 3,000 square foot building, I'm only gonna sublease a thousand square feet. So now you just do the math, you know, a thousand times two dollars and seventy-five cents, and that would be fair market value. And that's a good way to assess if you're getting a good deal or not. And obviously, there are different classes of buildings, right? There's class A, class B, obviously, class A being much nicer. You want to try to stick to a class A or class B and make sure that that rent number fits within that type of class of the building.
SPEAKER_01Yeah, and I mean, I've done this work and I'm like, how do I even know what this means? Like, how do you figure this out? Where are the numbers listed? Wait, I sure I see it, you know, you're like, oh, my buddy down the street says he's gonna lease it out for you know four hundred dollars a month or four thousand dollars, like right. You know, it's a nice office. Let's say we would classify this as a class A space, right? Yeah, it's fully furnished, it's you know, you turnkey, you come and go, it's it's in a nice part of town, it's you know, doesn't need any upkeep. Uh are there location like where do you find the dollar amount that's reasonable?
SPEAKER_00So loopnet is a good one. Loopnet is like the Zillow for you know commercial real estate. I think that's a really good way to just kind of get your feet wet and kind of figure out what's going on. You can also try to get a broker, right, that maybe is gonna show you some other properties and in those listings you can get those numbers from there. But I think loopnet is probably the best tool I've used to try to figure out what's available and what those numbers are probably gonna be.
SPEAKER_01Loop L-O-O-P net?
SPEAKER_00Yeah, L-O-O-P net. Yeah, loop net. It's like the Zillow for commercial real estate. It's great.
SPEAKER_01All right, well, I guess we'll we can be done now. We're good. Okay, let's see. Like, okay, so let's say we don't want to sublet, we want our own space. We're we've been maybe doing it for a while, and we're like, okay, we're gonna either break off from our current group or we're gonna have a carve out and we want like uh our own space. What what's the next step?
SPEAKER_00Well, I think you know, for for my liking, I wanna see a space that's gonna have at least two rooms per provider, okay, because that gives you some flexibility where you can kind of go from room to room and you have to kind of figure out for yourself, okay, is this really just gonna be me and it's gonna stay only me? You can really condense the space, right? You can be very lean and mean. But if your goal is to develop a brand or develop a clinic and bring on more providers, then you probably want to have a plan as to where are you gonna fit those providers, right? The other thing you want to do is, you know, make sure that depending on the term, right? So if you're gonna be in somewhere for one to two, three years, then you can bet low, right? And basically get a smaller space that you're gonna potentially grow out of, right? Versus if you're gonna sign more like a five or ten year lease, that's when you wanna bet that okay, I am gonna grow in this thing and I better not cap myself out. So that's where you want to kind of get some bigger space. I do think you wanna be smart about your space, right? Out of the square footage, how much of it is it, you know, profitable square foot, right? So you want to make sure that you maximize that. I see a lot of clinics try to, you know, they they overdo it with administrative space where you know everybody has their own office and there's this huge back office space and only three or four patient rooms, right? And then that's cool if it's just you or maybe one more person, but it's really gonna cap your growth, right? So you have to be smart about how you're gonna transition that. Also, I think there's something said about the size of the rooms, right? So when I first started, I was in, you know, I shared space with eight orthopedic surgeons. And you know, most of their work is gonna be in the OR, right? So in clinic, they're just doing basic consults, maybe some cortisone injections. So they can do fine in an eight by eight room. I've even seen like six by eight rooms, right? But in a cash-based practice that you're gonna be doing a lot of interventional work in the office, you probably wanna make sure that that's more like 10 by 10 at the very least, 10 by 12. You know, if you're gonna have like a cart ultrasound, you may need even more space to get around, right? So you wanna make sure that you design it so that you can flow around the space and you don't feel cramped, right? I also think it's important, you know, for obvious ortho biologics is to try to have some dedicated space to process, right? Where you're not doing it, you know, you don't have your centrifuge on top of your microwave and you're doing it through lunch, right? You want to try to have some dedicated space that's gonna be clean. And also as you progress, for instance, if you're gonna get a cell counter or a hood, you can start to add these variables to that space. And not only is that, I think, very professional looking, but you know, it really starts to drive up your standard of care.
SPEAKER_01Awesome, awesome. So, what would you say? I mean, I know we're just on the first question, but man, it's what a wealth of knowledge. So, what do you think is the least like a lean amount of square feet for a single practitioner to start out with, you know, an orthopiologic practice that was gonna serve them, you know, maybe a two people, two to three people who work for them, a single practitioner. What's the what do you think? I mean, I have my ideas as well, but what do you think is the the minimum square foot?
SPEAKER_00I mean, with the right layout, you could get away with like 800 to 1200 square feet, right? Obviously, it's gonna be tight, but if it's just, you know, you and another person, you can definitely fit a small lobby there, two patient rooms, probably at that point, you know, it's a shared bathroom in a common area. You know, you may not have much of a break room space, if you will, but you could do a lot of damage, you know, in 800 to 1200 square feet. I think if you want to be a little more comfortable, maybe you go 1200 to 1500, but I certainly wouldn't go above 15 or 1800 square feet if you're only gonna be practicing by yourself. I think now it's it's a little bit too much. At least those are those are the square footages that I've worked with and I feel pretty comfortable in those. How about you?
SPEAKER_01Yeah, I actually my current office is you know, working space is only about 800 square feet, and then we have some administrative space, so it's still pretty lean. And is it perfect? No. Did I move into a building that needed very little work? Yes. Did I make some mistakes along the way? Absolutely. Did I, you know, buy a building and build and do a uh redo? Absolutely. Should you? No. Yeah, it just hams you in and you know makes you the that stress level like crap, I've got to succeed a little bit higher, right?
SPEAKER_00Well, I also think there's, you know, I would much rather have an 800 square foot space in a really nice part of town in a great building than a 2,000 square foot place in a not so nice part of town in the second floor with a parking lot, you know. So those are some other things you want to think about, right? Is I think ease of access, people really appreciate that. You know, how easy is the parking situation? You know, at that orthopedic clinic, we were on the third floor, and I swear the hallway from the elevator was probably, I'm not kidding, like a hundred yards. So they called it like the orthopedic hallway of death, right? So again, these are things that, you know, as you're thinking about it, or if you have a couple of options, don't forget to look at, okay, ease of access, parking, you know, if you have an elevator, you'll be fine, but it's still gonna be more or easier for your patients who are orthopedic patients to go on the first floor, right?
SPEAKER_01Yeah, absolutely. So, what are the biggest build-out and tenant improvement mistakes that you see physicians make before signing the lease? Like, how do you either prevent delays or really run up your costs before you even opened your door?
SPEAKER_00Yeah, so the the biggest one is signing the lease before you know your true construction costs. So let me walk how that would work. So you see the space, you love it. Now you spend all this time working the terms, right? How long am I gonna be there? What's the price per square foot? Blah, blah, blah. You're working through all these terms and you have an idea or a concept of what you think it's gonna look like, right? And when you talk to the broker or even, you know, someone else, okay, it's gonna cost you $50 a square foot to kind of get your idea out. So, okay, no problem. Sign on the dotted line. Okay, we're good to go. Now you bring in the architect, you get your construction drawings, you get your construction bids. Guess what? It's $150 a square foot, right? And you can't go back now because you've already signed the documents, right? So now that's gonna create not only a lot of stress, but obviously you're gonna try to, you know, we'll talk about some strategies on how to reduce costs. But the key thing is that it's important to invest in construction drawings early. So when I'm looking at a space, the thought of spending three to five thousand dollars on construction drawings is like, why would I spend that kind of money, right? But I'm telling you that if you're really interested in the space, I would get them done. I would have one or two constructors or GCs walk the space, look at the CDs, and then give you the bid ahead of time. So you at least know exactly what that's gonna cost, and then always you have to add probably at least 20% on whatever the construction bid is, right? Because there's gonna be changes. So I think that's the biggest mistake, and you know, it's actually happened to me where you you get so wrapped up in the deal that you sign it because you think, okay, yeah, how could it be more than $50 a square foot? And then you can really get burned on the back side.
SPEAKER_01Yeah, that's that's perfect. So good.
SPEAKER_00Another thing I would say is in that point, when you're looking through LoopNet, find the previous dental office, find a previous medical office, right? It's if if the layout is already done, especially plumbing, that's gonna be probably one of your most expensive things, plumbing and electrical. So you want if you can get an old dental building that already has the plumbing, they already have all the rooms set up, and all you have to do is, you know, flooring, you know, aesthetic stuff, you're gonna be in a much better space as opposed to an old attorney's office that you know you gotta really tear down the whole thing.
SPEAKER_01Yeah, I hear you. We when we bought our building, it was an architect's office, it's gorgeous, but it was not plumbed for medical, right? So we have to add a bunch of sinks. So that does that does make a massive difference. Well, clearly we still have more questions, so and you obviously have more answers for us. So when you're, you know, I know as a physician, you start reading these legal things and you're like, oh man, you know, your eyes kind of glaze over, and you're like, not another contract, like great. So, which clauses do you think are the most important for protecting your practice over five to ten years? And what do you think is like the red flags? And I can share some of my information as well, that maybe physicians aren't aware of or don't, or or maybe they miss?
SPEAKER_00Well, I would say, you know, obviously let's let's put aside the term, the price per square foot, and those things. I think a really key one, especially if you're gonna grow, is right of first refusal to your adjacent space. Okay. I think that's a key one that allows you to, if that space becomes open, hey, I can knock down a wall and expand to it, and I have that right before anyone else does. Okay, obviously the timing has to work because they might go, hey, this space is open. Do you want it? And you have to kind of decide on the fly or not. But at least you have that right. The other one I would say is an exclusivity, where if you are orthopedics, you know, it's okay if a general surgeon is across, right? But do you want another orthopedic group right in front of you right next to you? Right. So you want to try to have some exclusivity there. The other is probably some caps at your renewal or when your term is due, right? Where you cannot increase my rent by X amount, or in general terms, it's still gonna be fair market value, right? Because the last thing you want to do is invest, you know, $200,000, make the space really nice, and in five years, you know, they're gonna jack up your rent or jack up your prices. So you wanna have some protections there. I will make a comment, and I think this is something that's very important from lessons learned is contracts are nice, right? And you want to have them and you want to have a good attorney review them. But the contracts are only as good as how can you enforce them. So you need to understand who your landlord is and what type of leverage you have, right? So let me give you an example. If your landlord is worth $500 million, okay, and he owns huge amounts of real estate all over town and in different parts. You enter an agreement with him and he says, Hey, where are we? February, May 1st, 2026. I will have this thing built out for you. Turnkey, give me the construction drawing so I get to it, okay? You know, it's April 15th, two weeks. You're supposed to open, nothing's been done. You're like, what the hell is going on? Right? So you call him, you call him, he finally answers and goes, you know what? It was too expensive, you know, to do your build out. I'm not building it out for you. But we're supposed to start in two weeks. Yeah, I hear you, man. My bad, but this is too expensive. We're not doing it. But we have an agreement. I have a contract that says you're gonna do this. And then he goes, gonna go, yeah, guess what? Sue me, right? Sue me, what does that mean? Well, it's probably gonna take two years to even get into the court, right? You're gonna spend a bunch of money on attorney fees, and then you're gonna have to try and figure out something else to put your practice in the meantime, right? So again, he has all the leverage, and even though you have a signed piece of paper, there's not really much that you can do to enforce that, and you're stuck in a very hard place. So just know that going in. The opposite is true if you miss up on your part of the deal, right? So if you do something that's not in the terms, he has a lot more leverage to come after you and has the means to do it, okay? Different would be a small shopping center that's owned by, you know, a family that's been inherited. You know, maybe it's not the nicest place in the world, but it's the only shopping center that they have, and that landlord has a different type of leverage, right? So that you may be able to negotiate more and you may be able to do different things. So I think really understanding who your landlord is, and again, it doesn't mean you don't have to sign the agreement or try to get the best terms possible, but understand that it's only as enforceable as you can enforce it.
SPEAKER_01Yeah, absolutely. Now, turns out I'm a landlord.
SPEAKER_00Um you got the leverage.
SPEAKER_01So well, in part, right? But I will tell you who my renter is is the hospital, right? And so right now, like as we speak, we're still in negotiation. They're in holdover, which means they haven't signed a new lease. And what am I gonna do? Kick them out and then it's it's it's empty, or do I want to keep them you know, doing and renting? So it really does matter. The things that I will turn your attention to is one, what happens if you don't renegotiate or you don't sign your lease? What happens to you? Technically or commonly, it tells you that then you go month to month at 125% of rent. So for the hospital, they don't care that they're at 125% of rent because they're not paying it now. They're like, yeah, yeah, yeah. When we renegotiate, we'll just roll it all in. Right. They don't care that they have more leverage than I do as a landlord, right? Now they are in holdover. What do I have? I can evict them.
SPEAKER_00Right, right.
SPEAKER_01And and so that does that does work and it does get people's attention, but you've got to be willing to call the bluff either way, right?
SPEAKER_00Absolutely.
SPEAKER_01So that's been my experience as a landlord, as you know, and clearly as a renter as well. I think that the next question that we have has to do with your like vendor contracts, marketing contracts. Like once you get it all built out, you've picked the space, like okay, now what? Do you lease? Do you buy? Like, what are the what are the benefits of having assets where you buy them, leasing them? Like, what what are what talk to me a little bit about your feelings on you know outfitting your space?
SPEAKER_00Yeah, I think that that's really a decision on where you're at in your career, right? If your business is doing well and you're you love the city you live in, you have family there, you have roots, and you're not gonna leave. If you have the opportunity to buy, I would buy for several reasons. One, you're now paying rent to yourself, right? I would certainly recommend getting an LLC that's going to purchase that asset, and then the medical practice pays rent to that LLC. There are gonna be, you know, some tax deduction benefits that you can have by owning that asset, some depreciation assets that you can do with it. So it has all of that, right? And if you just add it all up, you know, medical clinics for the most part are pretty safe, right? It's not like you're opening up a restaurant. So the chances of you being there in five years is probably pretty high. The chances of you being there in 10 years, again, if you love the space and you, you know, you've you've been there, it's probably pretty high. So what I would recommend is if you're gonna get the if you're gonna purchase the asset and you get like a 20, 25 year mortgage, actually, if you can try to pay that mortgage down quicker so that in 10 years you have that full asset because this whole time you've been paying rent to yourself, and therefore now you really just own it outright. So instead of spending, you know, a million dollars in rent over 10 years, you've just paid yourself essentially a million dollars, right? Which is nice.
SPEAKER_01That's phenomenal. Yes. Um absolutely. So, what if you're not in a position to buy the building, but you know, you still need an ultrasound, you may need a C arm, like what like that's the there's some big capital outlay. What are some strategies to maybe offset it? Is there some tax advantages to leasing versus purchasing?
SPEAKER_00Yeah, so I think that the best thing to do is to kind of pick and choose your battles, right? So you don't have to buy the best and newest thing all the time. You can find some really good deals, especially on CARMs with lightly used equipment where you can get a significant reduction, like you know, 50%, where you go from a $120,000 C arm to a $60,000 C arm, right? Maybe even less. Ultrasound, you know, it's obviously a little bit different, but you know, I would have you don't have to have a really nice ultrasound in every room, right? You can have one medium-tiered one and then maybe like a smaller handheld one that you can use for small stuff in the other room, and that way you still don't have to bring everything back and forth. Same thing with your furnishings, right? So, you know, obviously when you want to, when you think about the space, you want to deck it out, right? This is your your baby, right? It's your dream, right? Your heart and soul is going into this. So, yeah, of course you want the marble countertops, right? But it's probably not a good idea, and for Micah is gonna do just fine, right? Same thing with the furniture, right? You can get some really nice pieces on Amazon that are gonna be reproducible. You don't need to, you know, go to RH and deck the whole thing out, right? So, again, the space itself, you want it to look sharp, you want it to look super clean, but you wanna be really mindful that you don't over-design or overspend on these things. When it comes to medical equipment, you can't depending on your state and federal tax laws are a little different, but in general terms, you can depreciate that asset. So it does give you a significant tax benefit. So I would typically say if you're planning on buying medical equipment, you don't have to wait, but maybe wait till you know Q3 where you start to see where your numbers are gonna be. Do I need a tax deduction this year? Hey, I did great this year. You know, we made a lot of money, I'm gonna have to pay quite a bit of taxes on that. We could try to bring that tax down by purchasing a new equipment and depreciating it. So it still doesn't mean you need to buy the highest end one, but either, you know, find a good middle ground that's gonna let you do your job and be effective.
SPEAKER_01Yeah, awesome. And and just for clarity, do you have a separate company that holds all of your medical equipment assets, correct?
SPEAKER_00Yeah, you can do that, right? It's there's different ways to structure everything, right? That's that's one way to hold the assets, you know, the same thing as when you're getting an LLC to hold the real estate assets. And not to go into orthobiologics, but then you can get into the well, is my is my cash practice a different company than my insurance, right? Right. So I at the end of the day, you want to have a plan and a strategy where you have a bit of an umbrella and you know, you can take some of the risk away from the different clinics or the different things with that.
SPEAKER_01Yeah, absolutely, absolutely. And and so then if that's what you're looking at, you know, is it is it better to have a lease contract where especially and I'll I'll give you an example, right? So I had uh a pretty reasonably high-end price to equipment and I leased it, right? Because I had zero cash flow. I'm like, well, I I can't buy it outright, clearly, right when I was first starting out. But the the problem is is that by the time that my lease was done, the equipment was old. And it's now currently like end of life. They won't even like service the dumb thing. And I didn't buy it that long ago, but you know, still I I think that there's something to be said, lease versus buy, and and what makes sense for that.
SPEAKER_00Yeah, I think you could do the math on it, right? And see what's the you know, how much different is my monthly payment going to be, right? And what type of equipment, right? I mean, CARMs, uh, I mean, those things are beasts, they're dinosaurs, right? They can live forever. Ultrasound, maybe not so much, right? So I think you gotta pick and choose a little bit. And there's also some really good lease-to-own options, right? That you can get into as well. But I think the key, the key driver is okay, if my monthly payment on this is a thousand, you know, a thousand dollars a month, how much am I expecting that equipment to bring me per month and what's gonna be my net profit? And is that enough to warrant the risk of you know buying the asset?
SPEAKER_01Yeah, that that's a good kind of rule of thumb. I like that a lot. So when we talk about financial policies, right? And and we're really talking about now revenue inside our practice, right? And we're we're talking about for a cash-based practice, these are questions I always get about, okay, we you know, we're we're now going along this journey. We've bought the building, or we've leased the building, or we've subleased the building, we've bought the equipment, or maybe we haven't, we've gotten the chairs, but we didn't pay that much, or maybe we did. Maybe we went to IKEA and got the the the cabinets that's that plan. And and then so now we've opened, right? And now we're like, oh man, I'm in the hole a little bit. I really need to have some good revenue. So what are maybe if you can share really good revenue savvy strategies for patients who are paying cash to prevent chargebacks or refunds or no show, like revenue loss from like, oh, I'm sick. You're like, crud. That was a you know, a $5,000, you know, treatment that was supposed to be done this month. And I was kind of we had already penciled that in as expected revenue. What what are your thoughts and strategies on that cash flow piece of your practice where you're you know it is a cash-based practice and it is variable? How do you kind of mitigate that risk?
SPEAKER_00Well, you know, I think like Marcus Lomonas said, right? You if you don't know your numbers, you don't know your business. And I think that's a piece that, like you said earlier, we don't learn in school, right? And no, you get so wrapped up in in, you know, obviously the most important part is still patient care, right? And you being the best doctor and the best advocate for your patient. So you get so wrapped up in making sure that that's number one as it should, that sometimes you get tired or or you you get a little lazy with the numbers, right? And unfortunately, in these small practice scenarios, you can't do that, right? And you really have to stay on top of your numbers. In terms of the strategies that you can do, certainly making sure that the patient understands that these are cash services, that this is not a business that's contracted with insurance, that we're not gonna be billing the insurance, etc. Chargebacks or refunds, it's really more at your discretion. It shouldn't be based on outcomes, right? Where, hey, my knee still hurts, you know, I want my money back, right? In terms of the no-shows, that's a little bit tricky, right? Because again, we're still trying to be customer service friendly and not, you know, just anyone who doesn't, right? So you gotta have a little bit of discretion. But I think if you're gonna book out two hours of your day because that's you know, I don't know, a big $5,000 procedure, you may want to take a deposit on that, right? Where ahead of time, hey, in order to book this appointment, you know, you have to leave whatever the number is $1,500, $2,500. It is refundable if you cancel within 72 hours, whatever policy you want to make. But if you cancel the day of and you're and you know, and you don't come back, you know, you don't have a great excuse and you're not coming back to do it soon, you know, that we're gonna keep the rest of that, right? And I don't think that that's unfair, right? But again, it is your customer, and you know, we have to be customer service friendly. So you you're gonna take everything, but you want to have a policy, but have a little discretion, you know, patient to patient.
SPEAKER_01Uh in terms of you know, numbers, I think obviously I was just gonna ask you, what are your top five numbers that you think everybody should know?
SPEAKER_00Well, obviously the big one is your PL, right? And your balance sheet.
SPEAKER_01Oh, by the way, everybody, if you don't know what a PL is, when I started business, I didn't know what a PL was. It's called a PL sheet is a profit and loss sheet. Just an FYI. I didn't know that until much later on. I was like, oh, what is this PL thing? So PL profit and loss. How much can you? Profit correct.
SPEAKER_00How much you and the note that I will that I will make on the PL, it's a great, it's probably your number one, but just remember that liabilities don't go on there, right? They typically the interest that you are charged on a liability or a loan go on there as deductible, but your loans are actually gonna be, you know, on your balance sheet. So just remember that in your head you need to add back your liability, you know, that that really nice floral you got and the TI build out and all of those payments you're still making, make sure that you add them up. So don't make, don't forget that those are still there. Balance sheet, uh, you know, not something I'm gonna check all the time, but I think it's you wanna keep track of it. I think a really good one is the profit per patient scene, right? Where, you know, in a week, you know, I made $50,000, I saw, you know, 20 patients, and then you know per visit on average what you make. And that's a nice number to help you figure out, okay, where do I need to, how many patients do I need to see per day? Do I need to increase that? Am I doing okay? And and getting there. From your PL, you also obviously your net profit line is the big one, right? A lot of people are like, Well, I made three million dollars this year. Well, you spent, you know, 3.5 million, right? You want to make sure that you try to get that net profit at the very least 10%, and that's not very good. You want to shoot for 20. And honestly, if you're doing really well, I think 30% is really where where you really want to shoot for. And it also depends on how light you are and how much you're paying yourself, right? There's a lot of ways to move those numbers, but in general terms, if you are a W-2 employee of yourself, which that means that your your practice pays you a salary for the work, you still want to keep 30% on the back-end net profit aside from the salary. You got paid as a business owner. That does that make sense or does that go with your the numbers you look at?
SPEAKER_01Yeah, absolutely. I think you know, there's another number that I look at that I'm always kind of cognizant of is average revenue per transaction, right? Which is similar to profit per patient, but I think it just kind of I'm always looking for, okay, if I have 50 transactions and my average revenue per transaction is one dollar, well, that's not very good. If my if I have 50 transactions and I have $500 per transaction, well, that's a whole different ballgame, right? And so I'm always monitoring my revenue per transaction, my average revenue per transaction, and I'm trying to month over and month really make sure that we're doing the things that are profitable and we're mitigating some of those lower revenue per transaction dollar amounts. They're nice, but they do bring down that average. Like by the by the way, my my Medicare patients bring down my my average revenue per transaction horribly, right? And so we try to mitigate that with our cash-based practice. So that's another number that I'm I'm usually kind of in my mind monitoring week over week, month over month.
SPEAKER_00In that, you know, in that same thought, do you base your schedule or save spots throughout the week where if I have a you know a big cash pay procedure, we can slot them in right away, or everybody's just next available, you know, how do you kind of make that work a little bit?
SPEAKER_01We have two schedules. So we have slots for our insurance patients that are predetermined, and we have slots for our orthobiologic patients. And so if you're getting a high dollar big revenue procedure, of course we're gonna preemptively find a place for uh right because it doesn't that doesn't make sense that we would take that time, which is let's just say it's two hours, you can put eight Medicare patients in there, or you know, you can put your 5k or you know, a higher in there. And it's just it's a 15 to 1 revenue ratio, Medicare versus you know, cash-based practice. So I'm really I I I keep slots available for those on and then they we start to move the lower revenue generation appointments. We give them a an opportunity to move up if they like. Now we also kind of look at that schedule, and so my my schedule is my girls are always like, okay, let's see, let's see, let's see. And then if there's uh still a slot available in you know 48 hours, we'll start to bring some of my pre-qualified patients that are probably going to be converting to orthobiologics, and we'll offer them a sooner appointment and to fill those slots up.
SPEAKER_00Got it. No, that's that's great, that's great advice. And the way it should be, right? In in these types of scenarios, you have to you have to be that. Yeah.
SPEAKER_01Yeah, I I heard today, I heard uh there was a conversation today that we do have a moral and ethical responsibility to keep an eye on having a profitable practice. Because if we don't have a profitable practice, we don't keep our doors open and we can't serve our community.
SPEAKER_00Well, and look at what happened with Yale, right? They had to close their biologic program because it wasn't profitable. And and the truth is, you know, for better or for worse, private practice has gotten more challenging because operational costs have, you know, significantly increased, right? All the vendors want to charge you like you're a hospital and not a private clinic, right? So unfortunately, you know, I don't want to say we're a dying breed, but we're a little bit of a dying breed, right? And if we don't take care of ourselves and make sure that we're paying attention to the numbers, it's it's just not gonna work, right? But how often do you look at your numbers? I've got now I'm like, you know, daily to weekly, you know, like I started like we just check every quarter, and now it's like, well, I'm yeah, we've got a really good thing.
SPEAKER_01I do it every week. I do it every week. We I have a finance meeting with my controller every week, and we go through and we look at our ART, we look at our weekly projected revenue and where that falls from our monthly projected revenue. Yeah, absolutely. It otherwise you can't really plan for the future. If you're surprised every month and you're like, whoa, what happened? It's much easier to, you know, flex your staff. If you know you're gonna be short and the schedule's not full or you're gonna be on vacation. You know, that's one of the ways that I'm able to control my expenses. Is my staff, one of the reasons they love to work for me is because they have that ability to flex off, right? Number one, I don't have to pay for them, but they don't have to use their their accrued vacation either. They just get extra time off. How lucky, right? No, they didn't get paid, but at the same time, they don't have to be limited to two weeks of vacation or three weeks of vacation, right? So that's that's another piece of the puzzle that you just have to, it's it it is, you do have to pay a little bit more attention. And at the same time, you know, I think it's really satisfying to be able to know which levers to pull and be like, oh, it's just money. We can always make more. Turn that one on, right?
SPEAKER_00Like turn this one down, yeah.
SPEAKER_01Cost down, revenue up. Yes, yes, absolutely. Well, you know, so a lot of people get nervous going into private practice, going into business for themselves, because like we I don't have an MBA, and clearly I don't have an MBA either. I don't know if you have an MBA. So here we are talking about all sorts of PLs and ARTs and you know the all all of the things. What do you think as you scale? What do you think are the biggest legal or compliance pitfalls for operations and marketing as you're trying to grow this practice and as you're trying to scale? What what do you think are the biggest things that you would say, oh, by the way, don't do this because I did it and it was stupid?
SPEAKER_00Yeah. Well, I I think you got to look at the different, you know, lines, right? You have HR, right? That's got its own compliance line, right? And obviously there's a difference, I believe, depending on how many employees you have. Like if you have under five or more than five or more than 25, but you want to make sure that HR-wise, you know, you know, everyone's done the HIPAA training, the you know, sexual harassment training, like all those things are in check, right? Making sure you have all the liability insurances, right? Whether it's general liability, property insurance, you know, nowadays you also have to even look at like cyber attacks, right? And having some insurance that way to kind of protect yourself, right? I think the biggest way to get in trouble is to overmarket, right? Say, you know, make false claims or over, you know, set the expectations so high, right, that you're just, you know, you can be all you can really get yourself in trouble by saying the wrong things, right? And obviously you have the FTC, right, which is gonna be the one that's gonna look at those things. And then you can also get in trouble with the FDA, not from the marketing side, but from what are you actually doing, right? So going to the meetings, speaking to, you know, folks like yourself, right? Listening to Scott Bruder, right? He's got some really good points, right? So there's enough information out there where you can get some really good guidance on how to stay in the proper lane, right? Because it's it can be easy to deviate if you're not sure and you get the fast-talking rep, right, that comes in and it's like, oh yeah, you can just do this on everybody. And it's like, wait, right? So you you want to make sure you know legally what you can do.
SPEAKER_01Now, I I was just talking to one of my friends who just opened their practice, and you know, they've got the and they're coming from an insurance-based practice and they're going into a cash-based practice, and they all of a sudden have you know their office manager and they have three back office and you know, a scheduler and uh front desk and a PA and three MAs. Now, for me, I was like, whoa, that's a lot of staff. They're like, well, that's exactly how much staff I had at my other office. What what is do you actually need all those staff when you're using when you're you're in a cash-based practice? Or you know, how do you decrease that risk of overstaffing? Because that's like probably my biggest, I'm sure it's your biggest uh cost every month, is that that payroll, right?
SPEAKER_00Oh yeah, and it can easily get out of hand, right? Well, I I think again, it's what are you trying to accomplish with the staff, right? If you have an insurance model, you're gonna need more people because you need more people to do authorization, send out referrals, do things of that nature. With a purely cash pay, you can kind of reduce some of that. I typically like to stick to, you know, I would say if you're just one provider, you could probably do a lot with just two people, right? Where you have someone who checks people in, kind of gets gets everything set up, and you have kind of one back office person that helps, you know, with referrals. Now, as we've grown, you know, now we have a phlebotomist, right, who draws the blood and does this. But do you need that? No, right? Like you could, when you're starting out, just draw the blood yourself and process the PRP, right? So I think it depends on which stage you're at. Something interesting to look at too are some of the virtual type of assistants. Obviously, you there's you gotta kind of make sure you're gonna sign a associates agreement and things like that because a HIPAA, but you can get some really good pricing, especially for repetitive tasks like answering calls, scheduling patients, things of that nature. If you just get a virtual assistant, that could save you a lot of money, and they've if you get the right one, they could be very, very efficient.
SPEAKER_01Yeah, or even AI. I too, yeah. A lot of tasks and a lot of things that can be done by AI. AI agents are on the rise, and I think used and deployed, you know, smartly can really change the way that your office runs. I have a couple of you know virtual assistants or offshore workers that I've worked with through the years. I I currently my my controller is not on site, but she's virtual, right? Um, and so I think having the the wherewithal to take that little risk for that financial benefit is really has for me has definitely paid off in the long and short run. I I'm now currently going into using AI for some of my phones and chatbots on my website to uh filter new patient uh questions and it's it's actually working really well because we can we we get to track inquiries, we can we can really be much more specific about who we spend time pre-educating and pre-filtering to make sure that when they finally show up, they're educated, they know what we do, they know that we're cash pay, and that all they want to make sure is that they're a candidate to move forward with the treatments.
SPEAKER_00Yeah, I think you know that's the downside to like being super lean, right? If you only have one person, what's you know, your quality of care is still gonna be there. But what's gonna happen is the periphery, right? You're gonna start to get complaints like, hey, uh, I called your office three times, no one answered, right? Or it took forever to get a call back. Why isn't my MRI order in, right? And those are the things that you have to deal with, right? So the main thing too is making sure that you stay on top of the staff, right? Or if you have that one person that's gonna run the staff where you're trying to make sure that they're being efficient with their time, right? And that they're doing things the way you want them done. And again, you want to give everybody an opportunity and always ask yourself, okay, is this person underperforming because I haven't done my job, right, at coaching them and make it putting them in a position to win, or they just suck, right? And and you have to have a very candid conversation with yourself first because a lot of times it's you, it's not them. But then sometimes it is them, and then they gotta they gotta let them go, you know.
SPEAKER_01Yeah, no, yeah, that's so good. Well, holy cow, we definitely have really gone over this. Has been amazing.
SPEAKER_00Are we over already? I'm sorry.
SPEAKER_01We're not over, but we'll we'll go quick, it's fine. Um yeah, no worries. I just wanted to give everybody the opportunity just to say what the next step is, which is you know, uh it's my practice launch system. It includes orthobiologic knowledge, how to attract the right patients, how to create cash-based business, taking into account all the things we just went over, how to make sure that our consultations convert to paying customers, and then finally putting it all together for success. And really, you know, those patients, those right patients, for the most part, are already sitting in your office. They're looking to you for solutions. And so that's not that is not the hard part. If you want the fast track, I'm gonna invite you to Clearwater, Florida. We have the business of with the Biologics Express course on Saturday, Cadaver Lab on Sunday, getting your hands dirty. The best part is is Apex is really committed to education, and so there is no registration fee for this. So, man, if you're interested in figuring out how to put all these pieces together, come scan the get code. There's there's dates for February and March. If you're wondering where the heck to start, like what the next step is, this is just a little quiz. It'll tell you, you know, it what your capital, what your clinical confidence, what your workflow readiness is, and legal freedom, whether you have a non-compete, the all of those things. So you can just take a little quiz and see if this works for you. And then I'm gonna invite everybody to our virtual event. This is online next Saturday. It's Valentine's Day, but so we is during the day. So we won't be interfering with your Valentine's plans at night. And this is gonna be really helping you get clarity on business structure, on marketing, on ultrasound training, and really how do you put all of the pieces together? And this will help you make that next best step. So I would love you guys to be there. It's it's gonna be a really fun, very, very high value event to really get you launched to the next step. So I really want to thank you, Alberto, for taking the time. I'd love to turn it over. If there's any questions, please don't hesitate to raise your hand or just pop it in the chat and we'll get that done. Otherwise, I want to thank you all for really hanging tough with this fun conversation about the more of the business aspects of private cash-based practice. I really appreciate this. All right, guys.
SPEAKER_00Appreciate it. It was awesome. Thank you so much.
SPEAKER_01Awesome. Yeah, it is our pleasure. This is stuff that we love to talk about.
SPEAKER_00Yeah, literally. It looks like we got a heart on the chat. I love it.
SPEAKER_01I know, we got a heart. All right, awesome. Well, have a great rest of your evening, everybody, and we will see you in two weeks for the next conversations in region. Oh my gosh, this is one not to be missed. This is Dr. Thomas Buckight. His new book is out on regenerative medicine. It is going to change the way you think about regenerative medicine. So please, please, please don't miss this one. This is gonna be a bomber. So we'll see you in two weeks, and everybody else, have a profitable day.