Interview with Andy Lodato of PhysioCare - September 2014

The following is not original material. This interview is reproduced with permission from Cinema, a former Twitter personality & blogger who left the social media years ago. The reproduction is intended to preserve & share Cinema's insightful interviews.

I had the pleasure of interviewing Andy Lodato, one of the friendliest Physical Therapy personalities on Twitter. He is co-owner of PhysioCare located in the greater Seattle region. PhysioCare just celebrated their 7th anniversary. Congrats! I highly recommend visiting their website. It is beautiful, functional, and simple all at once.

He has a unique story and wonderful insights on physical therapy today. You will glean some very applicable pearls of wisdom from this interview. Enjoy!

First, what did you have for breakfast today?

I had cereal with blueberries, a cup of coffee and a cup of OJ. Then, I finished half of the banana my 2 year old wouldn’t eat. I hit the gym and downed a fruit smoothie on the way to work.

Let’s start at the beginning. What initially drew you to physical therapy as a profession?

When I was a Senior in high school, I was trying to figure out my college major. Even though I was a starter on the varsity baseball team, I knew my baseball career would end with high school. I had (still have) a love of sports and academically, I was interested in science. I was trying to figure out how to combine those two passions and my mom knew a woman who was a PT. She was an outpatient PT, so I followed her around for a Summer and fell in love with the profession. This was 1993, so the PT profession was much different then. Seeing patients 3 x week was the standard and they had cool, new technology like ultrasound and electrical stimulation.

Throughout college, I kept PT in the forefront of my mind and my GPA ebbed and flowed depending on the amount of beer consumed during each respective semester. I wasn’t sure my GPA was good enough to apply to PT school, but did it anyway. I received 2 interviews and I was waitlisted at both schools. A week before my undergrad semester ended, I got a call from the University of Texas-El Paso. Going to PT school on the border was an interesting experience both culturally and clinically. I would venture to guess its the only PT school in the country where you can go to AM classes, have lunch in a different country and walk back for PM classes.

A little side note to this story is I don’t have a Bachelor’s degree. Back in those days, you did not need a Bachelor’s to apply to PT school. I have a Master’s, I am 2 semesters away from a Doctorate and no Bachelor’s degree. I am waiting for a program to open up a Transitional Bachelor’s program.

How have you changed as a Physical Therapist since graduation?

I feel like I am constantly changing or better yet, adapting. The biggest change for me has been my interactions with patients. I hear a lot of people talk about the need for business skills to be taught in PT school. I don’t disagree with that, but more importantly I think there needs to be a much bigger emphasis on human interaction and communication. Why isn’t there more continuing education focusing on communication, human behavior and human interaction? The interaction with your patient is the key!

When I started, I thought it was all about my skill set and I could not have been more wrong. I was an absolute disaster relating to patients. My cancellation and no-show rate was through the roof! I look back now and feel bad for those patients who had to deal with me. The best PTs out there are the ones who can relate and interact with different personalities, not the ones with the most letters after their names.

How has Physical Therapy as a profession changed during your career so far?

The amount of paperwork has increased tenfold since I started my career. Insurance companies clearly are trying to validate the need for our services by us filling out paperwork, functional scales and pre-authorizations. Its ridiculous.
The amount of post-grad certifications out there is staggering. The problem is our consumers and most other healthcare practitioners have no idea what these certifications mean or how they translate to better care. Its become alphabet soup….Full disclosure here, I am TOTALLY guilty of this myself!

Tell us about the Doctorate of Science degree that you’re pursuing.

As I said above, I am 2 semesters away from finishing up my ScD at Texas Tech Health Sciences Center (TTUHSC). Ironically, I went to undergrad at Texas Tech and when I applied to PT school there, they never gave me an interview. I remind my advisor of that each time I see him.
The program has an emphasis on orthopaedic manual therapy. Its partnered with International Academy of Orthopaedic Medicine (IAOM) as part of the curriculum. The program has 2 tracks: Research and Teaching. There is online learning and contact sessions at TTUHSC and via continuing ed through IAOM. The professors in the program are pumping out a ton of research, teaching and all practicing clinicians. They truly “walk the walk”. I am currently pursuing the research track and hope to collect data on my research project this Fall. It has been a fantastic learning experience and a great networking experience as well. I have met tremendous PTs from around the country and around the world.

What big/simple ideas/basic concepts do you believe will help all Physical Therapists become better/smarter/wiser?

Its about the patient. Remember, we all got into this profession because we felt a calling to help people. When you are in the hospital, clinic, etc. remember it ain’t about you, its about them.
This is a profession, not a job! Professionals are constantly updating, improving and honing their craft to make themselves the best they can. I really believe if more PTs treated physical therapy as a profession vs. a job, we would eliminate a lot of the problems we face right now.

Rather than starting a PT Practice from the ground, you partnered with 2 other PTs to purchase PhysioCare. Why did you choose to buy a practice versus start a new one?

We felt buying a practice would provide an opportunity to not only bring in our own referral sources, but capitalize on the referral sources of the existing practice. We definitely thought carefully about both ideas, but in the end purchasing a clinic made more sense. It also helped there was a clinic for sale!

And, what determined the purchase price of the practice? In other words, if you were to buy PhysioCare today, then how would you determine how much to spend?

We calculated what it would cost to startup a clinic and then looked at the financials of the existing practice and came up with a purchase price. The seller had a selling price and we were not far off on our numbers. Determining the purchase price was a valuation done by both our accountant and the sellers accountant. There are a million ways to value a practice and how to interpret a valuation, but the bottomline for us was the purchase price of the existing practice did not exceed what it would cost us to start a clinic from scratch. Looking back, I am sure we could have negotiated a better price. We were eager to get in and with the clinic’s existing referral base plus our own referrals, we were busy from day one.

What advice would you give me if I were to follow your precedent and buy a clinic? (What specifics did you look for at that time?)

1. Find a clinic for sale – Sounds obvious, but not all owners are actually advertising they are selling. Some advertise by hiring brokers or advertising on PT sites, business sites, etc. Others may not. We found both of our clinics for sale on Craigslist. I also think having conversations with owners during networking events or at conferences is a great way to get an idea if a clinic is for sale. I have found owners (who are thinking about selling) are quite revealing when asked about future plans.

2. Location – Everyone wants to be in the same town or right next to the local hospital or huge medical building….I don’t disagree, but I think being in the next town over from the big hospital has huge upside which a lot of people miss out on. More than likely your big PT chains, POPTs and HOPTs are located right next to the hospital. On top of that, there will probably be a private practice or 3 located there as well. The next town over may not have as much competition and POPTs/HOPTs physicians may be more apt to refer because their patient may not want to commute all the way to their locations. I also think you can get integrated in the community a little better in a smaller community without a big, local hospital. That integration can drive business. Finally, the practices for sale next to the hospital may have bigger overhead. Rent near hospitals is really, really expensive.

3. I am going to assume a potential buyer will get all financials. If you are buying a clinic and don’t get the financials, then you are an idiot and should not be in business. Which financials are more important than others is probably an independent decision and too in-depth for this conversation (and I am not an accountant). Beyond that, one thing I look at is the variety of referral sources. Not all owners will have referral data at their fingertips. With the advent of EMR, they should be able to access that easily. If an owner does not have a wide variety of referral sources, then I think that is a red flag. In my opinion, it means either the clinic is not the go-to clinic in the community or the owner is the main reason for referrals and when he/she departs, the referrals may depart with them.

PhysioCare now has two locations. How did you decide on the second location?

We were approached 3 months after buying our first clinic to purchase another one. We were just trying to get out heads on straight and another owner approached us about buying him out. We declined and looked at several other opportunities which didn’t work out. We passed on a few and a few expansion opportunities passed on us.

About 2 years ago, we got serious expanding from scratch which was nerve-racking. We focused in on a community about 10 miles from our location. The community was growing, it only had 1 clinic in town and was far enough away from our first location to not cannibalize referrals. We did some research and then the clinic in that community came up for sale. Since the formula of purchasing a practice worked out prior, we jumped on this opportunity and purchased our 2nd clinic.

You gave a talk with Jerry Durham on marketing at CSM. Since some of my readers and I missed the event, what were the key take-aways from the talk?

I could probably do a whole interview on my talk with Jerry and that week in Vegas. It was such a great experience! First off, let me say that there was not a better person to co-present with than Jerry. He is clearly experienced in presenting and has an amazing passion for the profession. Secondly, let me say that Jerry and I could not be more opposite in our personalities, presentation styles and choices of NFC West football teams. He is very extroverted and I am on the introverted side. I believe I used 23 slides during my presentation, Jerry had 3 slides (and I don’t even think he got through them all). I like NFC West teams who are current World Champs, he prefers teams who have not won a championship in like 20 years. Anyway, you really wanted to know about the talk…..

Jerry initially approached me about doing a talk regarding marketing in a direct access state (Washington) and a non-direct access state (California). At the time we submitted, California did not have direct access. By the time we presented, California gained direct access under controversial circumstances which Jerry has vocalized on multiple occasions.

My portion of the talk discussed how PhysioCare focuses marketing directly to the consumer. Microsoft HQ is about 7 miles and 10 miles away from both of our locations. Microsoft employees enjoy full direct access. Also, there are other big employers in the area such as Boeing, Starbucks, Amazon and others who also have some form of direct access. Our marketing efforts focus gaining the loyalty and respect of the consumer. We use various tactics such as social media, community involvement and creating an clinical environment where patients enjoy coming to PT. I also discussed how “soccer moms” are our best marketing tool since they spread our message the best and have access to the younger and older population. Jerry talked about how San Francisco Sport and Spine built their success through marketing to physicians. Jerry discussed the importance of relationship building with physicians and using his company’s core values as a foundation for his marketing. He did a great job of describing how he approaches physicians and continues to build relationships.
The marketing angles might be different, but the core of the marketing is the same. We both have target markets and we both build relationships.

What has been your most successful marketing effort? Why do you think it worked so well?

I think the most successful marketing effort has been the overall theme of marketing to the consumer. I believe we use the consumer to be our bullhorn and they tell friends and family. Also, I believe they go to physicians and tell them how good we are which makes a huge difference. I firmly believe that our PhysioCare “family” gets steered to different clinics, but they return to us because of the culture we created and marketing to them directly.

Favorite books & authors?

Tipping Point and Blink by Malcolm Gladwell and anything by Tom Clancy (RIP) are my favorites. I am not reading a ton right now that is not ScD-related. Once I finish with school one of my goals is to get back into reading.

What challenges do you face by being both a family man & business owner? And, how do you manage these challenges?

Oh boy, this is my struggle! The biggest challenge I face is time. Trying to manage my time with business, school and being a husband/dad is a constant source of stress. My wife also works full time, so I think we are able to struggle together which makes a difference. We can help each other out and empathize with the each other. Both of my kids are young (ages 5 and 2) and that helps a little. We are not shuffling them from school to whatever activity they are involved in….yet. As they get older this will get tougher. One strategy for me is to try and disengage from work when I get home and spend some quality time with them either horsing around or reading a book. Even if its 15 minutes, it makes a huge difference. I also try to get some alone time with each of them on the weekends. I am not perfect with this, but it is a constant work in progress. I think my wife is much better at this than I am. I am too much of a workaholic and owning a business has only fed that fire. I continue to work on strategies to get a good work/life balance.

Imagine you’re sitting across the table from yourself right after graduating PT School. What advice would you give yourself?

This profession and your patients will humble you. They will humble you with their generosity, their complexity and their vulnerability. You won’t realize the power that you have to help someone just by listening and talking. The profession is a “Physical Therapist”, but all of those psychology classes you took in undergrad will be of great use to you. Also, remember to be have patience. Your career and development will take not happen overnight. All of the bumps in the road are part of the journey.

Now imagine that you’re 95 yrs old. Choose one of the following two questions to answer:1) What advice would your 95 year old self give to your current self? OR 2) Looking back on your 95 years of existence, what would you want to be able to say about your life?

I just want my life to have an impact on someone’s life. Whether it be through being a dad, family member, friend or PT.

Life is an adventure. Tell us about one of your favorite adventures.

The one that sticks out in my mind happened the first weekend of my freshman year in college. I was at Texas Tech University and rooming with one of my best friends from high school. Four of us decided to drive to Dallas (about 5 hours away) to catch a Texas Rangers baseball game. The Rangers were playing the Minnesota Twins and Kirby Puckett was my favorite player growing up. We got to the game and a Church group was outside the ticket window giving away tickets because members of their group had not shown up. Score, we got into the game for free! When we got into the game, we were sitting next to a group of older guys who befriended. We told them our story about who we were and how we drove from Lubbock just to see the game and we were planning on driving back that night. They loved it and bought us all dinner at the game. Score, free food! The game finished and we got into our car and were in game traffic trying to get out of the stadium. We were stuck on the main road leaving the stadium, when a drunk driver crossed over the center lane and hit a car head-on right next to us. The force of that collision drove the drunk’s car into ours and smashed our driver’s side window and door. The driver’s side door wouldn’t close. The police were called and thankfully, no one was injured. After all the reports were filed and arrests were made, the police said we could go. Well, problem was we could not close the driver’s side door and had a 5 hour drive ahead of us. We pulled into a gas station and tied the door closed with some rope. I drew the short straw and drove all night without a driver’s side window and a door held closed by rope. We pulled into our dorm around 4 AM…..The most frightening part of this whole story is the following week when my roommate’s parents came to visit and we had to explain what happened.

Andy, thank you so much for your generosity and time with this interview. I learned lots, and I’m sure my readers have as well.

Connect with Andy via Twitter and Facebook to keep up with him.

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