The Plastic Surgery & Med Spa KPIs That Really Matter with John Gwin
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Coding and billing pro John Gwin shares the most useful key performance indicators (KPIs) to help your practice grow and succeed.
Hear John’s money-saving insights on:
Advice for dealing with the complexities of insurance billing
The need for strong financial controls and regular checks on your accounts
How to decide whether your practice should accept insurance or focus on cash pay services
How to protect your practice from risks like embezzlement and fraud
Why it's crucial to stay on top of your practice's finances and plan ahead for potential challenges
About John Gwin
John Gwin is the CEO and co-founder of The Auctus Group, a revenue cycle management consultancy. With experience in medical billing and practice management, John brings his entrepreneurial spirit and passion for leadership to drive growth and development at The Auctus Group.
Follow John on LinkedIn
Learn more about The Auctus Group
Host
Robin Ntoh, VP of Aesthetics
Nextech
Guest
John Gwin, CEO
The Auctus Group
Transcript
Announcer (00:06):
You are listening to the Aesthetically Speaking podcast presented by Nextech.
Robin Ntoh (00:10):
Hi everyone. Welcome back to the Aesthetically Speaking podcast presented by Nextech. I'm Robin Ntoh, your host, and John Gwin is here today with us as one of our guests. He's the CEO of Auctus. We're really excited to have him here today. So John, tell us a little bit about yourself and your company.
John Gwin (00:27):
Sure. Well, first and foremost, thank you for having me. It's a pleasure to be here. We've been around for going on 13 years now, which I feel like I'm starting to be able to claim that I'm dating myself, finally. We are a revenue cycle management consultancy, so we focus primarily on insurance billing and all of the fun things that come along with that, like insurance contracting, authorizations, bookkeeping. And we're a little bit of an odd duck in the space in that we specialty focus. We are national and we work in a number of different programs, versus 85% of the industry is all specialties, regional at best and then one to three systems. So it's certainly not divine design. I came from two jobs off Craigslist out of college trying to apply to medical school and then working for a billing company and then working for a plastic surgeon on another Craigslist gig. And I was able to sit in a office in a lot of different seats like PCC, billing office coordinator and eventually practice manager. So tried to parlay that experience into a different type of mousetrap for the backend or back office of aesthetic practices.
Robin Ntoh (01:26):
I think one of the things that I find interesting about your business is it's not just all about RCM. You also have a unique niche in that you really focus on performance and growth and you do that a lot of times with your KPI tracking. Tell us a little bit about where you see that fitting within the practice.
John Gwin (01:43):
Absolutely. I mean, KPI tracking is such a broad term. Everybody knows they should have reports and should have things they're looking at and metrics for the business. With our aesthetic practices, we may be handling 10% of the volume from a service standpoint. And so being able to translate how that impacts strategy for the business, meaning do I look at ER call? Do I look at lumps and bumps versus breast recon and what's the administrative burden? How does that impact 90% of my practice, which is cosmetic? How do I make assessments about different contracts to obtain or what's valuable to me on a revenue standpoint versus what do I actually like doing? And so really trying to think holistically about that rather than just being a billing company that's going to take data and push it out the door, we try to really strategize what our practice is on what makes sense for their business.
(02:29):
And I think another unique thing about I guess being in our business is I don't have formal training in being a CEO or running a business. I came from a total chem bio background and so there's been a lot of learning that I've had to go through and I think a lot of physicians at a much higher educational level of course than I've gone through have a similar experience where they've spent eight, 10 years going through school to be a doctor and they're thrown into running this multimillion dollar business immediately. And so learning trial by fire on what does it make sense to look at, and what's a standard KPI versus what's effective for my business? And given that we handle financials, those things are often married. So it's always interesting to work with clients on what numbers should I be looking at that actually give me the ability to make decisions in my business rather than just monitoring what I'm supposed to be monitoring.
Robin Ntoh (03:18):
I think it's a unique perspective because a lot of times we hear practices say, I'm running these reports, I dunno which ones to run, or they'll take the data but they don't necessarily understand how to synthesize it. So you bring an important component back to the business and I love the way that you emphasized you've worked in all the different areas of a practice, which gives you a unique perspective. I mean a lot of people just, they don't really value experience and it's a great way to credential yourself at the practice. I think about that a lot of times, even just in speaking, you want to start with credentialing yourself. So your audience says, wow, she gets it or he gets it. He understands, he's actually been in my seat, so I want to lean in and listen to what they have to say. And I think that it takes it to another level. But when I go back to thinking about the KPIs, we talk about this a lot. We hear about this on different podcasts, people speak about it all the time at different trade shows. I talk about it, you talk about it. I think you bring up something that I think is worthy of really digging into a little bit more, which is KPIs are a number, they're a measurement. They're there to help you with your business, but do you actually know what to do with the information?
(04:31):
I think a lot of times that's the struggle, that's the rub. I've got this, but how do I execute on that? I think you're looking at this at a more holistic perspective, but you've got the experience to just kind of take it up a level and really help these MDs that are not MBAs really kind of think about where can this make an impact on my business. Tell us a little bit where you think that you've seen some success here and what that looks like.
John Gwin (05:00):
I mean, I think one number or metric that gets overlooked quite a bit that is super valuable is people tend to focus on these billing KPIs or the revenue KPIs, but if you don't tie that back to what you're actually doing and the costs of service that comes into that, you can lose perspective on is this actually valuable for me? So if you're thinking about the cases I did last week, the cases I did last month, a lot of surgeons see their patients as actual patients, so they want to look at case one, case two, case three, what came in, what's outstanding, and then well, should I do that procedure again? But I really encourage them to look at how long did you spend in the OR? How many follow-ups are there with that? What's the cost of customer acquisition? And then dial that into is this worth the time me and my staff put into that?
(05:45):
And then the inherent cost that comes with the services, the consumables and so forth. So maybe I do want to consider that even though breast recon cases are great value to me when I do a deep flap, it's eight hours in the, OR I've got a high potential for complications because it's such a big case. I have X number of follow-ups I don't get paid for. Does that make as much sense as doing lumps and bumps at five an hour in the office even though it's boring as heck, your ROIs is almost better there occasionally. So really looking at almost like a profit and loss per service line or per procedure type can be extremely helpful because it may be that the things you like doing or the things that are high case payouts are actually losing you money because you have to spend so much time in the pre and post care.
Robin Ntoh (06:28):
Yeah, I go back to thinking about what are some of the common ways that we see doctors leaving money on the table. I think it's that they focus too much on, there's money in the bank and they forget that there is an actual cost to the service. I do these reviews of margin with physicians and sometimes it's like margin, what's margin, and you have these conversations, okay, well yes, you charged X, you've got a hundred grand coming into the bank per month per injectable provider, but what is the cost? What's a real cost and what's the margin? I mean, a lot of times I'll see margins at sometimes 20% or less when it comes to an injectable provider and I'm like, okay, so yeah, you've got a hundred grand, but is that acceptable and are you looking at where you can reduce those costs? So I think about it from that perspective and you bring up a really valid point. What are some of the ways that you're seeing that money is just left on the table because they're just not even focusing on the cost?
John Gwin (07:28):
I mean, I think cost of goods, as you just mentioned on injectables is a big one, right? Because you're getting compensated for the injectable and then your time, but there's a significant portion of that revenue is going to go directly back to operational expense. And I mean that driving into that P and L conversation or looking at the books and running your business from your actual QuickBooks or your Xero or whatever system you're using, not your bank account, gets you to a space where you can be proactive instead of reactive because the bank account's not issue until it's a problem and now you've got you're 30 days behind when you should have started fixing it. I don't know how many of my practices actually have a P and L per service segment in the business or even per vertical. So ASC, med spa, pro services, cosmetic recon, I don't know how many are running like a 13 week cashflow, which I think for business owners becomes just part of your day to day, but physicians don't have time to get into that and sometimes maybe don't have the resources to get there, but some of those basics are not basics in healthcare. And I think those are two really good spots to focus is the verticals and then you're actually OpEx percentage and looking at the P and L per vertical.
Robin Ntoh (08:36):
So you've been doing this a long time, so what are some things that you've seen that go wrong when people don't think about their P and L or their budget?
John Gwin (08:43):
Well, one, you're reactive, right? If you're not monitoring your charge output or your anticipated revenue for different service segments, for example with insurance, if you hit an issue by the time the issue hits your bank account, you're 60 days beyond when you should have started addressing it. If charges drop, payments will drop that, you can see that 30 days ahead of time at least. And so now you're in scramble mode where anything you do is going to take it another 30 days to even have an impact. And so trying to be proactive about those numbers is the most important part. You can also get into this kind of false flag on I'm doing great or I'm making a lot of money, like you mentioned on injectables, where if you're not looking at the different segments of your business, you're not seeing what's jumping and what's dropping. So if you have an economic downturn and you're so heavily focused on cosmetics, your cosmetic screwed 20% last year, did your insurance drop, the economy takes a downturn and now cosmetics drop, you're at a lower baseline. So I think it makes for less stability and less detail oriented growth decisions essentially. You don't want to just focus on what's bringing in the most money without looking at all aspects of the business.
Robin Ntoh (09:51):
Yeah, you bring up a really good point. I think budget is key in practices and a lot of times practices will think about, well, I need to make X amount of money per month just to pay my bills, but yet if they're budgeting, and even when I think about it, you've got to look at year over year, you've got to look at your six plus six forecast. You've got to understand what's going to happen. Some of that is basically based upon what's happened in previous years because there's a trend, there's a seasonality and we know it, but if we don't actually report on it, then how do we actually stay ahead of it? And you're right, I've seen practice's become very reactive versus proactive in that approach. So yeah, I think that there's a lot to unpack there. I mean, God, John, we could talk for several hours on just this subject because there's a lot of opportunity there and I see more often than not, sadly, where practices just don't focus on it.
(10:44):
I mean, let's see. We've had two huge industry reports just come out recently. One was AMSPA's report, and I think it was showing that only 75% of practices actually track their costs. I'm like, okay. Someone might say, wow, that's great, 75% no. Is that really great? I mean, that's 25% of the businesses out there, if you think about the number of med spas now, that's a lot of businesses out there that have no idea what their expenses are. And they're just basically setting themselves up for a huge point of failure. So I love where you're going with this. I think another area that you mentioned earlier that I want to dig into a little bit more is the CAC, the cost to acquire your customers. It's a term we don't talk about much. We think about lifetime patient value or lifetime customer value. Oh, God, we've talked about retention for years. I mean, it's just like a mainstay in practices, but do we actually talk about what it costs to acquire a new customer? I mean the trends are out there, we all know it costs more to acquire a new customer than to retain an existing, but what does it really mean to think about, what are the things someone should look at when they're thinking about the cost to acquire a customer, their CAC, so to speak?
John Gwin (11:53):
I mean, you've got to monitor essentially your marketing costs and you have multiple potentially omni-channel verticals to look at that. Are you doing print? Obviously you're doing SEO. Are you doing any direct outreach, marketing campaigns, newsletters, things like that? If you're reinvesting in your website and there's a number of expenses that go along with that, and those are going to fluctuate over time and back to what you said, a lot of these expenses are going to stay pretty level for a business and when you have seasonality and revenue, whether it's deductible season in quarter one or the summer dip in cosmetics, those expenses are going to stay level and your bank account is now going to not look so good in those areas. So if you're not doing predictive analytics on CAC and on marketing spend, you're going to be reactive because you're going to have to figure it out once the problem's already there. But yeah, the cost of customer acquisition and making sure that you're focusing on closing those leads is an often overlooked place because you're focused on, did I make the sale, but how many top of funnel customers did you actually get a lead option on? And are you monitoring the follow-up on those customers as well?
Robin Ntoh (12:55):
Yeah, I think you bring up a good point. How many times do we see practices generate leads but do nothing with them or they actually only track the leads that actually make an appointment? I mean, that is one of the most common problems I see in practice is you paid for that person to call you, but you did nothing with it. And that's just sometimes just not enough hands or people there to actually manage them or they just aren't doing a good job of filtering out what their qualified leads are.
John Gwin (13:21):
And a lot of times the tools are there to do some of those things in their system. Nextech has some specific reports I can think of off the top of my head that make it really easy to find your enclosed quotes to make. You've got CRM level functionality, it's there. It's a matter of making sure that you have time budgeted for the staff members that are responsible for it, and then somebody's actually monitoring to make sure they're doing those things. Where things tend to get lost is if you don't have a structure to monitoring these numbers and holding accountability to the process behind them, then it just becomes, I'm looking at what shows up today.
Robin Ntoh (13:54):
Yeah, no, I think we go back to and think about what are those specific KPIs. I think CAC is one of them, but at then it also drives into thinking about what your budget is and your budget isn't just what you're budgeting for revenue you want to bring in. Your budget goes back to how many new patients do I want? How many patients should I expect to retain? What is my actual cost per service? You want to think about those budgets, otherwise you're going to lose control. And then before you know it, six months in, you've basically blown your budget because you didn't even have a budget. And then you're trying to figure out, again, that reactiveness of how do I actually get ahead of this because they're not actually focused. The other thing I think that's overwhelming is people don't even know where to start, and you probably see this a lot. How do you coach practices to think about what are the basics just to get started?
John Gwin (14:49):
Yeah, I think it's a double-edged sword because you have so many reporting capabilities that you can track many things if you put time into it, but if you don't even know where to start, like you said, it's overwhelming. There may be several hundred canned reports and maybe they don't format to the way you want to see it. But I always start with when a customer asks me for customer reports, it's like what do you need to see to make those decisions in your business? What helps you at the end of the day, be able to change or make your practice malleable so that you can get to where you want to get to? And that sometimes, again, is also too amorphous because that could mean any number of things. My gut check is starting with the really, really basic items, which are that P and L per service segment in the business.
(15:31):
I remember over a decade ago when I was in the practice management seat, I think one of the most effective things for us was to segment out charge payment adjustment by vertical essentially, meaning med spa ASC, anesthesia, physician and then cosmetic and recon, and split that out on your P and L. So you have almost, you have the business and you have your mini P and L's per segment so you can see what unit is profitable. To me, that helps provide a lot of clarity about not just the top line or even the bottom line, but per vertical in the business because you're going to have different staff members, different expenses, different growth opportunities. You're going to have to allocate marketing budget to each of those potentially. That to me is the first place I would start. It's just incredibly important to be able to at least see the different business units within the practice because it isn't just one thing you're doing every day.
Robin Ntoh (16:20):
Yeah, 100%. I think practices will innately split their ASC out from the professional services in their business because it just makes sense, but I think you bring up a really valid point, and a lot of times software can do this for you. People just don't really always understand how to do it, but building those practice units out so you can actually really drive a better understanding into that business unit and looking at the lead, looking at the patients, looking at the costs, looking at all of those things, it does make a difference. Especially if practices are thinking future and they're thinking, well, I want to sell, then they're going to look at how those business units are actually growing and performing at a higher level because a high performing business really is a business that's focused on looking at those metrics and really looking at them on an individual basis.
(17:11):
I even think that we think about per physician oftentimes as being the best way to look at our business. And yeah, I think that's important, but you've made a solid point on you need to carve out the med spa, you need to carve out the ASC. You've got to really generate those reports based upon those business units or you're not going to see where you've got the bigger holes or the bigger opportunities, the risks that are going to be associated with those different components. Sometimes, and you've seen this, I know, I mean we could go on and on about this where the med spa is really dragging the business revenue down, but they don't know that because they're not looking at that unit. They're just focused on the surgery side of it and the surgery seems to be making a lot of money, but they don't know that it's doing as well as it is because the spa's underperforming because they're not actually carving that out and looking at that. So it makes sense what you're saying, and I think that listeners should actually take the time to dig in and think about that some more. Let's talk about forecasting. I think that this kind of lends itself to being really proactive. What are some things that you've seen that a really high performing practice does or maybe where you've put in place things that really help from a forecasting perspective?
John Gwin (18:25):
I mean, the first thing is it can be really challenging in a practice where you've got insurance, cosmetic, and med spa because you essentially have three revenue models fee for service, potentially pre collecting packages where you're not recognizing the revenue on an accrual basis until the service is rendered, and then you've got insurance where you're waiting one month, two months, or even longer if you're out in network. So trying to be proactive on the three ways that money comes into the practice and then recognizing how much of the money that's in the door today is for a pre payment, for a collected deposit for a surgery versus cash pay, versus how many services have I rendered that I haven't been paid for, and what's my expected turnaround time? So from an insurance side, you can predict based on a net collections ratio, what should come in, right?
(19:10):
You've got your charges this month, you have your day's revenue outstanding. How long does it take me to get paid? You should be able to roughly predict the next couple months, what's going to come in. In terms of looking at your consults on the cosmetic end, what patients are coming in for potentially based on that consult reason or type of consult, what that may convert to. You could potentially predict cosmetic revenue therein or certainly you can predict cosmetic revenue based on collected deposits and remaining open quotes, so you should be able to get to that. And then on the med spa it's you get back into marketing and acquisition and retain and looking at previous year, looking at three month drags for each of those different models, I think it can get you to a place where you can actually predict revenue. The 13 week thing we mentioned earlier I think is really, really helpful and I don't think anybody really looks at this, but you should know when your expense for your billing company comes out, when your expense for your software comes out, when your expense for your marketing comes out down to the day, if you're really, really on it, because those are going to be recurring expenses that are roughly level and you should be able to predict that revenue along with it. And you can predict your bank balance out that long to be able to see when am I going to drop and do a 12 month prediction if you want with a budget where you've got your growth Gantt chart items built in and where that expense is going to drop, and I'm going to double my marketing budget in May because I want to get ahead of the summer or whatever it looks like.
(20:32):
So I think predicting it, predicting things out based on 13 week expenses and then also based on previous year metrics for growth or for revenue essentially would be the two places I would focus.
Robin Ntoh (20:45):
Yeah, you talk about the 13 week predictions here, and I think that there's a lot to be thought about with that, and I think there's a lot that people could focus on to actually improve their business model and get a higher performing business from that perspective. When I think about these businesses, one of the things we talk about, and it's all related to money. I mean money, money, money, it's what makes the world go round here, but we also worry about the risk of embezzlement and fraud and the things like this, and it's a topic that we hear and it kind of comes and goes. It depends upon what's going on in the world of business, but I still hear about it more than I want to hear about it in practices and just when I think I could not be surprised by anything, then I hear of some creative new way that someone's been able to steal from the practice. Have you found any ways to think about how there's opportunity to perhaps reduce risk based upon the financial tracking models that you've put in place?
John Gwin (21:46):
Yeah, I mean, I wouldn't necessarily think about it like a KPI level, but people should be doing hard closes. There should be at least two to three people that are validating things. So front of house closes the cash drawer that gets signed off by a manager that's going to a CPA or a bookkeeper who's reconciling QuickBooks against bank account. And then I rarely see when the CPA is coordinating with the PM system, and that's a huge gap, cuz you essentially have this weird thing in healthcare where your AP and your AR are in two different systems because your AP is going to stay in QuickBooks, but your AR is going to stay in your pm. And if you don't match those two against each other, you're just matching bank account against your QuickBooks and you're missing where all of your revenue comes in. I think the most creative embezzlement I've ever seen was a company credit card for a practice that hadn't been cashed in for their points for like five, 10 years, and somebody was tricky enough and unethical enough to cash that in for a prepaid debit card using the points that got shipped to the practice and now it's untrackable.
(22:46):
I almost appreciate the ingenuity if it wasn't illegal. But yeah, people will do some weird things and if you're not, I don't know how you track that one, I mean that's out there, but front of house cash can walk very easily if you're not doing hard financial closes, if you're not monitoring adjustments payments. You could have things going in as adjustments that were payments and getting reversed. It really comes down to financial controls and that's at a practice front of house level as well as coordinating with the CPA to get that in with the bank account or the bookkeeper.
Robin Ntoh (23:17):
John, we could have a conversation that goes on for hours about this one, I'm sure. I think that you touched on one, which is the reconciliation against your bank account. I don't think practices, practices rarely do it. In my work that I've seen. They don't reconcile their PM against the bank account, against their clearinghouse if they're doing insurance, and I think that that's just critical because things get missed and it's just impressive to me that people don't do it. Now, generally what I find is probably the loyalty point systems or the hardest to reconcile if you're doing it often enough, but by that token, I think that it's just one of those things that people are just not doing.
John Gwin (23:56):
Yeah, I mean when back to the practice management days, we would have 30 minutes a day allotted for this at the end of every day. Before the front office leaves, they're doing their close, it drops to management in the business office, they're spending their first 30 minutes the next day checking it, and at the end of the month you're doing your monthly rec. And it might take two to three hours, but it's worth it for financial stability, if you mentioned M and A earlier, they're going to want to see that you have processes like that in place. Ideally, perhaps it gets overlooked and they instill it, but you're that much more attractive if you've got these organizational controls in place. It's just not something to overlook, even if you have a small practice where we've known everybody for 10 years. You want to address for the business that you want to be, not the one that you are today. And I know it seems like a time suck, but it is worth it.
Robin Ntoh (24:43):
That's a great point, John, I want to circle back for a second and talk about M and A. We briefly touched on it, but I think there's a lot that we've talked about today that really do set the stage for practices that are thinking about this. Give us some of your words of wisdom when you're talking to practices and how you were thinking about this.
John Gwin (25:01):
Yeah, absolutely. I mean, I'm not an M and A guy by training, first and foremost, but I think there's a couple areas that get often overlooked. And when we think about the metrics we talked about earlier, this can really give you a lot of value when you're looking at potentially selling because a lot of folks spend x number of years building their business, and if they're a one man or one woman band, they are the value in the business because once they leave, it's the website, it's the patient list, and frankly, they are the widget that drives revenue. So if you've got a justifiable revenue stream outside of you as a physician by tracking your med spa and seeing that that's profitable, that profit doesn't go away when you leave ideally. Or if you're thinking about a surgical space, a lot of plastics get into this, where am I renting the space when I do a build out?
(25:48):
Do I want to pay for Medicare level certification thinking about the value of the asset of the surgery center as a surgery center that could get insurance contracts. Now I can sell to ortho or GI or whatever specialty versus having my surgery center that works for me as a plastic surgeon where I've just limited potentially my acquisition targets to somebody that can deal with not having insurance in the surgery center. So really thinking about, again, those practice verticals and then the assets at a really crude and it can feel insulting, I feel like almost level, where it's like you as the physician need to pull yourself out of it. What does the business generate without you and why would somebody want that?
Robin Ntoh (26:25):
It's a good way to think about it, a really good way. I want to talk a little bit about aesthetics and insurance, but before we move on, what are your three top KPIs that you think that practices must do? Limit yourself to three, John, just three.
John Gwin (26:38):
CPA or charge payments adjustments is the first one I would look at. That's just what's going out, what's coming in and disappearing essentially, and making sure that you see the reciprocal trends month over month. If there's a blip in the matrix there and your charges are up last month, but your payments aren't up this month, there may be an explanation, but you need to be able to monitor that to see with your bill company, your bill or whatever why that reciprocal jump didn't happen. Or if typically you have a one to two ratio on payments versus adjustments, if your adjustments tripled one month, well, did you know about that? Do you know what got written off? Do you know why? Does that make sense? So that's just a good kind of pulse check. Everybody hears about AR or age receivables, what's unpaid? That's the first place you look for trouble with insurance billing, make sure things are in the right buckets.
(27:25):
MGMA standards are no more than 25% should be over 90 days, but that number is going to be drastically different if you're a busy derm practice, where a great business is going to have less than 10% versus an out of network plastics provider, you may have most of your percentage over 120. So making sure that you're tying that to the type of practice is super important. And then I will say the third is actually one that I don't like, which is the net or net collection ratio. A lot of people look at what percentage of what goes out am I getting paid for, and there's some equations that people put together that are rather complicated that can get you there, but ultimately I would suggest thinking about the percent of money that comes in from insurance, as more a structure of your contracts and your arbitrary outbound charge rates than it is of the success of your billing. For example, if I bill three x Medicare and my rates are Medicare rates, I can only mathematically collect 33%. That doesn't mean I'm doing a bad job. That means I'm inflating my charges, and if a biller is doing anything that can change that 33 down to 20, they're going to be totally out of bounds on how they're operating versus if you jump that to four x now it's 25%. That seven point jump is more a structure of your fees than it is your biller.
Robin Ntoh (28:39):
Really, really good feedback there. Let's shift for a second because we touched on insurance, and this is an aesthetics podcast. However, we know insurance is still very visible out there in the aesthetics arena, not just in a plastic surgeon's office. Let's talk about that a little bit. Where are you seeing it? What kind of trends are you seeing?
John Gwin (28:59):
Yeah, I think a lot of folks stay with insurance, so they have that kind of fallback option of cosmetics dip, and that makes sense, but thinking about why you do that or how you're doing it, because you don't want to, it's going to come with more administrative burden than cosmetics. It just is. So thinking about how much you want to allocate from a human labor standpoint to that aspect or that vertical in your practice. For example, you might have to take call to maintain privileges at the local hospital, so do you want to put a lot of time and effort into getting contracts for Medicaid and Medicare replacement policies, especially if you're in Florida where it's a fractured market, probably not worth dropping a couple grand on and monitoring all of that because it's only 5% of your business, versus if you're a breast recon surgeon, you have to have a broader grid and think about how am I going to receive those referrals?
(29:49):
So we really see ER inbound referral for most closures, breast recon, hand recon, things like that, or folks that are doing it out of network, where it's essentially found money. I think just concentrating on what methodology or strategy you have with insurances, and then tying the amount of time and effort and even frustration you're willing to tolerate that goes with that strategy. Makes sense, because otherwise you're going to spend your time opening your EOBs at your desk in the morning with the mail and you're going to be not happy about what you see and it's not worth it for 2% of your revenue.
Robin Ntoh (30:21):
Yeah, that makes sense. What about the wellness arena? I know that a lot of practices are starting to venture into that, and it's med spas, plastic surgeons, derms. I think it just, it couples well with aesthetics in general because it helps retain those patients, just generates candidates in a different way. Where are you seeing insurance play a role in that arena?
John Gwin (30:40):
I mean, you could always take this answer to anything with insurance. Cash pay is always going to be better. You're going to get more typically, but with the weight loss therapy, things like that, there are lines and LC, local coverage determinations, medical policy determinations that draw those lines, but you can consult on weight loss and you can use a consult code for that if you're doing other things, but there are also weight loss counseling codes that pay 20% of a consult fee. And so really thinking about, do I want to make this an insurance portion of my business so that I can attract customers and transition 'em to other cosmetic services versus do I want to just keep this cash pay because I know I'm going to make five x? That's where we see the wellness and that med spa aspect come in. There are also a lot of focal points on mid-levels and focusing the mid-levels towards driving that revenue, and it almost becomes a gen-derm segment to a degree, injections, lesions, office visits, acne, things like that. I think it does make sense there. You get into more of a gen-derm model, but I just would be cautious about taking what is traditionally considered cosmetic and wanting to move it towards insurance because of the administrative burden and drop in revenue. You're going to see per case.
Robin Ntoh (31:49):
Just means more people want you to do the work for 'em is what it comes down to, right, John?
John Gwin (31:53):
Yeah, it's job security for knuckleheads like me.
Robin Ntoh (31:56):
Yeah, that's true. That's true. Well, it's an interesting market. I mean, wellness is definitely a hot topic right now, especially around the weight loss. There's a lot going on in that arena, and I think even practices that aren't filing insurance are also still wanting to be sensitive to that. There's components of it that could be covered by insurance, so like labs or some of the medications, et cetera. So I think that there's some dabbling there and some practices may not be actually filing on behalf of the patient, but they're offering them the ability to take claim form and go do it themselves. They're just not participating, so I get it. I see where there's this mix of trying to be sensitive to it just another way, I think to reduce that barrier to entry, and while it may be a very minimal amount of wallet share of what the patients have as an offering, it does tend to bring people in the door. It's just a matter of how you manage them and what you want to do with it. And that's also where I think the more practices are thinking about, I don't want to manage this. I want to send this out. I want someone else to manage it. I don't want to invest in staff that have to do this. It's frustrating. I'd much rather worry about just acquiring patients and retaining patients and being more focused on that.
John Gwin (33:07):
Yeah. Two things to think about that you just brought up though on that wellness. If you're going to say, I'm an out-of-network physician, I'm not dealing with this. I'm going to provide a receipt for my patient. You can almost put yourself in a risk profile there because the patient then may hear an expectation that I can get this done on my own, and because you've given a receipt, you've indicated to me that this is going to be a positive experience for me, and they're not going to have a positive experience trying to file on their own. And the other thing is these are often, for the wellness stuff especially, they're smaller ticket sizes, meaning it's an office visit that's 150 to 500 bucks depending on what you charge.Out of network deductibles right now on average are $13,000 in the US. In-network is 3,500. Most patients aren't seen out of network surgeons, they don't, or providers, they don't realize that in and out of network are two different deductibles and guess who they're going to call and complain to that you didn't explain to them what product they purchased. It's going to be you. Well, why'd you give me their receipt? Why did you tell me I could bill out my own? So just something to make sure your expectation setting really carefully with otherwise, ultimately, you own the patient relationship, so you're holding the bag for everything that's terrible about this industry.
Robin Ntoh (34:15):
Yeah. Well, it goes back to people I hear often are trying to really deliver a great patient experience. I mean, that's a big topic of conversation. We didn't even touch on that, but you're right, it does lend itself to a not so positive patient experience. So I can see where there would be, let's just keep that out of the actual arena of what we do within the business, and let's make sure it's a positive experience. So listen, John, it's been great, great talking to you today about this. I think that this is a lot of information for people to go back and process. How would someone reach out to you or find you if they were interested in learning more about what you offer services?
John Gwin (34:51):
Auctusgrp.com. Auctus is A-U-C-T-U-S, and then GRP is the abbreviation for group. We've got our direct line there. You can drop an inquiry, we'd be happy to chat. Again, we're very consultative in our approach, so answering questions is how we sell, and we don't need an engagement to talk to people. So we'd be happy to talk through numbers, et cetera, with anybody that's interested.
Robin Ntoh (35:10):
I know you're passionate about it like I am, so I appreciate that. Thank you very much for joining us today and look forward to working with you and seeing you again at other trade shows.
John Gwin (35:19):
Thanks so much for having me.
Announcer (35:20):
Thanks for listening to Aesthetically Speaking, the podcast where beauty meets business, presented by Nextech. Follow and subscribe on Apple, Spotify, YouTube, or wherever you like to listen to podcasts. Links to the resources mentioned on this podcast are available in your show notes. For more information about Nextech, visit nextech.com. Or to learn more about TouchMD, go to touchmd.com. Aesthetically Speaking is a production of The Axis, theaxis.io.
