Shorr Solutions: The Podcast – Ep. 159 – What Consultants See That Owners Often Miss

Why Aesthetic Practices Struggle to Grow: The Hidden Problems Owners Miss

00:00:04 – 00:05:26

Voiceover

You’re listening to Shorr Solutions: The Podcast, where our expert consulting team steps behind the mic to share some of the strategies and solutions we implement for aesthetic practices nationwide. With decades of combined experience of running and coaching aesthetic and medical practices. We bring you the guidance that strengthens operations, elevates profitability, and supports long term growth. This is where solutions begin.

Jay Shorr

Well, welcome to another episode of Shorr Solutions: The Podcast, and I’m your host, Jay Shorr. Today I have a very special guest with me, Nan Maddox. And Nan is a senior Client Success Manager. And Nan deals with all of our clients and prospective clients. Nan is no stranger to the industry, having owned a med spa in Florida and then being a practice administrator for one of the largest plastic surgery med spa practices out in the Midwest.

So let’s get started.

Many aesthetic practice owners don’t know exactly what’s holding their practice back, and more often than not, the biggest challenges are not the ones that they actually are focused on. Why? Because sometimes they just don’t know. So during consults, recurring patterns emerge across practices of all sizes, revenue leaks, operational efficiencies, staffing issues, compliance concerns, and patient experience breakdowns often exist beneath the surface long before they become obvious problems.

We would like to speak about why practices reach out for consulting, whether it’s a prospective client or whether it is an existing client. Usually the common denominator is the same.

Nanette Maddox

Yes. One of the most common reasons that people reach out to us is HR. You know, the staffing issues. They feel like they don’t have the right people. The training is not there. And, you know, sometimes it’s not just HR or staff. It’s not the staff. Sometimes we may find that there are other reasons why they’re having HR issues.

And I think another main reason that they reach out is we hear this a lot: “I need more leads.”

Jay Shorr

So, “I need more leads.” But some practices get 100 to 200 a month, and their closing ratio is 10 to 15 percent. And they’re complaining about more leads. What about the leads they already have?

Nanette Maddox

Well, when we listen to phone calls, which we often do, we hear that the leads are not being handled appropriately or properly. And we also find out that the leads aren’t always being funneled into their CRM. They’re losing leads, and they don’t even know half the time what their conversion rate is, how many leads they’re getting, or how many are converting. They haven’t followed that process to find out where that leak is located.

Jay Shorr

How could it be enhanced? How could it be more mature? Or how could it be perfected to better serve the client?

But let me get back to something for a second. Talking about HR and all the problems—could it be the practice owner by chance?

Nanette Maddox

Jay, that would never happen.

Of course it could. And we often find that there are accountability issues. A lot of practice owners are physicians. They’re good at taking care of patients, but they have a hard time holding their staff accountable. And when you don’t do that, or you don’t have set policies that you stick to, then there are issues.

Jay Shorr

So when we talk about practices reaching out for consulting, let me just add one or two more reasons. They feel that the revenue is stagnant and the growth has plateaued.

Let me share. When we first take on a brand-new practice—and we’ve had three in the last two or three months—they’re all different. One just finished fellowship and is opening a brand-new practice. One left a practice where they had worked for a very long time and opened their own. And the last one worked for a governmental agency, then another practice, and now wants to open independently as well.

But for the most part, when revenue and growth have plateaued, it’s often a direct correlation to bad lead management. Not bad leads—bad people chasing leads that become bad.

Nanette Maddox

Yes. I don’t think there’s any such thing as a bad lead. It’s a lead, and it needs to be followed through.

I think the problem with revenue is they may not even be tracking it. They may not be tracking how much a lead is generating or how much that lead is costing them. There are lots of different avenues that need to be looked at and analyzed to determine whether or not your marketing is truly working.

What we find most often is it’s not really the marketing—it’s the way they’re handling the lead once it reaches the practice.

00:05:26 – 00:10:41

Jay Shorr

So now that brings me—because we’ll stay on this topic forever, and I will move on after this question.

What about offshore marketing? I’m an old guy that does watch Instagram, and every third or fourth feed that pops up on my phone or my iPad is about remote workers in Asia, South America, and India. I’m not against any of that. I’m just questioning, what do you think about that?

Nanette Maddox

I think in some cases it can be beneficial. But what we find most often—what I recently found—is that one of our clients had a marketing agency, but hired an external marketer to tell the marketing agency how to do the website, and then was in the process of hiring yet another company to build a CRM when they already had two that were not being utilized.

So again, a lot of times it’s the way that the systems are being run—or not run—within the practice that really makes a difference and causes those money leaks. Practices sometimes don’t even realize how many different systems are running at the same time or what they’re actually doing.

Jay Shorr

That actually sounds like a practice administrator problem, if you want my opinion. The doctor is an amazing scientist, practitioner, surgeon, or provider. They’re seriously too busy, which is one of the reasons they hire us. They’re too busy to do it themselves, nor should they.

They should be working on their business, not in their business.

If they don’t have a good manager looking over everything—and there’s a difference between a manager and an administrator—I find that this is an administrator’s job. They should be checking every vendor, monitoring their staff, reviewing leads, and overseeing the CRM systems.

Why do we have more than one CRM? Well, if we need one to communicate with another, I understand. But you don’t need two, three, or four systems that all compete with one another.

So that lack of accountability, combined with systems that break under growth, becomes a real issue.

Everybody wants to grow. But don’t you think you should first perfect the problems you already have?

How many times do we hear during the first consult, “I want to open a second and third location.”

I say, “Wait a minute. Your first location is struggling. Why would you replicate those same deficiencies into a second and third location and lose two or three times as much money?”

Your fixed costs won’t stay stagnant. Every additional location creates another set of fixed costs.

So then what is the cost of not identifying the gaps—from marketing to the phone call, the consult, treatment, and retreatments? Commonly, as Shorr Solutions calls it, the Conversion Cascade.

What’s the cost of not finding those gaps?

Nanette Maddox

It can be astronomical.

Again, in the practice that I just visited, I found 30 different vendors being used at the same time for different reasons, with none of them communicating with each other.

I tried to identify the cost, but unfortunately the profit and loss statement had not been completed since the previous year, and the provider kept saying, “I’m not making any money.”

The cost can be anywhere from $1,000 per month—which was just the cost of one vendor—to significantly more if you don’t have a good understanding of where your money is going and whether those systems are actually working for you.

Jay Shorr

I see two ways to identify those problems.

First, you can’t rely on a vendor to identify them because that’s a conflict of interest. That’s their revenue.

Unlike vendors, our job is to identify these gaps and help the practice either close or eliminate them.

If you don’t have a strong administrator—and I’m not criticizing administrators because many come from completely different industries—they can still be smart, financially minded, operationally experienced professionals.

Those are the core requirements for the position.

But if you don’t have a great administrator, then what do you do, Nan?

Nanette Maddox

You hire us.

We’ll help you.

00:10:41 – 00:13:03

Jay Shorr

So how often does the owner become dependent on the team to identify these gaps, and they just can’t figure it out?

Nanette Maddox

I think a lot of times, Jay, the owner tries to take care of everything on his or her own and just becomes overwhelmed. They have issues with delegating and letting things go. They also have different perceptions of what a practice administrator should actually be doing.

A practice administrator should be responsible for everything from the finances to the staffing, the supplies, watching the money, and paying the bills. There are a lot of responsibilities that sometimes the practice owner is afraid to let go of because they don’t want to give up that control. They have a hard time delegating, and that fear often prevents the practice from operating as efficiently as it could.

Jay Shorr

So what do we look for when we’re identifying marketing gaps, operational gaps, administrative gaps, and growth opportunities? What do we look for as consultants?

Nanette Maddox

We first look at the financials. We want to see the financial picture because that tells us a lot about what’s happening within the practice.

From there, we begin looking at the patient flow and the lead flow. What happens when a lead comes in? We listen to phone calls and hear what actually happens during those conversations. We evaluate the entire patient experience.

What happens when the patient arrives? Are they treated exceptionally well, or are they put in a paper gown that tears when they sit down?

We look at every aspect of the practice because we want to make sure the foundation is strong. Many times, we discover cracks in that foundation that may be relatively easy to fix, but more often than not, they require commitment, consistency, and dedication from both the practice owner and the practice manager or administrator.

00:13:03 – 00:16:07

Jay Shorr

You know, when we look beyond the presenting problems, how do we identify patterns across different departments?

Now, I know it’s not a retail store, so let me define what I’m talking about.

Every practice has departments. You have your front desk team, which creates first impressions. You have your check-in and checkout staff. Then you have your clinical department, from your MA to your doctor, including your LPN, LVN, RN, PA, and NP. You also have your patient care coordinators and finance team, which is responsible for closing treatment plans. Then you may have an operating room with anesthesia providers, scrub technicians, recovery nurses, and pre-op staff. Finally, many practices also have a med spa department providing services that are separate from the surgical or medical side of the practice.

As consultants, we have to identify patterns across all of those departments.

Now, Nan, I’m going to bring up a real example because here’s a problem that wasn’t identified.

You were reviewing leads and discovered that a patient requesting a mini circumferential tummy tuck had been scheduled with the med spa instead.

Let’s talk about identifying patterns across departments. What happened?

We wasted the patient’s time. Instead of seeing the surgeon, the patient was scheduled with the esthetician. There’s nothing wrong with seeing the esthetician—maybe she could recommend a peel—but that patient is going to be frustrated.

How do we handle something like that?

Nanette Maddox

Again, it boils down to really taking a close look at the systems you have in place and making sure they’re functioning the way they should.

In this particular case, it was an automated CRM function that was booking consults without any pre-qualification.

A lead came in, an automated text was sent, and a consultation was scheduled with the wrong provider. There were no notes explaining why the patient was coming in.

It was a major disconnect caused by a system that the practice was paying $1,000 per month for.

Ultimately, it came back to the staff not having the authority to communicate with the CRM representative or point of contact to discuss how that patient journey and scheduling process should actually work.

That’s how these mistakes happen—and when no one addresses them, they simply continue repeating themselves within the system.

00:16:07 – 00:19:55

Jay Shorr

Do you think practices should do dry runs before implementing a new system in real time?

Let me give you an example. A cruise ship coming out of dry dock doesn’t make its maiden voyage with paying passengers. They first test everything with their own crew. A restaurant doesn’t simply open its doors one day and invite customers in. They feed their staff and guests first to make sure the operation works.

Practices should take the same approach.

You should always test your systems before turning them live. Use your own practice as your beta test. Schedule different procedures through the system and see how it performs before relying on it with real patients.

Now, with the rise of AI, I actually think it may get worse before it gets better because AI is so quick to automate everything. You have to teach AI how your practice should operate instead of allowing it to make every decision for you.

One of the first questions I ask a physician, PA, or NP who is opening a practice is, “Where do you want to be one year from now? Two years? Three years?”

Sometimes those goals are unrealistic when compared to the current operational efficiencies of the practice.

I ask them, “How do you expect to reach those goals if you continue operating the same way you are today?”

Sometimes the answer is that the practice needs a complete transformation.

Then I ask another important question:

“Are you prepared to invest in making those changes?”

One thing I always tell people is this:

Don’t hire a consultant expecting an immediate return in three to six months. Anyone who promises they can instantly turn your business around is misleading you.

Whatever changes you implement today typically take at least three to six months before they begin producing meaningful results.

Yes, you may convert more leads. Yes, you may generate more revenue.

But if you haven’t fixed the operational leaks first, bringing in additional revenue doesn’t necessarily mean you’ll make more profit.

I don’t want to work harder just to bring in more money if the profit stays the same.

If, however, you can substantially increase revenue while maintaining your fixed costs, then your cost-to-revenue ratio improves and profitability increases.

So what are the top things a practice owner should focus on if they aren’t ready to hire a consultant or invest in a strong practice administrator?

Because the reality is, you can’t afford not to.

Someone has to take ownership of the business while the provider is generating revenue in the operating room or exam room.

So once again, Nan, what can practice owners do?

Nanette Maddox

They need to make sure they fully understand their financial situation.

They should have a well-structured profit and loss statement and review it every month with their bookkeeper, accountant, or practice administrator.

That’s the first step.

00:19:55 – 00:21:01

Nanette Maddox

They need to make sure they fully understand their financial situation.

They should have a well-structured profit and loss statement and review it every month with their bookkeeper, accountant, or practice administrator. That’s the first thing.

Another is to avoid purchasing large pieces of equipment simply because someone tells you it’s going to make more money or pay for itself. Too often, practices end up with expensive machines sitting unused in a treatment room.

The same applies to adding new service lines. Don’t expand your services unless you truly know your patient base will support them.

Staffing also needs to grow strategically. Make sure your team is adequately staffed for the services you’re providing.

Most importantly, don’t continue adding responsibilities to employees who are already overwhelmed. If you overload your strongest performers, you increase the likelihood that they’ll burn out and eventually leave the practice.

00:21:01 – 00:27:27

Jay Shorr

You mentioned capital equipment, and it reminds me of something I once said to a laser sales representative.

He wanted to sell me a piece of equipment, and I asked him, “When I buy this, does it come with a gravestone?”

He asked why.

I said, “Because this piece of equipment is going to end up in our practice graveyard within a year or two.”

Like many new technologies, it generated excitement and revenue during the first few months because it was new and everyone wanted it. But just as quickly as it became popular, demand disappeared.

In conclusion, having been both a practice administrator and a practice owner, one of the biggest lessons I’ve learned is to stop assuming that the obvious problem is the only problem in the business.

Nan opened today’s conversation by talking about operational, administrative, and financial deficiencies, but the very first issue she mentioned was HR.

You can have all the leads in the world, but if you don’t have good people and strong leadership holding everyone accountable, your practice will struggle.

You also have to evaluate the patient journey from beginning to end.

What’s the lifetime value of that patient?

Maybe they only came in for Botox. Later they became a filler patient. Then they referred a friend for a facelift. Then another friend came in for a tummy tuck.

The lifetime value of a patient may be far greater than a single neuromodulator treatment.

You also need to review your key performance metrics regularly.

Do you know your run rate? Your fixed costs? Your variable costs? Are you properly insured?

Every time someone tells me they’re having staffing issues, one of the first questions I ask is:

“Do you have EPLI insurance? Do you have cyber coverage?”

I’m not talking about the small amount of cyber protection included with many business insurance policies. I’m talking about dedicated coverage because we live in a highly litigious environment, and those policies can protect your practice when problems arise.

We review these key metrics monthly and quarterly with nearly every client.

You also have to identify recurring bottlenecks and frustrations.

If the same problem keeps happening over and over again, ask yourself why.

Are you avoiding the difficult decision that would solve the problem?

If I see bugs in my house, I call the exterminator. I don’t wait for the problem to fix itself.

The same principle applies to running a practice.

Don’t be afraid to seek an outside perspective.

Sometimes you’re so close to your business that you can only see what’s directly in front of you. An experienced consultant or executive coach sees things from a completely different angle.

A good consultant should be honest with you—not simply tell you what you want to hear.

Finally, one of the biggest mistakes I see is that practices fail to create a plan.

Develop operational, administrative, financial, and marketing plans for the next three months, six months, and year.

You can always adjust the plan as your practice grows, but don’t wait until a problem becomes a crisis before creating one.

Think about your exit strategy early.

Create a roadmap before you begin, refine it as you grow, and don’t be afraid to use outside resources when you need them.

So, ladies and gentlemen, thank you for joining another episode of Shorr Solutions: The Podcast. I’m your host, Jay Shorr, with my special guest, Nan Maddox.

Good luck. God bless.

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Before you go, new episodes are released every two weeks, offering perspective on the decisions, systems, and leadership behind well-run practices.

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This is Shorr Solutions: The Podcast.