Transcription PNC Podcast Episode 409

Why Business Ownership Is Better Than Real Estate Investing

with Dr. Chiagozie Fawole

John: One of the best ways to build wealth and financial freedom is to become an owner and investor rather than an employee. I think most of us know that already. So I'm excited about today's guest who will explain how she employs both real estate investing and business ownership to achieve financial independence. So Dr. Chiagozie Fawole, thank you for being here today. Hello.

Dr. Chiagozie Fawole: Thank you so much for having me on Dr. Jurica. I am very excited about it.

John: I am very excited about it too because I've spent the last couple of days watching a bunch of videos with you and your guests and some other things. The more things I listen to, you know, a lot of it's about mindset and it's when someone's like positive and being really, you know, enthusiastic, it wears off. So that's... I was even listening to some related podcasts today. But anyway, let's skip that. Tell us about yourself briefly and I guess kind of segue into where how you got from being a physician, which you still are obviously, into real estate.

Dr. Chiagozie Fawole: Yeah. So yeah, thanks for having me on actually. So I'm Chiagozie Fawole, like you said, I am a pediatric anesthesiologist based in the Syracuse area, mom of three kids, business owner now. How did it start for me? So I was born and raised in Nigeria, came to United States at about age 16, Howard University, Johns Hopkins, you know, did the whole med school route. But it was during residency actually, while we were in Brooklyn, New York, I was at... I had this itch because I noticed, and no shade to anyone, but I noticed that we had attendings, because at the time our attendings were like bias dinner on call. And I noticed that there were some attendings that were like, oh, you know, we'll just buy anything you want. Like, what do you want? We'll buy it. And then there were other attendings who were like, you get $10 and you get $20. And I was like, that was a huge... I was like, so clearly it means that just becoming an attending doesn't necessarily equal having a ton of money. At least it seemed that way.

And it created this sort of hunger or itch or quest in my mind that, okay, what is it that these ones are doing that they have all the money? Like there has to be something else you can do to boost your wealth, to grow wealth. And I began searching for the other thing. And then I was watching TV one day, watching Flip or Flop with Tarek and Christina on HGTV. And I saw them do a flip, a real estate flip, and they made $60,000. And my eyes were like googly-eyed, like, wait, what? Cause at the time we made about $54,000. Oh, I made 84k as a resident. So these guys just made my entire annual salary in one deal, no call, no missing kids event, all of that. And I was like, whatever they're doing, I need to go learn it. So I went down this huge rabbit hole of real estate and eventually got my first deal done and subsequent deals. And we can talk a little more about that, but that was the beginning.

John: Yeah, I've seen that show several times and the other shows that they had. I get the sense that there's a lot of that happens in the background. It may not be as easy as I'm sure you found that out if you've done real estate.

Dr. Chiagozie Fawole: Oh I sure did.

John: But still, it's a thing and it could be very productive and, you know, financially excellent. So let's see, though. Tell us a little bit then about the type of real estate, because I've had some guests on doing real estate and it just varies like so many different options. And so what have you come up with as sort of the best options for you?

Dr. Chiagozie Fawole: Yeah. So I chuckle because it's almost like if it exists, I've probably thought about it and maybe taken a stab at it. But the first deal that we did was actually a flip, just like on TV. And we found a deal all the way down in Norfolk, Virginia from Brooklyn, New York. I was able to, you know, organized the deal and then my dad was the boots on the ground person because they live about 30 minutes from it or so. Turns out that one did not work out like on TV as you as you anticipated, right?

John: Oops.

Dr. Chiagozie Fawole: Actually we lost 10K on that deal. After that one, it was like, OK, well, that may be a little risky. What else can I do? Now at this point, I was knee deep into the real estate forums online and I heard of, you know, multifamily. I'm like, OK, great. Well, the kicker here was I didn't have money to start. OK. So I figured out, you know what? I don't have money, so I might as well get a deal that's big enough that I could bring other people in and have a cut for myself. So I ended up doing a 12 unit apartment complex, got about five other investor parties, and we basically split the deal. It ended up being roughly one sixth a person or an investor group. So we ended up owning about 16% of that deal, but they brought all the money.

John: Got it.

Dr. Chiagozie Fawole: I ran the deal on the back end that was multifamily. Now at that time I thought, you know what, let's go get 2000 units. You know how they talk on the, on the internet. I'm like, let's go get, you know, 2000 units and blah. And my husband goes, actually, no, he did not want to have to, you know, have the burden of people's money and all of that. And he's like, can we, can we just do just like what we're able to do by ourselves? Like, let's not add that extra stress to, and I'm like, okay, fine. Because between the two of us, I tend to be a little more of the like, go, go, go. And he's more of the like the safety, you know, like the...

John: That's a good match up.

Dr. Chiagozie Fawole: It's a perfect match up between the two of us. And so when we moved to Syracuse, so those first two deals actually happened while I was still a resident and now going through my one year fellowship for Peds Anesthesia. So by the time I finished my fellowship, we moved to Syracuse. Within the first three months of being an attending, we actually ended up having a major life event. I had a preemie born at 25 weeks during that period, but we ended up buying our first two duplexes in December that year. So our motto when we came to Syracuse was more of let's just buy small multifamily properties using what's called the BRRRR strategy where you buy property, rehab or renovate them, refinance and basically take the cash out and do it all over and over again.

And that was our way of using, you know, a pile of cash that we got in that, in those first few months and basically just recycling and building our portfolio. So we did that for the next, so that was 2017, did that until 2020. 2020, we bought our, what was our last multifamily property just as the pandemic was starting. But at this point now I was helping other doctors get started and I could, each time I got on sales calls with people, they were telling me of how they wanted to like leave medicine. Like yesterday they needed something that could give them cashflow. And I'm like, okay, well it's not what I'm doing because this takes time, but I'm like, but there has to be something.

And that was when I found this thing called rental arbitrage, which is where you lease a property and turn it into a short-term rental. Yeah. And in a three month window, I was able to get 10 apartments and turn them into short-term rentals. And at that point I was like, anyone who had an ear had to hear about rental arbitrage, because I was like, previously you were limited by how much capital you had, but now with just, you know, $7,000 or even $4,000, you could be into a unit that will create 1K a month. Do that a couple of times. And so I hosted a conference for short-term rentals at the time. It was called the short-term revolution podcast. And I was so excited about it. We got about 1500 doctors roughly to attend virtually at the time. And because at the time people were just starting to like do short term rentals, but it was almost like this like silent thing that was happening that you could just see people getting to short term rentals and not talking about it. But then they were making like crazy amounts. And as I interviewed people, it was like, wait, what? You guys are here making 150K per property and not talking about this. Like, what is...

John: OK, pause there for one minute. I just want to make sure it's clear to some of the listeners that maybe haven't at least dabbled or looked at this. So you're basically, let's say leasing or renting the property at like a standard rate, thousand, two thousand a month or whatever. But because you do the short term rental, you're charging... What would the amount be? Five, ten times that amount?

Dr. Chiagozie Fawole: It was usually about two or three times at the time. Just enough to get you a good enough...

John: Yeah, healthy. That's quite a bit. I know you have downtime in between, so there's gaps. It's not like short-term rental is gonna be for a year. So you have to fill those gaps in as many as you can. Okay, so I just wanna make sure listeners understood. I mean, when I heard about that, that sounded like, wow, that is awesome if you can do it. I never tried it, but it sounded awesome.

Dr. Chiagozie Fawole: Yeah, it was actually pretty crazy. But then what then happened in the subsequent years was that rents began to go up and it became a lot harder to find where those numbers worked. But while I was interviewing the doctors and professionals for that conference and I was hearing their numbers, people were talking about buying property for 600,000 and then making 150 in revenue. I was like, wait, what exactly? But then I had ruled myself out of being able to buy short-term rentals then because I thought they were too expensive. But it was during that conference that I learned of the financing options that you could finance them at 10% down instead of 25% that I thought you had to do for investment property. So once that key was unlocked for me, within the next two months, we bought our first lake house and that marked the true, it marked our pivot into actually just buying. And so we started buying luxury lakefront property. And from a real estate standpoint, that's sort where we have now sat for the last three, four-ish years now.

John: OK that's a little busy you've done a lot in a few years. So are you now, do you still look for new opportunities there? Are you kind of satisfied with what you have? And then maybe you can tell us just how many you have or what they look like, something like that.

Dr. Chiagozie Fawole: So about two years ago, we were thinking of ramping up and ended up buying five properties in a very short timeframe. Most of them needed some work. And I thought, you know what, I've done renovations before, because our model really has involved renovating houses for the last, I mean, since we began, really. But it ended up being actually more challenging from basically every angle. Like at some point, the city shut us down for one of the properties. At some point, you know, one of them went over budget and ran out of cash. It was just very interesting. But at some point it began to stabilize and it was really, it ended up being really a journey of both faith and tenacity and, you know, just going through the motions and, but during all of this time, the idea of buying a business sort of began coming up. Okay. So it was now a case of like, okay, you don't need to, break yourself buying property. What if you just stabilize the one, actually like get through this hurdle, but while you're doing that, start to look for businesses.

And that was sort of how that transition, not really transition, or at least mindset thing began to transition. Because one thing that I found is that I love real estate. I love taking a house from, you know, ugly to pretty. But one thing I learned was that you need to have capital, not just available, but also in reserves. And after 10 years, you will think I would have known this already, this like having done this now with like multiple at one time, I realized, okay, don't do this to yourself. Like just take it easy, get your cash printing machine, which is a business of some sort. And then you can rehab to your heart's content. And that was when, you know, I mean, at that point I was, I was already, I had been building my coaching business for a while. So I knew that business has made money. But when all of these happened, it really just solidified in my mind that, okay, maybe the focus right now should really not just be on acquiring the property, but on acquiring something that then is that cash printing machine that then can fund the fun projects of renovating and doing the short-term rental thing.

John: Yeah, I mean, and they're probably... I mean, there's an infinite number of businesses that would tie to real estate. I'm assuming I could think of many, but, like my sister worked for someone who was a jeweler and she owned the jewelry business and she owned the building. And then she retired. My sister ran it for her and she was, you know, getting her percentage. He was good. Plus the rental on the building by the business. And so then, okay. So that sounds very intriguing. And I think people are going, oh, so how are they, how did you approach this and what direction were you going once that aha moment came?

Dr. Chiagozie Fawole: How happened? Yeah. So the first time the idea of even looking into businesses came to me was an online event that I attended back in 2020. But at the time it kind of seemed like, Oh my gosh, this is a really cute idea. But it didn't see like, it's almost like I didn't see it as something for me. It seemed like something for them. Like I'm in this room with these people buying businesses. I remember I even signed up for the guys course at the time. And I remember being in those rooms and just feeling like everything was like above my head. Like it felt like just this huge concept that will be nice one day, but I hadn't embodied that identity yet. It took about two years. It was in 2022. I then went to a different conference or event. And while I was sitting there, and talking to the people, actually, I remember it was on Sunday morning, I sat next to this lady who had actually just bought her first business.

And I was talking to her regular, you know, good old American woman with two kids, single mom, you know what I'm saying? Like very regular human being talking about the business that she acquired with no money down, that made 30K in the first month profit. And I'm listening to her like, this is flesh and blood. She's a human.

John: Sounds too good to be true, but let's see what happens.

Dr. Chiagozie Fawole: And just talking to her just unlocked something for me that, okay, like she can do it. I can do it. And so I, then I left that conference. Oh, and sorry, that same event. I also saw the numbers. I'm, that was when my eyes popped. When I saw the numbers and I sat next to the lady, was like, okay, we're doing this. This is it. I left that conference and on my way back, I mapped out my goals and vision or whatever. And within the next few months, I actually found a business that I wanted to buy. It looked great. The numbers looked great. It was a landscaping company in Maryland. It had, you know, like 18 or so employees. It was making the numbers that I would like. Before debt service, it was going to make me $425,000 a year. Yeah. Before debt service. After debt service, maybe take away about $180,000, maybe $200,000 from that. So I'd have walked away with maybe roughly $250,000 right there about. For a business that I would have bought for one point, I think it was 1.1 million. So 10% down on that would have been about 110 roughly. And it was great.

But then during due diligence, something came up and I was like, Oh my gosh, this seems so little to drop it. But then when I spoke with, I just happened to just be on a call with the guy that actually hosted that event I went for. And I was like, Oh, by the way, like the attorney and accountant are saying that this may be a no-go. He was like, tell me about it. And I told him, I was like, oh yeah, next one. I was like, what? What? Oh my gosh. That actually devastated me. Just like not devastated, like, you know, being all dramatic, but it almost felt like, oh my goodness. If I had simply called him before I sank all my money into due diligence, we could have known this before I spent $28,000 on due diligence. So for the next few months, just kind of like, took a step back, just like mentally recuperating from the deal, because I really liked that deal. And then I began my search again, I would say kind of towards the, actually the next year. Was it next year? No, no, no. In a few months, I began a new search with a new mentor and whatnot. But that was the first one. And then now we have another one that's also, because the mental part of all of it, but the numbers, once you see them, it's really hard to unsee.

John: Well, you know, it reminds me, I think the listeners know that my wife owned a business and she recently sold it. And we were... I mean, we were so open with all of our numbers. There was nothing hidden. So I think the buyer really felt good about it. But then there's a couple of things. I mean, I read through things my wife did the, you know, the offer and then the contract. But darn if my attorney didn't find one or two things that said this should not be in here. Now we were able to get rid of those things that at end of the day, you know, she was able to go ahead and sell. But I could see as a buyer having that same kind of, okay, there's something in here that could explode on me in a year from now or something, you know? And so you've just got to listen to those experts.

Dr. Chiagozie Fawole: You know, yeah, I learned that one because it was like. In my mind, it seemed like a very small thing. It was like a contractor versus employee designation. And I thought, oh, I mean, they're landscapers. They're probably all 10-99. It'll be okay. And I remember I even put it on a Facebook group. Like, is this a real issue? And people came out and they said, actually, Maryland tax collection makes the IRS look like puppies.

John: Okay

Dr. Chiagozie Fawole: And I was like OH.

John: And each state is different, right? in terms of what people have and the different rules or regs you may not be aware of if you live in a different state. All right. So take us on your journey then. Where are we now in terms of your learning as you go here? So you have an idea now, like kind of what's the ideal business for you or for people in general?

Dr. Chiagozie Fawole: Yeah. So initially I was looking for a home services business, and we're talking landscaping, pool companies, all of that, to kind of tie into my real estate background. But then at some point I shifted more so from the industries, now more so to just the numbers. And again, depending on who you're talking with at the time, those numbers will vary. But right now my buy box is that the business has to make more than a million dollars in revenue. And we have a cheat sheet for this, how your listeners can get afterwards.

John: Yeah. In the show notes.

Dr. Chiagozie Fawole: So it has to make at least a million dollars in revenue. And the reason for that is that for the most part, when, you're going to do this, you might as well get something that by the time you get it, it actually means something to you. So a million in revenue sort of like starting is like the business is, is like settled. Okay, because people don't just make a million still trying to figure things out. So at least a million at a minimum and then profit margins of 20% and above actually is more of 25 and up. Now, this is the one that I really use really often and that is 10 employees or more. And that is because, you know, for some people, for some business owners, it's them, their spouse, their, you know, son-in-law, brother-in-law, you know, family members, people that if you pay, they will all get a portion of that payout and could possibly leave. So you don't want to buy the business and then be left with just two people to work the business. Meanwhile, you've paid full enterprise value for a business that had about 10 people, you know, eight or even five people prior. So 10 is our cutoff. Now, will I look at a nine person business? Possibly, if the numbers are good enough, but... but really it's 10.

And then age of the business. So 10 or more years in business or more. So that way when we're not dealing with startups, they say how many percent of businesses go out of business in the first five years. So you don't want it to be that they are in the middle of their throws and then trying to sell the business and dump the business with someone and you now pick it up thinking it was all great. It's actually not that...

John: I've heard another, you know, it's like a similar strategy is there's a lot of people have started businesses 20 years ago and they're they want to get out. Now, they may have a 20 million dollar business you can't afford, but anyway, there's people in all kinds of businesses that are looking to get out. And some of them just want someone that they can trust to keep it going. They don't necessarily have to pay top dollar. It kind of sounds like you're looking at the same kind of thing.

Dr. Chiagozie Fawole: Yeah. Exactly. Yeah, because sometimes people ask me, but why would anybody sell a profitable business? It's like there are multiple reasons. They're tired, they're retiring. You know, some of them it's divorce, some of them it's they just want to move on. There are multiple reasons that people sell, but your job is irretrievable of what they tell you to actually go under the cover, raise the hood and take a look. And that's a due diligence piece that we're talking about.

John: Now, you mentioned it, I think, as you were talking about this, that sometimes they're just getting worn out and they can keep a business going for 10 years, maybe without following the best practices. They get in habits and they do things the old way. They don't even know about technology. I imagine coming in and using technology to streamline things. Makes a lot of sense.

Dr. Chiagozie Fawole: Yeah. So even as we look, that's one thing that we try to see that are there any inefficiencies right now that we could possibly add. For some businesses, when they come all dolled up, like if they're completely stabilized, you'll probably be paying a pretty high multiple for them because they know that they are good. But if you get them at a point where they're okay, they're profitable, they are functioning, but they have a couple of loose ends here that could be tied up, that could be an opportunity. Certainly what we look for as we search for them right now.

John: All right, do you have any out there you've looked at recently that fit in there? Because again, you're focusing on the financials. And is the business, the nature of the business all over the place or is it kind of down to a set type of business?

Dr. Chiagozie Fawole: Right now, I think my husband has successfully weaned me off the landscaping hype. I really wanted a landscaping company because in my mind, if I needed to do my backyard, why not just buy the company and then do the backyard? Because otherwise it would cost me $100,000. But now I've been weaned off that. I still like the home services space if the numbers work. I'm still looking at, I found a plumbing or HVAC company right now, I would happily take a look at that. I've come to also like equipment rentals because the few that I have looked at have been pretty solid. And actually right now we are looking at one like very seriously. But it's really, when it's not been real estate, it's kind of been in that heavy equipment zone. Also because those equipment companies tend to have a lot of equipment which will give you nice tax deductions on the back end.

John: This has been awesome. Okay, let's pause here because I need to do a promo for you in a way. Just because I actually listened to a bunch of lectures the other day that you produced in whatever was webinars with a bunch of different guests and I don't know if that's still available to people but Let's start with your website. Where can they find you and learn all about you?

Dr. Chiagozie Fawole: Yeah, so so primarily right right now if you go to savvydocevents.com that will be the first kind of window into our world. Yeah, but a very nice way would be even to just to grab that. Grab that cheat sheet of the five things to look for in a in a business you want to acquire and that will be savvydocevents.com/5things— number five.

John: OK, got it. Five things up with that in the show notes. And the website, of course. And then you don't mind the occasional inquiry on LinkedIn.

Dr. Chiagozie Fawole: Absolutely.

John: You can ignore those if you want.

Dr. Chiagozie Fawole: People reach out to me from LinkedIn, Facebook. I'm usually more on Facebook, but I do get LinkedIn notifications on my phone as well. But for those who want to just kind of see all the things that I post, it's probably going to be on Facebook to find me.

John: OK, excellent. OK, let's go back to what we were talking about. So let's just wrap it up in some way this way. So now with all the experience you've had, you're working on something right now. If someone was, let's say five, 10 years out of residency, they're half burned out. Now maybe they've paid all their loans off. They've got some money put aside. Maybe that isn't necessarily in a 401k or something. And they're thinking, yeah, I think I do want to maybe pursue something entrepreneurially. What would you tell them to start? Not really knowing what their interests are, you know, real estate business, something else.

Dr. Chiagozie Fawole: No, I would recommend that they buy one short-term rental because I truly believe that every doctor needs, I say every doctor needs a Doris because Doris was our first lake house. The reason is if you've never done anything entrepreneurial, it's like entrepreneurship on training wheels. You'll get the experience of going through a transaction, of negotiating, of actually getting it closed. The experience of having a place that you can actually get away to, you and your family, right? And you can also lock in some pretty hefty tax benefits by getting a short-term rental, not just any kind of rental, but a short-term rental that can possibly offset your W-2 income. But while you're doing that, then learning about buying a business, I think, will be the next move. And the reason that I put it that way is because, at least even with my clients to like redo a 90 day sprint and people can have a property in 90 days. So literally between now and what's, you know, now and July or now in August or whatever, you know, his gets, this gets released 90 days from now, you can start from absolute zero and be collecting bookings from your guests in a short term rental. So that can be done like that.

And then you can start learning about, you know, acquisitions and all those things, which it can happen quickly or it may take a little while, but at least you've begun to of grease those wheels of entrepreneurship, starting to sort of build the identity, because that's a huge piece of it too, the mental reworking of being a physician and entrepreneur. It's a whole mindset shift that happens. You start to kind of find yourself in circles asking questions that are nonclinical, making money that is not tied to being on call or being at work. It's a very good thing.

John: I think that's great advice. And then I think, you know, if you feel like you enjoy that, the idea of buying an existing business, having, you know, gone through starting one from scratch, albeit it's a, it's a franchise, so it helps the startup, but you know, there's eight, 10 years of, you know, struggling and then. She sold it after 16, so it worked out fine. But I like the idea of really focusing at some point if you have any interest in being an entrepreneur on the small business or medium business even. Let's see, I don't know if we touched on too, I was going to just say, what is Savvy Docs looking for in the future? And I think you did mention before we got out that you have some event coming up, which is probably not being promoted yet, but tell us about it people will listen to this four months from now.

Dr. Chiagozie Fawole: Absolutely. So you know how I mentioned that I went for a live in-person event? in 2022. Well, in December, I hosted a virtual event and people were asking me, there a course for this? And I was like, well, I don't have a course. But then I reached out to my mentor and I said, Hey, you want to teach something? And he agreed. So we actually hosted two iterations of this and people went through it. They loved it. But then I said, you know how I went for that event in 2022. Can we do it again? Can we do something like that for our people? And he agreed. So September 12th through the 14th, up here in Syracuse, New York, we will be hosting what's called Catalyst, a business acquisition bootcamp to help people get started.

And the idea is you come in one weekend, Friday, Saturday, and then finish up on Sunday. But one weekend, you will learn how to pick an industry, pick an niche, pick whatever, how to find good businesses, how to screen them, like I just told you. how to actually find them, like the actual mechanics of finding them, how to fund them. So both creative financing, deal structuring, different, you know, nuanced things that you can do with transactions, and then how to grow and scale them. So Mike, my business partner, he has bought over 50 businesses at this point. He's done over 50 deals. His current portfolio generates about $145 million annually. So he's done this quite a bit. And he's going to be teaching how he grows businesses. So his primary model is that he buys them, he grows them, and then he sells them. And he actually says, he's like, it's not the million dollars that you make annually from these businesses that really matters. It's more so what happens on the sales.

So he teaches how to grow them when you have them, using AI, automations, all of those things. And then how to prepare yourself for an exit. So it's not... I say like, it's not a fluffy event, okay? Cause he doesn't have to be there, right? I'm the one that called him. I'm the one that said, can you come teach our people? So he's like, yeah, it has to be to the point where somebody can come in and they learn what they need to know to be able to go out and go get deals done. And so yeah, September 12th through 14th up here in Syracuse, New York. And it's, if you want to check it out, it's savvydocevents.com/catalystlive. So C-A-T-A-L-I-S-T-L-I-V-E.

John: All right. That is going to be something to look forward to. And I'll definitely send a reminder out closer to, you know, it'll be in the podcast show notes for sure. But then down the road a few months, I'll maybe throw out a few more reminders to people. Maybe I'll show up with my wife.

Dr. Chiagozie Fawole: Hey!

John: That can be fun. All right. I think we're about out of time here. I want to let you get back to the rest of your life and your weekend. And it's already the weekend for you because you're an hour early than we are here in the Midwest. So, all right. I mean, I appreciate you coming on today. This has been really fun and I've learned a lot myself and we'll maybe keep in touch. Again, thanks for being here.

Dr. Chiagozie Fawole: Thanks for having me.

John: It's been my pleasure. Bye bye.

Transcription PNC Podcast Episode 407

How to Be Happy and Appreciated: Thrive with Direct Primary Care

Part 2 with Dr. Josh Umbehr

John: You have not been sort of sitting on your laurels and just resting on your laurels, is it? And so you had this great practice. You got a lot of people around you. And so I think you felt, well, you could even contribute more. So you created some new things. So I want to hear about that because I think our listeners, if they're interested in this, are going to want to hear about it.

Dr. Josh Umbehr: Yeah, I think my wife would agree with this sentiment. I heard a quote, success is mental illness weaponized. And so my mental illness is I probably can't shut my brain off. I'm a little eager beaver. I was thinking, thinking, thinking. And so that made it easier, fun to take each project and keep running with it.

So once you had the clinic model, well, if you have kids, there's a whole series of books. Like if you give a moose a muffin, or if you give a mouse, a pig a pancake or something, and they're going to want another and another and another thing. And so you start the practice and then you figure out wholesale meds and labs.

Then once you do that, you realize, well, now we have nine different software systems running. We better fix that because we can't show other doctors how to be successful with their wives or their husbands doing QuickBooks in the basement for hours and hours every month. Well, then we found a local software developer, Joe and Intermotion.

And then they helped us out by being great at what they do, but they had never done healthcare software before. And I was like, great, because I've never found healthcare software I like. So you don't have any bad patterns and then just keep fixing problems.

And to this day, we have more irons in the fire than fire. It feels like if you tried to stop running downhill, you'd fall over, but we're very excited to have probably the number one EMR program for direct care, Atlas MD. And we do all of our consulting for free for anyone in the movement because number one is growing the movement, rising tides, raise all ships.

But eventually then the next biggest problem that doctors or patients ourselves saw was we had some options to make custom insurance around direct care clinics in some states and for some employers, but we needed something more extensive overall. So March or December 3rd of 2024, we launched a health insurance product just for direct care and their patients. And let's fix that or let's fix it is our tagline because that implies community, that implies that there's a lot more work to be done, but we do it together.

John: That's interesting, because you've sort of opted out of insurance and yet you're saying, well, but we need a special kind of insurance. Now I've heard of crowdfunding and things like that, which I assume is not what you're talking about, but maybe it is as a way to put money aside proactively so that when you need it, it'll be there if you have to opt out of the DPC or see a surgeon or something. So explain more about the health insurance.

Dr. Josh Umbehr: I'm on this big kick now. I think once you start seeing this, you'll see this everywhere, but the parent company for the insurance is called NHI, not health insurance. And so, Elon had not a flamethrower and there's all these versions of this, not first class or not, but something else or something better.

Because we definitely wanted to do a different type of health insurance because we had to, you're remembered for the rules you break. Every ACA enabled plan does the exact same thing in the same broken way. And then Einstein's quote of insanity is doing the same thing and expecting a different result.

The solution to the broken health insurance program is less insurance. And there's so few times where people acknowledge the solution is less of something, not more of something. We keep trying to add more red tape to a broken bureaucracy and we're surprised that it grows. Again, if you say that direct care can make 80 to 90% of healthcare too cheap to insure, what's left? Actuarily, not a whole lot. Car wrecks, cancers, heart attacks, ER visits, things like that.

We worked with the best people we could find in insurance fields to say, help us thread this impossible needle. This Gordian knot. And you kind of have to become the villain, I think, in your own story because the insurance free guys are now insurance licensed agents in 18, 19 States.

You got to have your foot in both worlds. But so it's a fixed indemnity product where it is not a ACA plan, proudly, because then we don't have to play by the same rules and we can carve out everything that direct care does well and try to cover the rest. I will say like any good agent, asterisks, it's not the right insurance for everybody, but the kind of nervousness.

Nirvana fallacy is that if you don't fix everything, you don't fix anything. And people will often tell me, well, in family medicine, but you don't treat cancer. The hell I don't. I cure skin cancer quite frequently with biopsies or 5FU or different things and all of that skin cancer. Oh, well, it's still I had a patient with a glioblastoma, her chemo was going to be 26,000 a month that we could get for 1200 a month. Not because I knew anything other than how to type in the wholesaler's page and be like, well, what medicine are you on? Well, it says here it's 1200. Every doctor should do that. It's not a skill. It's an option. It's a commitment to do the best thing for the patient. You start carving all those big things out.

The rest is very simple. And a fixed indemnity product gives the money back to the patient. So now you don't have a copay, a deductible, or a network.

The money goes to the patient. If they're in a model like this, they qualify for uninsured or self-insured discounts at our local HCA hospital, uninsured or self-insured patients on the HCA website are eligible for a 92% discount. It's ridiculous. We're insuring the wrong number. And that's not because doctors are bad or insurance companies are bad specifically. It's because of a bad system.

I'll say it again systems and when they fail is we should understand this more. The Affordable Care Act for all it's good and bad created a system where insurance companies were punished if they decreased the cost of care because the 85% corridors and these things that even if they were innovative, they would still get punished. So they're legally anti-incentivized or anti-allowed, but the pie only gets bigger.

So you had to come out with a different insurance company or model that says, all right, the national average for a cash rate for hospitalization, I think is around 2,800, if I recall, depends on your search terms. We reimbursed the patient $3,700 per day. But at a 60 to 90% discount, depending on the website, it's structured so that some people will make money on this.

And we've seen that example play out throughout time. Recently, we just launched the insurance. So we don't have a lot of actual examples, but we have lots of patient examples who went to the hospital. What was their bill? How did we get it down by 90%? So what would that look like in the insurance reimbursement?

To the point that Atlas EMR has recently partnered with a company called Goodbill. And so that every clinic using Atlas EMR gets free help with hospital bills for their patients. So now they have free help getting information about where they qualify for discounts, their local hospitals based on non-for-profit status.

But then they'll also help negotiate a hospital bill down afterwards and just take a fee of the savings. So, it's a win-win for everybody. It's become so ridiculous in a broken model that the solution seems hard to believe.

The problem seems hard to believe to me. But this fixed indemnity product, again, may not cover everything, but either does Medicare. One of the fun facts you learn along the way of getting insurance licensed is Medicare has a deductible. That's exactly what they call it. They don't pay for the first three pints of blood you get in the hospital. Those are on you.

John: After that, anything goes.

Dr. Josh Umbehr: After that, hey, Uncle Sam's got it. But they don't do dental or they don't do vision or they don't do a lot of stuff and no insurance pays for everything. So we do hope the model will crawl, walk, run as it picks up momentum.

But direct specialty care is popular. Cash surgery centers are amazing. All these sort of things that now less insurance is the obvious answer. It's better for patients. It's better for physicians. It's better for employers.

It's really even better for the insurance companies. I hope one of those big companies comes in and out-competes us on this model. I don't think they'll be able to because we're just so amazingly cheap.

The national average for a family of four under 45 is $2,500 a month for an employer. Our prices are under $500 a month for a family of four. So that's an 80% savings right there even before you get to no deductible, no copay, and you might get money back.

There's a lot of room in this insurance, and you might not, but somebody has to come along and innovate. The two biggest pieces of the puzzle that we've been asked for 15 years is how do I get health care and how do I get health insurance? Normally, they feel like they're very separate, but if done well, one complements the other.

Then your insurance underwriting is so much easier because if you have hypertension in a traditional insurance model, you're high risk because they've got to pay for every doctor's visit and meds and labs. But when your amlodipine is 0.8 cents and your metabolic panel is $2.50, well, you just don't insure that. Now, what was expensive is no longer expensive.

There's a great analogy I like to this from history, two actually, whether they're true or questionable, but Napoleon's egg, I'm sorry, Napoleon's aluminum and Christopher Columbus's egg. Are you familiar?

John: I don't remember hearing about those.

Dr. Josh Umbehr: No. Christopher Columbus's egg, long story short, he discovered the new world, comes back, and they say, well, you're not special. We already kind of thought the world was round.

And so he takes the egg, asks all the king's horses and all the king's men to make the egg stand up. And of course, they all try and they all agree, we can't make an egg stand up. It's designed to wobble.

He takes the egg, crunches the bottom, egg stands up. It's like, I didn't say you couldn't do anything to the egg, but that's how we think of problem solving. Then Napoleon's aluminum, it was so rare that if he wanted to impress dignitaries, his generals ate off silver, he ate off gold and they ate off aluminum.

And then introduced electrolysis. And now we have tinfoil that's so affordable, we throw it away. Capitalism brings the comforts of kings to commoners. It's insane. Not that we want healthcare to be throwawayable, because it's still always valuable, but there's no reason to ensure the most affordable version of healthcare. And family medicine can cover such a broad version of that.

That's the part that's hardest for doctors to wrap their head around. I think often patients get it easier than doctors do, because doctors hear HIPAA and Medicare and MACRA, MIPS and reporting and all this other stuff. And all patients hear is, and I think Jeff Bezos or Peter Thiel, what won't change in the future.

People, what won't change is people will always want it better, faster, cheaper, easier. If you do that to healthcare, you do that to movies, you get Netflix. You do that to hotels, you get Airbnb.

You do that to phones, you get Apple. If you do that to healthcare, you get direct care. So it's an exciting time. Hopefully it feels obvious after the fact, but right now still a lot of work to convince people.

John: Yeah. It's such a different way of looking at things that some people just cannot even imagine it unless they really sit down and study it to some extent. Well, if I have colleagues and listeners, this podcast who are basically they kind of hate what they're doing because of the way the system, and they know there's the system's broken, there must be another, what advice you have for them, how to get started or how to even understand that there is a better way?

Dr. Josh Umbehr: Yeah. First and foremost, everyone's welcome to reach out to me. My email is drjosh@atlas.md or hello@atlas.md. We have live chat on our website. For the doctors, we have all of our consulting is free, just that way anybody can come and ask and learn whatever they want to learn.

For patients, we have atlas.md/map, which is growing daily so they can look for direct care practices around them. But any direct care doctor would probably be more than happy to have local physicians reach out to them. Again, I think it's the happiest group of doctors you'll find is they are so free of that burnout.

Not that medicine isn't stressful. It's still a very empathetic career. But they understand that they're in a spot that they'd never get the luxury of if they were doing regular. I don't see 30 patients a week. Most doctors are seeing 30 a day. Now, I always like to add on the criticism to that is that direct care makes the doctor shortage worse, which I would say that's a fallacy.

Well, too bad is true because that's the ship blaming the iceberg on some level or vice versa, I guess, is that the current system is sinking on its own. It doesn't need to blame us to speed up that is sort of silly. But the inefficient, we don't have a physician shortage, we have an efficiency problem.

There's a great Dr. Antonio on Twitter does research on this and had a great example. It was 63 clicks for a resident to order an MRI in Epic. We have a clicking problem. AFP did a study on this years ago, the most conservative version of this was that just 22% of a doctor's time was wasted on paperwork.

John: Exactly.

Dr. Josh Umbehr: But 22% times the physician workforce would be 165,000 full time equivalents back. And the AMA is about the same noisy stat that we're going to have in like an 80 to 150,000 doctor shortage in 10 years. It's always a wide number.

And it's always in 10 years. If you're that far off, you don't know what the number is, right. But we have roughly 500,000 primary care doctors, 600 patients each, that's 300 million people, we have no problem covering all the patients, we have an efficiency issue where docs are spending in a broken system, they're not doing what they're supposed to do, they're doing what the system wants them to do.

They're doing paperwork for an insurance payment model when they should be working directly for the patient, then I guess I see on average, three or four patients in the office a day, I can double that if I need to, if that means solving the patient access problem. But just more doctors doing this and avoiding suicide and burnout and early retirement and administrative. That's the funny thing.

We do a lot of debates at med schools. Professors love to hate on us for choosing our own lifestyle here and taking care of fewer patients. But they applaud any doctor that leaves clinical medicine for administration. At least I'm still taking care of patients. That's the funny thing is so they have this weird do as I say not as I do mentality when it comes to healthcare.

John: You just mentioned the AMA, I think. Now, I think the family medicine organizations have endorsed DPC, correct? AFPA, ABMF, or whatever, family medicine. What about the AMA? Do they have an opinion?

Dr. Josh Umbehr: I don't recall the AMA. The American Academy of Family Physicians has done a great job because they sponsor one of the conferences every year. The Board of Internal Medicine has had a love-hate relationship with them. Dr. Lee Gross had a very productive presentation at one of their conferences just last month or two. They're coming around. I think that's in part because their internal medicine is so much more specialty based.

So my joke is that the specialists are 10 years behind the family docs on frustration. When I was in training, they had an easy life and great reimbursements and never had to do Pryor-Ross. It was just sunshine and rainbows. And I love this cardiologist, but I remember vividly as a third year resident, we were in with him and a patient asked about diabetes and he put his hand on their knee and said, oh, ask your family doc. Is that what you guys do in here is just put everything back to us? No wonder you can see so many patients, but it's caught up with them.

And that's why more specialists are doing a direct care model as well because the current model is just unsustainable. It's a cold war that I still blame doctors on. There's a great book, Sunsetting Laws. I'd have to check the title, but they interview forever ago, the founders, the writers, the architects of Medicare.

And those architects went out into the medical field a year or two later to see how it was working. And they were shocked at how different doctors were practicing medicine. Before they just did things because it was supposed to be done and there was no box to check.

Once you gave them boxes to check, they became very good at maximizing revenue because you told them, here are the rules to the game, check these boxes. Which is a systems problem. It's a gamifiable issue. So when you remove that, guess what? Doctors still do the right thing. They just don't have to worry about checking the boxes.

John: The general internists too are adopting DPC pretty aggressively, are they, or not as much as family docs?

Dr. Josh Umbehr: Yes. As they get burnt out and they see more and more successful examples of this working, the Delta between DPC is getting better all the time and the current model is getting worse. So the friction to change is less. Now I'm guilty of saying that for the past 15 years, but at some point the dam breaks and no one wants to be the last man out of Vietnam.

John: All right. Well, we've gone, I don't know that we've gone over, but we've gone taken enough of your time, Josh. So I really appreciate it. Yeah, this has been eye opening and I think it's exciting. And like I said at the beginning, you're one of the pioneers. I guess a great resource too, if someone's interested to contact you. I'll put those links in and with that, I'll say goodbye. Any last words of wisdom before I let you go?

Dr. Josh Umbehr: No, thanks for having us on. We'd love chatting with anybody. And again, open invitation to anybody that wants to learn more patients, employers, insurance, doctors. We'll talk to everybody. This is our favorite topic.

John: Awesome. All right. Take care.

Dr. Josh Umbehr: Thanks.

Transcription PNC Podcast Episode 406

How to Be Happy and Appreciated: Switch to Direct Primary Care

Part 1 with Dr. Josh Umbehr

John: I recently interviewed a family physician who established her DPC about six years ago, and her practice was very lean with only a few employees. But this week, I'm interviewing what I call a DPC pioneer, because he's been doing this for a lot longer. It started about 15 years ago, and since then he's created an EMR and other useful resources for DPC physicians. So with that, Dr. Josh Umber, welcome to the podcast.

Dr. Josh Umbehr: Thank you for having me, looking forward to it.

John: This is good. Gosh, I wish I learned this stuff about 20 years ago, but I can just live vicariously through you. What we usually do is, have you give us a little bit about your background and education, and then when did you discover DPC and how did you get interested in it so early in your career?

Dr. Josh Umbehr: Yeah, the long version of a short story I like to tell is growing up, my dad was a trash man. He's a lawyer now, so we still tell people he's a trash man because it's less embarrassing. But he had a fantastic business model for 20 some years, which you pay once a month, you pick up once a week. What could be complicated about that?

And then in 2000, in undergrad, I started working for a plastic surgeon as a biller and coder and he hired me knowing full well, I was just a pre-med student and never done this before. And he had never done it before. And no one taught him in all those years of training or fellowship, how to bill insurance. And he struggled to make what a private practice or a resident would make in private practice because insurance doesn't want to pay. And he came from a medical family. So it was even more amazing that no one thought along the way. So you saw that sausage get made and said, look, this makes no sense. He's fighting every payment for everything and not getting reimbursed well. And he was a brilliant surgeon.

That started the path down this idea of surely there's businesses that run like my dad's business that run well and are simple. And that led to concierge physicians in some areas or fee for service, urgent care and others. But the trend being that insurance is enough of a problem even in 2000 that people were saying, I got to get out of this.

Then I became kind of the only med student really involved in the National Society of Concierge Physicians and watched that for 10 years. And the bitter truth there was that the failure rate was like 98%. It didn't work for most doctors. You had to have some sort of shtick of you were George Bush's doctor or Michael Jordan's doctor or something. But they were, some were making it work and doctors were still excited to leave a broken system and some things never change.

But the business side was very underdeveloped. We learned about it through undergrad and med school and residency. And I was kind of that token guy telling anybody who'd listen, this is what I would do. And attendings on rotations would say this is crazy or, but it was a blast. We graduated residency in July, 2010, launched our practice September 2nd, 2010 to pay homage to the book Atlas Shrugged because that's a key date in that book. And so a lot of our website and story has Ayn Rand-isms throughout it but it's been a wild journey since.

John: Funny you should bring that up because when I was listening to some of your videos online and then I heard you bring that up Atlas Shrugged in the book, which yeah, I definitely have read but you made me think I got to go read it again because apparently you've read it more than once.

Dr. Josh Umbehr: 19 times. Yeah, read or listened to it.

John: Yeah, oh man. Well, so you've done some planning beforehand, obviously. So what were the complicated parts of the beginning? It only took you a few months to get going. What were the little steps in there that needed major attention?

Dr. Josh Umbehr: I really like building the business model. There was everybody knew insurance. So 99% of doctors you talk to just knew that. Occasionally you talk to part of the movement at that time which I think has kind of faded away was the ideal micro practice movement and variations on these things that just really struggled to get any true formation or momentum.

We knew we wanted to be membership based because that was easy from a business model. We knew we wanted to be affordable. Ironically in some ways in those years the biggest complaint against concierge medicine came from doctors that it was expensive and elitist. Now we've come full circle and the biggest risk to direct care is doctors making it expensive and elitist.

We've become our own enemy here. And in a weird way, that's an outgrowth of the successful movement is that doctors before never, they saw more failures than successes. Now they see so many successes that they're getting soft at the edges of the business model. But I remember being in med school maybe as a first or second year, their AM radio show was talking about healthcare innovation. I called up and said, I want to do a cash practice. I remember vividly they laughed like, oh, does that mean you don't take checks for credit cards? Ha-ha, next caller.

Like this idea of even what is a cash practice and insurance free, third-party free, concierge, administrative, had all these sort of rough, ugly names except for concierge, which was at least a nice sounding name, but still didn't quite, people didn't connect that to what it did. So it was a fresh slate in a lot of ways of explaining to patients, this is just a new model. Netflix was 13 years old at the time launched in.

People were at least, you could say something like we're the Netflix of medicine or a gym membership, but it really was getting the idea out that you could do healthcare differently. We would have doctors or nurses come to us and say, it's actually illegal to take cash. No, it's against your insurance contract to take cash if you're contracted with insurance. But I remember in residency as well, they bring the Medicare rep or whatever to help everybody enroll. It's like, well, what if you don't want to enroll? And they couldn't fathom that, everybody enrolls.

And so then piecing that out because in a large way that hadn't been done, concierge movement was so expensive and underdeveloped, they didn't see meds or labs or procedures or imaging or DME as a problem to solve. And again, one time a doctor kind of like, very sort of flippantly said, it's not my problem. It is, and that's the strength of family medicine is that we touch everything. And it's still the underappreciated aspect of this.

Amy Finkelstein's got an amazing set of books, Risky Business, Why Insurance Companies Fail, We've Got You Covered, and kind of her economic research of healthcare models. And she's an MIT economist, and she misses the point. She says two kind of funny things. At one point in the book, she references Helen Hunt, who I've always had a crush on. So I think my wife looks like Helen Hunt.

In some movie where a doctor sends, Jack Nicholson sends a doctor to look, do a home visit and look at her kid. And the kid says, mom, did you know doctors do home visits? And in at least the audible book, Amy Finkelstein, the author says, not in the 21st century, this economist screams at the TV. And I'm like, I did a home visit today. She goes so far as to say, primary care is only five to 8% of the national spend. It doesn't matter how we administer it. Let's move on. Everybody forgets what family medicine or intramedicine primary care peds can do because we touch meds, labs, procedures, urgent care, ER, referrals, imaging, patho. It starts from here.

And so to find a cash pathologist, to find where you dispense meds, again, we had pharmacists tell us it's illegal. And if you read the Kansas law, the board of pharmacy manages pharmacists and the board of medicine manages physicians. And they read their law and it does sort of sound like we can't, but that's not my law.

Because most of them were still part of a corporate pharmacy, didn't really quite appreciate there was a wholesale world out there. That you can get a thousand Lucinapril for $20. A thousand amlodipine, five milligrams is $8. It's less than a penny a pill, even after our 10% markup or getting somebody to give us cash labs and like just figuring out each of these things along the way.

And that's one reason we do all the consulting for free is because none of that's really proprietary. If we all practice best practices, then the whole movement grows faster. If you want to go fast, go alone. You want to go far, go together. And we need a thousand doctors converting to direct care a month for the next hundred months to make a real impact.

John: All right, I got a comment on a couple of things here. I did at one point, I was part of a three person group, traditional many years ago. And for whatever reason, the group kind of fell apart. I had to start my own practice. And literally half of the work of doing that and all of the delays was insurance billing. Finding staff that knew what they did, systems, whatever. So you take that out. It's just half of the problem just disappears.

Dr. Josh Umbehr: It's amazing. It really is designed by subtraction. If you're familiar with the Emperor's New Clothes, we were the wise fool at the end of the story because we had never seen how it was supposed to be done. We kind of just did what made the most sense to us at the time. And does it make sense to jump through all these hoops? No. And the key question was, what is the best, most affordable thing for the patient? Well, if you put that out front, then everything kind of just mapped itself to that. Well, client bill prices. When we started 15 years ago, a CBC was a buck 50. Now it's $225, damn inflation.

But it's like, well, I hate doing all of this stuff. I am a workhorse for stuff that matters, but I don't probably tolerate busy work very well. If we can offer unlimited visits and we knew practices were struggling with marketing and value and explaining to people, it's almost starving artist style. You threw as much value at the wall as you could. And then if you did that, the rest just kind of fell in place because you don't need all these extra systems.

I'm reading a fantastic book from 1975. The old phrase, if you want a new idea, read an old book. Systemantics: How Systems Work and When They Fail. And most things are a system, a great line in there. Systems fight themselves, resist themselves. Most systems don't do what they're supposed to do. He had a quote from a Russian czar that said, I never led the country, 10,000 clerks did. And we're not practicing medicine in this system. We're collecting data to send to an insurance company. Those are two very different systems.

And so when you remove all that and like, well, why are we insuring strep throat? It's not even, because I think we're perpetual students and that feels like a multiple choice test. And we did the paperwork, so we should get the dopamine. But we've extrapolated all of these extra steps to get paid when it still doesn't do what the system was supposed to do, which was just deliver a diagnosis and a treatment to a patient.

John: Yeah, you know what? The other thing that occurred to me recently as I'm learning more about this is that my wife and I are not a DPC in the practice, but we opt out or we sometimes we'll just go get imaging at the MRI center and pay out of pocket because it's deductible so high anyway and then hassle factor so high, it doesn't make any sense. So it's like, I don't know, systems and everything is getting in place to really just make this like the logical solution.

Dr. Josh Umbehr: It'll come full circle. There's a brilliant author, Christine Ford Chaplin. She is a medical economic historian. And I think social transformation of medicine, I think is the book. But anyway, she says 1920s, this is the model they did. They called it prepaid medical, but there was no insurance.

And so you had these groups combined. And so she would say a beautifully self-balancing system, because if you, in a prepaid model, if you don't do enough for the patient, they leave. If you do too much and your overhead is too high, you're less profitable.

So you oscillate somewhere in this Goldilocks zone. But then in terms of branding, you'd think you wouldn't want sick people, but everybody could be sick. So you want everybody to think that you could handle them if they were to get sick.

The brand really developed from bringing in specialists and giving out free care and taking on complicated patients, just so you could show all the other patients that don't worry. If you get sicker, we have the resources to help. And in this same book, it talks about how systems oscillate from academia, from letter grade to pass fail to letter grade.

And in true economic fashion, we're coming full circle that the emperor's new clothes analogy again is that the lie we were told is that insurance made care affordable. And I don't even blame insurance companies. I blame doctors.

Because doctors are the ones delivering the care. The doctors are the ones who don't know the prices, who keep trying to prescribe name brand or get paid by insurance. And so that had nowhere to go but up.

We're using a hammer as a wrench. So we're always going to get a bad result. First and foremost, if we're talking business startups in the world of clean energy or clean water, the term is too cheap to meter.

And doctors should be taking business classes to understand what they're doing. So the goal to making healthcare affordable isn't by making everyone have even more insurance, it's by making so much healthcare so affordable, it's too cheap to insure. At 0.8 cents a pill, it costs more to mail you the meds than it does to give you the meds.

There's no reason to insure that. That's great because those chunks of meds make up about 30% of everything insurance pays for. So we could bring it back to 2000s prices if every doctor dispensed wholesale meds, which is well within their license in 45 states. And again, answers the question of what's best for the patient.

John: All right, another basic question is we're going to get too far down here and I'm going to drift off in a different area and focus. But I've got to think of my listeners. So besides the membership model as opposed to using some weird thing called insurance, are there any other major characteristics of this model that make it stand out?

Dr. Josh Umbehr: I think it's that one, there's a lot of flexibility for the doctors. There's a recipe that works best, but like bumper lanes on a bowling alley, there's a variety of stuff. I used to make the joke that you can put almost anything on a pizza, but if you put sushi on a pizza, it's not going to work.

But I would eat the hell out of a sushi pizza. So I'm always in look for a better analogy. So the doctors have that to say, okay, do I want more patients or less patients? And is it hard to recreate this model? No, because it's easy to get wholesale labs, wholesale meds. A lot of the free consulting work we do is just getting that information out to them and letting them know we have a free lawyer, free cardiologist, free radiologist, free pathopharmacist, free national quest account, all these sort of things so that they know, all right, just now come out and practice medicine.

Designed by subtraction, we've removed 90% of the headache. Now you, which I will often say, if you really understand the model, you should wave the BS flag. When done well, this should sound too good to be true.

We have this sort of love hate Stockholm syndrome thing with American healthcare. Canadians love to say that they love their system, even though it's broken. Americans love to hate our system and refuse any possible solution.

But it should sound farcical that we can get meds 95% less than Walgreens. In general, I would say we're 80% less than Amazon, 70% less than GoodRx and 40% less than Mark Cuban. Jokingly, there's not a billionaire on the planet that can get meds for less money to our pay.

So the family physician has all of these tools and you'd think that would be expensive and hard. And the reality is it's very easy. That means doctors can have some staff, no staff, more patients, less patients, chart how they want, do the procedures they want, but it's all in the service of the patient. It's amazing how little burnout there is when 95% of the work is what you would have wanted to do when you were trying to get into med school. Just sit in front of a patient and figure out what's going on. Remove the noise and the job's actually pretty good.

John: Well, one of the things that occurred to me also was when I was in practice, we wouldn't really like to take phone calls and we basically had to drag our patients in, otherwise we couldn't charge them and we couldn't get paid. So it was a weird dynamic where today you could do a one minute phone call, text, whatever. I'm assuming you use whatever methods are convenient to you and the patient.

Dr. Josh Umbehr: It is kind of, I like to think teasingly, respectfully. I think doctors are some of the smartest dumb people that I know because we're so good at being cogs in a wheel, professional academics, et cetera, multiple choice test takers, that it blows my mind that it took COVID for us to finally embrace telemedicine. We knew for, I'll say 40 years, not to bring influenza patients to the office.

Like what a horrible system, but that's the only way we got paid so that we full stop, we won't do it, even though it's horrible infectious disease protocol to bring and then have them sit in an office and for a long period of time and no, no, no, no, no, no. Right, like if nothing else, just bring the sickest patients in or schedule them apart from the other patients or call, text, email them or do anything other than just decide the type of medicine I practice is based solely on what insurance will pay for. Whenever we made that switch, that was the beginning of the end.

John: Let me ask another leading question. This sounds like something, like hang up your shingle, be a solo and ride into the sunset, but I'm assuming, I think you have partners or people that work with you. So what, tell me how that evolved for you.

Dr. Josh Umbehr: I'm very lucky to have fantastic people around from my partner, Dr. Doug and co-founder to my wife, my family works for me or with me, dad, a couple of brothers, a couple of nephews. I joke on the software side, I used to think half of my ideas were good and then I got married and started working with the project manager. Now I think it's closer to 10%, but I just try to make it up on volume.

So much of this has been accidentally successful in a weird way, which is a longer story. But I think because we kept asking the right question, we just naturally led to the right answer. What is best for patient care?

And that helped us to avoid all kinds of pitfalls. But I hired all my friends from residency and then realized I didn't have a whole lot of friends. So we've got two locations and five docs, but they're all just, they're great people.

They want to commit to this model. It's an amazing group of doctors that will say at the direct care conferences, it's the happiest group of doctors you'll ever meet because they're not messing with all the other stuff, they're focused on patients. And it's amazing how much other support you get when you tell people the main goal is to make healthcare too cheap to insure.

Everybody kind of rallies around that idea. I think the luckiest thing we did is had clarity of purpose. And then everything came around that is we just, and again, longer story, but who I wrote my med school and residency personal statements on was my neighbor, Toronto, probably an illegal immigrant from Germany, but just an eccentric lady in all these kinds of ways and was sick and I had to take her to the hospital and follow up and physical therapy.

And you saw how the system made an amazing person as my neighbor, a horrible patient in the system. But art of war, if the soldier makes a mistake, blame the general, the system made her a bad patient. She was a wonderful person until healthcare got involved. Oh, they're upset that they had to wait an hour? Who isn't? Doctors don't wait an hour for anything. Oh, they wanted a clear bill? Oh, who wouldn't want that. They're distrusting, so they show up late, but then they have more questions and so they stay long. Like, yeah, so it's the system's problem. And if good people can't become good patients naturally, then we should be fixing that.

And so that was kind of the ethos that led that. I think in large part, yeah, we're successful because of all the wonderful people in and around the movement who share that same desire to put patients first and fix healthcare.

Transcription PNC Podcast Episode 405

Opportunities With First Class Consulting Firms Are Fantastic

Interview with Dr. Jonathan Jaffin

John: You know, I'm very familiar with consultants for my job as a CMO at a hospital. We used to have consultants in there all the time. And so it's kind of weird that after, you know, 400 episodes, I've never interviewed a consultant from a large consulting firm like we're going to do today. So I'm really happy to be able to introduce you to today's guest, Dr. Jonathan Jaffin. Welcome to the show.

Dr. Jonathan Jaffin: Thanks, John. It's great to be here with you and sort of excited to tell my story.

John: Excellent. That's fantastic. So I've done a little intro, you know, that kind of I recorded separate from this. But why don't you start by just telling us about your background. You have a long background and in practicing and then not practicing. So tell us a little bit about what you did as a physician.

Dr. Jonathan Jaffin: So as a physician, I did my internship and residency in general surgery and did that at Walter Reed because I was in the army, stayed in the army 31 years, so long army career. I then went and went to Honduras as a general surgeon, came back to Walter Reed as a general surgeon, went and was a group surgeon for Fifth Special Forces Group when I was a lot younger and a lot better shaped than I am now. And then went and went to Command and General Staff College with the Army. So have always done some nonclinical stuff. At Command and General Staff College, spent a year there and then went and did a fellowship in trauma surgery and critical care medicine. So went back into clinical medicine, was chief of trauma at Brooke Army Medical Center for my next job.

Then went and was the division surgeon for 4th Infantry Division up at Fort Hood, Texas. Went back, did some stuff with combat developments, took command of a hospital, a small hospital at Fort Eustis, Virginia. Then did my war college equivalent instead of going to the War College, I worked with Health and Human Services for a year. And that was supposed to be an easy year, but turned out to be 2001, 2002, if you can imagine with the anthrax attacks and everything else, we were busy. And so we had to set up the Secretary's Command Center. We spent long hours working and making ourselves helpful to the nation as a whole while we set up DHS, while we answered the anthrax attacks and everything else.

Following that, I took command at Walter Reed and that was when the war in Iraq broke out. So we got quite a few soldiers back. Fortunately, it was before all the scandals at Walter Reed, but it's still, my boss ended up getting fired as Surgeon General. And so that was not a good thing for my career progress.

John: Oh boy.

Dr. Jonathan Jaffin: But, then went and did the assignments for the medical corps. So I was the branch chief for the medical corps. Then did, was deputy commander and for nine months the acting commander up at the medical research command that the army runs. Then went back to the surgeon general's office where I served for the warrior transition units as chief of staff. And then for the Surgeon General, basically his CMO, they called it Director of Health Policy and Services, but it was the equivalent of a CMO, Army Surgeon General. And then, then retired from the Army.

When I retired from the Army, got a phone call from a friend of mine, and I had applied to a number of places, including CMO jobs. And he said, hey, have you ever thought about consulting? And since he outranked me, I said, no, sir, I haven't. And he said, come see me. So I did. And we talked. And he said, well, Deloitte would be very interested in somebody like you. We actually have 20 or 30 docs who work for Deloitte. And you can open doors and use your clinical expertise because they want to see somebody who's been in the trenches the same as they have.

And so that was always important was the ability to translate my experiences to what they were facing or what we were trying to teach them or help them solve whatever problems they were having. Now, the interesting thing with consulting is you have to be willing that they won't take your recommendations or that they may ask you for help with one problem. And you may see that problem is really something completely different. And so you have to be willing, one, to not have your recommendations taken, two, be willing to say, you know, I think we'd be better off solving this problem than that problem. And you have to be always looking for the next opportunity.

Now, what I liked about consulting was that I always was doing something different. So whether it was working with the military health system or their legacy EHR systems, whether it was helping a VA with coaching their directors at a medical center, whether it was helping physicians learn about clinical documentation and its importance, had a wide variety of jobs at Deloitte. And so never got bored, which was one of the things. Was I well rewarded? Yes, I would say I was well rewarded. Was it as much as a trauma surgeon makes? Probably not. But the hours were much, much better.

As a consultant, you spend a good bit of time, unless you're a government consultant, on the road. So you have to be willing to travel. So that's an important consideration in your consideration. You have to have some clinical expertise. And that's very important because people will ask you, why should I listen to you? And if all you've done is gone to medical school, they probably won't pay much attention to you, even if you're giving great advice. So you want to make sure that you've got some clinical chops under your belt, that they will respect what you've done clinically as well as what you've done beyond that. And so that's why I say it's important to be a good doctor first, then you can be a good consultant.

People ask often whether or not you need an MBA. I never got an MBA. So I didn't, obviously you don't need one. There are people who have them. There are people who have an MPH and other degrees. I have none of those. But what was most important was knowing people. Helping them, knowing that they can call me with their problems and building that relationship of trust with them either from previously, and those were some of the strongest relationships to the ones where we had to develop relationships, but we still developed the relationships because it was still important to have that.

John: Now, just to give context to the listeners here, so you were doing this full time, I believe, for over 10 years, is that correct?

Dr. Jonathan Jaffin: Yes, I did. I did it for probably 11 years full time.

John: OK. And I'll comment too on your background, because what I've seen in a lot of these nonclinical jobs, first of all, they love someone from the military. I think you have a little bit of an advantage because they assume you have that understanding of leadership, you know, which you have a lot of, and you throw that in with the clinical, you know, if you've been a CMO or a CEO equivalent in military, I mean, you have got a lot of leadership experience. So

Dr. Jonathan Jaffin: Thank you.

John: Did you run into other physicians that were consultants, number one of any type? And how many, if any, were had a background in the military?

Dr. Jonathan Jaffin: So we had a mixture. We had a number who'd been either department chiefs or CMOs of civilian hospitals. We had a number who'd been military, including ones who'd been at the surgeon general level in the military. So we had, so there were, there were some who were very, very experienced with leadership and had spent a career at, a leadership position. And obviously it's important that you have a good Rolodex because they want you to, to be able to call people and to call on people and to help generate business and your reputation lives with you, so you don't want to burn bridges as you leave the door, because those are the people who you're going to be working with again.

John: What's it like working in a team and what's the schedule like? Are you constantly doing something? Is there any downtime? Are you leading the team? Are you just a member of the team?

Dr. Jonathan Jaffin: It would vary. So it varies depending on what the problem is that they're trying to solve. So one team that I would be a member of was a team that was looking at revenue. So clinical documentation is an important part of revenue. So I would be the one who would educate the physicians on the clinical documentation, but I wouldn't review the charts to see which charts were necessarily had room for improvement and things like that. At the same time, I would be... I might lead a team that that had a purely clinical or a more clinical background. So the quality assurance team or something like that. So it would vary depending on the team itself and what was needed within that.

John: Now, I think Deloitte is known as maybe even a global company. Were you basically based in the US?

Dr. Jonathan Jaffin: So I did all my work in the US, but we did have stuff who folks who worked with our English firm, our German firm or Japanese firm. South American and Central American and Mexican firms, Canadian firm. We had a physician call with physicians from all over the globe. And that was really interesting because they obviously had a very different perspective. Often they work in, you know, have to work with a socialized medicine system and things like that. And so it was very interesting just comparing notes with how their experiences were different than ours.

John: I'll get into the nitty gritty here as much as I can, but how much were you on the road traveling versus working at home remotely or on calls?

Dr. Jonathan Jaffin: I was probably on the road two weeks a month. So about half the time I was on the road, that was more my choice. I could have stayed home more and done a more government type consulting job because obviously that was an important part as well. But probably two weeks on the road. I got my frequent flight on Mars.

John: And was it regional in the sense that would they try, if they have dozens of physicians working for them, you, would they say, well, we're going to send this crew to the East coast and we're going to use Jonathan for the West coast?

Dr. Jonathan Jaffin: It was more, we had areas of expertise. So I was, I had the expertise with the military. I had the expertise with clinical documentation. There were others who had Cerner expertise or Epic expertise. And so we did an Epic or a Cerner implementation, may ask them instead.

John: Okay, yeah. So really kind of fit the best team together. And I assume you worked with lot of different people over the period that you were there.

Dr. Jonathan Jaffin: Quite. I mean, traveled all over the globe, or all over the country.

John: Yep.

Dr. Jonathan Jaffin: I had one week where I was in Bismarck, North Dakota, Des Moines, Iowa, and Little Rock, Arkansas, all in one week. So sometimes you went to places that you otherwise might not visit.

John: Yeah. So you gotta have a lot of flexibility. You gotta be able to, you're not tied to your home for whatever reason, you're raising 17 kids or something, you know.

Dr. Jonathan Jaffin: No, and luckily I'm a little bit older. My family's grown and things like that so that I was able to travel as much as I did and it wouldn't, the kids didn't worry where I was.

John: Right, right. Okay, now, you kind of, I mean, you hadn't planned this transition for, you know, 10 years or anything. It sort of all happened pretty quickly. Now, if you were advising someone else, let's say they're not in the military and, who knows, maybe they're just practicing, maybe dabbled a little bit in, you know, different leadership roles at the hospital or something. Any advice that you would give in terms of if you were really thinking about this?

Dr. Jonathan Jaffin: I think one thing that's really, really important is to get leadership roles, whether it's chief of your department, whether it's running your practice, if you're more an outpatient practice, whether it's being a CMO or things like that. First of all, you make connections, you meet people. And one thing with consulting, you're more likely to consult with somebody you trust, somebody you know, somebody that you're concerned with, than somebody de novo. So the credentials always help, but they also would rather work with somebody they know already. And so that was, I would say, meet as many people, go to meetings. If you can, get yourself involved with the leadership in various organizations, because that also will translate to connections and people knowing you and developing a reputation.

One of the things that very important is to develop personal eminence. And so you want to be somebody that people will come to with problems. You want to be an expert in something. And whether you get that from being on a society membership leadership position, whether you get that by being a leader in the hospital or things like that, or leader in your medical system, those are ways to develop expertise and eminence and leadership.

John: Now, did you get a sense of or ever meet others doing consulting for other big consulting firms? Any feedback on that?

Dr. Jonathan Jaffin: We would meet. And I think most people, the experience is going to be fairly similar. Lloyd's got a fairly good size health care practice. Any of the big four, I would say, does as well. But it's important that and there also are boutique firms that specialize in healthcare. And you may find that that's a better fit for you than a great big firm. I mean, we were one of thousands at Deloitte. And one thing I did enjoy doing that was unrelated to my medical profession was I helped with the Welcome to Deloitte consulting. So I helped with that class, taught that class multiple times and enjoyed that too because you'd see such a broad range of expertise and experience and you could really help people as they made that transition from say industry into consulting.

John: You know sometimes when physicians are thinking about shifting, let's say they're just burnt out or whatever, you know it's not necessarily a good reason to leave medicine but you know they may practice 20-30 years, thinking of doing something else. And one of the things that holds them back is that they feel like they're sort of abandoning patient care and abandoning patients. But do you have a recollection of like some project you worked on that really ultimately was gonna help so many patients? You know, it kind of gives you the sense, well, I am helping patients actually, but in a different way.

Dr. Jonathan Jaffin: Absolutely. So I spent a good bit of time working with the VA leadership, especially at one of the VA medical centers. And we were able to markedly increase one, their throughput. So they were able to see more patients. Two, I think we helped them be more responsive to the needs of their community. So that not only were they seeing more patients, but they were able to help them more. And so that was one of the things that we did that I would say, yes, you're not you miss visual touch and you aren't going to do that, but you're definitely going to do things that affect a large number of patients that affect how a hospital responds to patients.

You're going to help people see that the patients are people too and need to be treated as such, not just physicians who usually get that, but sometimes administrators don't and sometimes People view the patients as a burden. And so you're able to bring your clinical experience in and say, you know, we actually were able to do this because of this patient, because this patient had this issue and brought it to our attention.

John: Now, I think it'd probably be pretty common that someone who had had a fairly long career would end up, you know, jumping into this because just the... You know, they're freed up a little bit and they're trying to do something different. Do you think some of that was really early in their career? Let's say after 10 years or so, did you meet some that had been physicians that have been with Deloitte for a long time?

Dr. Jonathan Jaffin: Absolutely. And so often then I think it does make sense to get an MBA because you're going to be a longer time at the company. You're going to try and grow within the company. You're going to start at a lower level. And so that helps you get promoted within the company and things like that. So I think all of those play a role. Still have practiced medicine, so you still have that rapport with other doctors. And I think that's also important. And then it's important never to forget where you came from. So the clinical side of things still plays an important role. And you will get asked clinical questions. I still get asked clinical questions to this day.

John: Are there any particular roles that you ran into that other physicians were doing maybe that you didn't do, but that seemed pretty interesting. Well I didn't think they would hire someone for that.

Dr. Jonathan Jaffin: So a lot of physicians go work for insurance companies reviewing claims and things like that. A lot of physicians take leadership positions in the hospital, which, course, appealed to me. There were physicians who would do similarly to what you're doing. They would focus on helping promote other physicians into nonclinical jobs. And so I think that's a really fascinating field to make too.

John: Yeah, there's a lot out there that sometimes I'm just shocked by what physicians are doing, but it's still building on their expertise, their training, their experience, and finding a happy medium with their lifestyle, you know, that there's plenty of things out there.

Dr. Jonathan Jaffin: I think one thing is that it helps to be a good doctor first so that that gives you a steal of approval from other physicians so that they say, yes, you're not doing this clinically now, but he still, used to be a good doctor.

John: Yeah. And when you do leave someplace, leave on good terms.

Dr. Jonathan Jaffin: Oh yeah. Don't ever burn bridges.

John: Don't burn your bridges. Yes, exactly. So, you... we didn't talk about this at the beginning, but I want to mention it because, you know, I found you by basically looking back over the SEAK, you know, brochure in a way, because I had gone to seak a nonclinical conference, you know, several times and met a lot of physicians doing things like what you're doing, any anything about the meeting you want to share with the audience? Because you've been there, I think, at least twice and presenting.

Dr. Jonathan Jaffin: Yeah, one, it's... It brings together a good group of people who have done a variety of things after their clinical practice. So I think it helps reinforce that there, one, are a variety of roles out there that you can fill, and two, that not only can you fill those roles, but you can prosper in them and your medical background provide you an extra area of expertise that they otherwise wouldn't have.

John: Yeah, and they're not a sponsor, so I have no financial relationship to them. I'm always looking for resources, you know, and for my listeners. And when I have someone like you that's been part of that, they can explain it. So I think the people that do help and go to SEAK are, you know, have good intentions. And so, again, I'm not promoting it, but it's just another resource for people. Now, I'm sure my listeners still have more questions that I haven't even thought to ask you. Would they be able to go ahead and maybe reach out to you through LinkedIn, back in the best way?

Dr. Jonathan Jaffin: I check my LinkedIn. LinkedIn always notifies you when you've got a message and would love to hear from anybody things I've said correctly, things I've said incorrectly, things that their experiences and things like that. So feel free to reach out.

John: OK. You don't have any books coming out.

Dr. Jonathan Jaffin: No, nothing to promote.

John: OK. Well, any last advice for physicians who may be been practicing for a while, but they think, well, you know, I like medicine, OK. But you know, what happens is things get old and they want to try something different. So any advice in general or about consulting as an option?

Dr. Jonathan Jaffin: Two things. One, don't be shy about trying something new. Yes, you may not make as much money, but the rewards are there are other rewards that you can gain. And two, the thing I like about consulting is it didn't bore me. There were always something different coming up. Somebody had a new problem. And let's be honest. If you can solve it yourself, you don't hire a consultant. So we only got tough problems. And so it was good. They were challenging, made us think. And I think we helped out people, which is also a very rewarding thing.

John: A great advice. Yeah, it sounds very interesting. Little, you know, you to deal with the travel and what have you, but the problems you're helping to solve and apply your medical background at the same time and your leadership experiences. It's just like a, just a way to really use a bigger, you know, panel of skills and experience. So what are you doing these days? You're not with Deloitte anymore?

Dr. Jonathan Jaffin: I do a little bit of consulting with Optimum Health, which is actually a sub to Deloitte. So I do some stuff with Deloitte. I've got seven grandkids, so that keeps me running, and uh... And three stepchildren and one son of my own. So between that, all keeps me busy.

John: I can relate to that. Just had three grandkids born in the same year.

Dr. Jonathan Jaffin: Oh good, congratulations.

John: Zero to three, my wife is ecstatic.

Dr. Jonathan Jaffin: I'm sure. So am I.

John: All right, Jonathan, this has been great. So I thank you so much for sharing all this wisdom and experience with our listeners. I think they're really going to appreciate it. So with that, I'll say goodbye.

Dr. Jonathan Jaffin: Thank you so much. And thanks for having me on.

Transcription PNC Podcast Episode 404

Triumph With An Awesome Direct Primary Care Practice

Interview with Dr. Ati Hakimi

John: I've been following the DPC movement for several years. And I've spoken about it here in the podcast, but actually today's guest is the first physician to join me on the podcast to talk about her DPC practice and why it might be the salvation of independent physicians and their patients. So Dr. Ati Hakimi, welcome to the podcast.

Dr. Ati Hakimi: Thank you, John. I'm happy to be here.

John: I think this is going to be good because I have this feeling that, you know, the people that listen to me, they're trying to get out of clinical medicine. They're looking for these nonclinical jobs. But I don't think they've, a lot of them have really fully explored this DPC thing. They've heard of concierge and they feel like that's, you know, expensive for patients. So just tell us a little bit about your background and then maybe segue into, you know, why you decided to start this particular type of practice.

Dr. Ati Hakimi: Yeah, definitely. So. My name is Ati Hakimi. I am a family medicine physician because we are the real doctors with all due respect to everyone else. That's why I chose to go into family medicine. I really wanted to know everything about everybody and how I could take care of the whole family. So that was my trajectory. I trained at Northwestern and I also did a little extra training at Rush University Medical Center. I got a year of geriatrics under my belt because we all know that medicine is geriatrics. So that was my calling in life. And I went on to actually work with the VA, which would have been the perfect fit, right? Because I just came out of a geriatrics fellowship and what have you. Unfortunately, it was not a good fit. And from there, I went to get an MBA. I have an executive healthcare MBA from UC Irvine because it had already started to become medicine was a business. Yeah. So I needed to learn how to speak the language. And that was the reason why I decided to get an MBA.

And so a caveat for your listeners as well is that you don't have to have an MBA to go into direct primary care. It was something that I chose to do to kind of give me more of the knowledge when I was actually in the insurance model of care because that's the care that is the business model, not what we do in DPC. So that's just a little caveat there. And so I actually went on to do more of the geriatrics practice in terms of post-acute care, things of that avail, and the primary care aspect was kind of put on hold until I came into DPC, even though I was trained in doing that outpatient primary care in my training.

So my story was that I was living in San Diego and I was with the Department of Defense there. Once again, not a good fit for me. And after doing my MBA, seemed Nevada became my calling. There was a gentleman who had actually became the president of one of the major HMOs out here. And if anybody knows any statistics about Nevada, unfortunately, we are number 47 in the nation in healthcare. There are just not enough of us here, specifically physicians. So he reached out and was like, we need doctors. And so I came out, it was a time in my life where it was a time for change and change is good. A lot of things that were going on were not good for me, but change was good. And California is very expensive. I don't pay state income tax here. So that was one of my major reasons to come out here. Quality of life was a little bit better for me. So it could have been worse, I guess. I ended up in Las Vegas. And I started working for that large HMO company. And at one time, it was an OK fit because they were physician run and operated. And they were called, can I say names?

John: Sure.

Dr. Ati Hakimi: I think names are OK. Health care partners, right? So they were physician run and operated, so it was a good fit. And once they started to go into the M&A world of mergers and acquisitions and sold and became DaVita, as you know, DaVita is a dialysis company with primary care, it was just not a good fit. And I really started to think that this was not for me because metrics started to become a thing in our world. And the metrics, unfortunately, were not attainable. There was probably at least 200 of us in the practice and like three of us would meet the metrics to get our bonus. So that was not what I went into medicine for.

And I decided that I needed to start thinking outside of the box, really. I actually left the company on my own accord when the metrics started coming because it was really egregious stuff, really egregious stuff and they had no answers for me when I had questions about these things. And I thought, you know, I'm a pretty smart cookie. Maybe there's other things I can do, right? But I'm a family doc. I love medicine. I love socializing with my people. I love taking care of people. I love preventing things from happen to them because that's my calling, right? My calling is to make a difference in your life before I leave this earth. It was a void. There was a void.

So I actually joined a leadership group in our city and found a tribe of people that believed in me, supported me. And I started volunteering. And when I was volunteering and just not being a scribe, not billing, not coding, not those horrible words that have nothing to do with what I was trained to do, I realized I'm a pretty good damn doctor. I am a good damn physician, and I deserve to continue practicing. And so I started doing my own research and I was a little bit into the whole internet world and social media and things like that. And I ran across direct primary care. And I started following a group on Facebook, which was literally, I think it's called DPC docs. And I just started becoming a little bit of a troll and checking out what people were saying and their experiences. And it was just different, right? It was positive, people were helpful, people seemed happy themselves, and it just lit up all of my sensors. What the heck is DPC? What is direct primary care?

And I went online and I tried to find someone locally that was doing this. And I did find someone and he was an... He is an amazing person. I'll call him out Dr. Jimmy Hawks. He already had started his own DPC practice. He had about 400 or members at that time. And his story was he was a hospitalist. So he actually found there were so many people that had no one to follow up with. And so he created his practice from that source and was extremely successful, and the nicest guy in the world. I mean, you couldn't find a nicer person, I have to tell you. So he took me under his wings and he literally said, just come to the office, just come check out, follow, shadow, see what I do. And honestly, I was floored. I was floored. It was just good old fashioned medicine, right?

The model that he had constructed, and I think we all have that base of the same model that we have constructed. We all go off on our own in terms of what we think is fulfilling, not only for our members. I don't call my people patients because they're not sick. Right? I call people that are sick patients. My people are members. So we all create our own models when we start doing DPC. And his model was chronic disease management and it was amazing. And I really just started to finally believe in myself and think that there is a possibility of practicing for myself, not dealing with insurance, not dealing with all of that drama. And I am a solo female minority physician. And I would like to think I'm pretty successful. And I would think that if I could do it, anyone can do it.

But the moral of the story is it's nice to have a mentor because we can talk you through it. We can show you how it's done. And we are glad to do it. Listen, John, nobody in primary care should be working for anyone but themselves. We have found a way. And we, the rest of us are... We would love to help you get out a hundred percent, right? Because we deserve to do this for ourselves. You know, for every one of us that gets hired, they might give us like, you know, measly six figures somewhere, but they make two to three million off of each of us. Right. Seeing 40 or 50 people a day. That is not quality care. That stuff was killing me personally. Right. It wasn't just my members or my patients at that time, cause they were sick. It wasn't my patients that weren't getting the quality of care they deserved. I was struggling and hurting and it was hurting my soul. So to find direct primary care, it was very selfish. It was really about me. It was really about me. Yeah.

John: Let me ask a couple of questions just because when you first heard about it, maybe weren't aware of it at all, but just the beginning, it almost sounds too good to be true at the beginning, doesn't it?

Dr. Ati Hakimi: Yeah, for sure. Yeah. But it's all real. It's all real. And I think that, I mean, when I found out how much things really cost is where, you know, and having an MBA is where I was floored. I literally almost started crying when I found out how much things cost.

John: What were the surprises?

Dr. Ati Hakimi: The surprises for me, first of all, so let me just give you a quick spiel about direct primary care. This is the 32nd, you know, elevator speech.

John: Okay.

Dr. Ati Hakimi: So direct primary care is a flat fee healthcare membership. It is like the Netflix of healthcare, right? You pay us once and we are there for you. So for me, I am solo. So you call, me. You text, it's me. You email, it's me. When you see me, it's me. And I do a lot of telehealth still. So fun fact is that telehealth is going to be removed from that fee for service model again, because insurance just decided that's what they want to do, right? I don't work for insurance, I work for my members. So I get to do whatever I want. So that's fantastic.

So direct primary care has its benefits. And one of the benefits of course is access. You have your physician with you at all time. I pride myself on that being available, being accessible. Another part of that is labs. I can get an entire panel of labs from A to Z. I've actually got a relationship with LabCorp and it's something called client billing that we do. So basically LabCorp will give us prices that are pennies on the dollar, pennies on the dollar. The same labs that somebody would go in and say cash pay, if they do it through me because I pay LabCorp, so that prevents them from having to deal with billers and coders to run after everybody for all these ridiculous fees, they know that I'm going to be responsible for that bill.

So when I do that, it drops the prices significantly. My members compensate me afterwards, of course, but when they do it through me, it's probably a couple of hundred dollars, including all kinds of things, vitamin levels, not just your standard CBC, CMP, TSH. I can get all the vitamins in the world. I can get inflammatory markers. I can get it all, right? Pennies. Penny is on the dollar. That's one thing.

The second thing is imaging. I work with the local imaging center. So that's something that's city specific. You got to get out there and talk to your imaging centers, find out which ones are the ones willing to work with you. My people here, they'll give it to me for, I can get an x-ray for about $45. Walk in, I can, and that's with the read, that's with the radiologist read. There's not a separate fee that goes with that radiologist. So I can get that. I can get that x-ray. They will even do it for me for stat, same price. Same price. I can get a CT scan for probably three, $400. Those prices unfortunately just went up. It used to be less. And then I can get an MRI of any body part for maybe $500. Because nobody wants to deal with insurance. That third party model that we have in this country with everybody's hands in that pot is what is costing our healthcare system to be so egregious. There's too many hands in the pot. When you just go straight to the source, as with any business, everything drops tremendously, right?

And then the final one that I have for my membership, and this is specific to physicians as well as the state that they practice in, I actually order medications directly from the manufacturer. Every physician should know that they can do that for their people. You can create an account. I use Andameds. You can create an account if you have a DEA number and you can order medications directly to you. Right? So my blood pressure pills can be maybe $10, $15 for three months. My cholesterol pills, all my statins, they don't cost a lot anymore. They are all pretty much generic. I can get three months for $10, $15. Now I even put up a little markup there. That's with my little markup. So it's even cheaper than that. You understand? So that is another benefit. I have people that are in my practice that are making money off of me.

John: In what way?

Dr. Ati Hakimi: Because I'm saving them so much you're saving them.

John: Right. Yeah. Do you find that your patients are maybe on fewer meds? I see a lot of docs that basically every visit they come in, they're adding another med because of a side effect or something. So.

Dr. Ati Hakimi: Yeah, so that's an excellent question. I think once again, as a primary care or family medicine physician, also with that geriatrics training, right, that polypharmacy world is a nightmare. So when people do have access to their own physician and when they, what I like to do is check in on people once a month. That is my way of practice. My way of practice is about lifestyle medicine, which means I hold people accountable for how they sleep, what they eat, what they drink, how they move physically, what their mental health is, how their relationships are, because that is your base and foundation of healing.

So that's how I do my practice. But with direct primary care, you have the freedom to create it the way you want. There's nobody over your shoulder telling you to meet metrics, right? That's all gone. You create it. I have colleagues that literally have office spaces where they might have put a kitchen in there, classes about nutrition or yoga studios or have contracted with people to do such, right? It's what you want it to be. It doesn't just fulfill your patients' souls, it fulfills your soul, right?

So my onus, like I was saying before, that physicians, we are chosen. We're not made, we're chosen. And the current sick care model in our country has taken that away from us. And so people need to know that there is still a way to practice the art that you were chosen to do. And this is not just for primary care. I have specialists that have jumped on this as well. You know, we have direct specialty care now. It's a little more complicated when you have to do procedures, unfortunately. But there is a way for your members who don't have health insurance to actually bring on DPC in their worlds as well. And that's called a health share plan. I don't know if you've ever heard of that. Health share plans are perfect with direct primary care.

So the perfect health care model right now, I'll tell you, is a health share plan, which was started by the Christian faith once upon a time where people put money into a pot. So it's not faith-based anymore. There are several companies now that are doing this. And basically what they do is they take the onus of the catastrophes that happen, right? They work well with DPCs because they know we take the responsibility of preventing things from happening to them. So with the combination of a health share plan, a DPC and an HSA, which you can pay for your health share plan, which actually, you know, your money working for you, is honestly the ideal model of care in the United States when it comes to healthcare. Hands down.

John: Sounds awesome. Yeah, I think I did hear a podcast where someone was talking about like a crowd share kind of approach the pool for the big things. But I know one of the things my listeners are probably wondering about, like what is your day like practicing like this?

Dr. Ati Hakimi: So, I think for me, I am very, very outside the norm because what we have to do when we start a direct primary care practice or any type of business is you always have to first go back and evaluate what your needs are when it comes to your financial situation, your family, things of that avail. I have very, very, very, very, very little needs. So my overhead is non-existent. It's non-existent. I don't have a ginormous office space. Yeah, so I actually found one of my colleagues in a women physician medical society group that I'm a part of that when I approached this group and told them, hey guys, I'm done, I'm doing my own thing, one of my colleagues was amazing. She's like, I've got a huge office, like a huge office space, because she does infusions in a rheumatology clinic. So she has nothing but space. She's like, come rent one of my rooms. That's what I do.

So I literally pay her for a room. I don't need an office. I don't need front desk. I don't need any of that stuff. I can take my own blood pressures and weigh people myself for goodness sake. So I actually rent space from her. I go into the clinic once a week. My practice is very tiny. And that's because that's okay with me. That's what my needs are. So I have like a boutique practice is what I'd like to call it, right? I have about 150 people and I know them by name. I know their husband's name. I know their wife's name. I know their kid's name. Cause that's the kind of family medicine practice that I wanted to have.

So that's my practice. What my day looks like, it can vary. Honestly, I do a lot of telehealth because remember I told you that I like to hold people accountable. So we will jump online based on their needs or their times as to when they had that availability. I go into the office, like I said, once a week because I'm tiny. So I go into the office once a week and that's when I do the hands-on stuff that I need to do. The rest of it, honestly, this is my office. Is here.

John: I can imagine you see someone texting you or calling you. Well, you know in your head already who that person is. If they're on meds, probably. With that number, can, especially the people that have, maybe they got a chronic illness. And you said a lot of it's preventive as well. Do you feel like you're gonna stay at this about the way things are now? You gotta pretty much...

Dr. Ati Hakimi: Yeah, I think for me, my goal is just 200. That's my sweet spot. 200 is my sweet spot and then I'll tap out. And like I said, I have colleagues that have 400, 500 people. They've got this, you know, this whole beautiful office space they're paying $5,000 a month for, you know. But remember, our price point is also different for each practice, depending on what your needs are again, and how you actually construct that.

When I first started, I based it on age. Um, and now, um, and I also was doing a lot of house calls. Unfortunately, Nevada did something to us where our med mal practice, our legislation kind of messed us up. Um, they, they removed the cap on our med mal. So it's not, it's not for me anymore to, do the house calls thanks to the legislators. Uh, so anyway, um, I was doing that at one time too, because like I said, you can make it anything you want it to be. Now I've just had a flat fee. So I have a fee for my individuals, have a fee for my couples, and I have a fee for families. Listen, I charge $150 a month. That's it. I live in Las Vegas. If you go out onto the strip and have a couple of cocktails and a dinner.

John: Yeah, that's it. So what's the mix now then? I mean, is there a certain of the, you know, because you're talking about full spectrum from children all the way to seniors. Is there certain mix? Lot of women's health, lot of more middle healthy younger people.

Dr. Ati Hakimi: Yeah. So, that's an excellent question. I have everybody from the CEO to the Uber driver, right? The CEO, because their access is very important to them when they need something now, they have to have it now, and the Uber driver because they can't afford the nonsense that's out there. So there is no discrimination. It is affordable.

So the difference between us and Concierge is that Concierge was once upon a time created for that access too, but they charge a large sum upfront and then they still bill your insurance. It's a double dip. So I'm not sure how they get away with that because with Medicare and things you can't. That's the difference between direct primary care and concierge. And concierge, sometimes they don't do all the other stuff of offering the labs and all these other things because they're going to bill your insurance and go through that fee for service model. They don't have the other things that are, I think, beneficial or options. They don't give people options, I think. So that's the biggest difference between us and concierge.

There was a time when I was interviewed by a local TV station and she said something about, well, it's cost prohibitive. You know, we are only taking care of people that have money. And I will dispute that all day, every day, because once again, I live in Las Vegas. So my fees, I think, are very affordable, very fair. And It's not the right concept or the right argument to even have with anybody when it comes to that.

John: You know, when Like where I am, our deductibles are so high that if my wife needed an MRI or an x-ray, I would just go outside the system and go directly to the freestanding clinic and get it done anyway.

Dr. Ati Hakimi: Yeah, sure. Cash pay it. And that's the other point is that we have forgotten that cash is still king. Um, so if people have insurance, can they do direct primary care? That's a major question that I get. Absolutely. Absolutely. Insurance doesn't take care of you. We do.

John: Right.

Dr. Ati Hakimi: When is that conversation going to be had? They do not take care of you. If anything, we are fighting them. If people are not paying attention to the world, we are fighting them every day to get you what you have been paying for every month. And every year it goes up. My fee for service family, every year Medicare goes down. We are the only profession that our salaries get docked every year. Right? That's a whole different conversation. That's because we are not part of the government and legislation. More of us need to get into that world if we're going to have any kind of change. We absolutely have to be a part of the legislator's lives and, you know, We should be in it ourselves. We should try to be elected officials ourselves. That's the only way is that if we are not at the table, we are going to be on the table. That's what's been happening every single year, especially in our state. So, I mean, that's a different conversation to be had. But once again, direct primary care, you don't have to worry about that.

John: OK, let me ask you this. Many years ago, I started my own practice. And this was not DPC obviously. Yeah, and I had to hire a ton of people and I haven't heard you talk about any employees. So do you have anyone doing anything at this point?

Dr. Ati Hakimi: What would I need them to do?

John: I don't know- I know the memberships they pay monthly or you know, but somebody might have to remind them. I don't know.

Dr. Ati Hakimi: Yeah, like QuickBooks. QuickBooks does my recurring billing? Doximity sends my faxes for free. I prescribe, I pay a yearly fee for my prescriptions. I'm primary care. I'm primary care.

John: Do you remember with your colleague that you talked to initially, Jimmy Hawks, I guess it was, Hawks?

Dr. Ati Hakimi: Hawks, yeah.

John: Hawks, yeah. Now he has a different practice. He has some employees or minimal?

Dr. Ati Hakimi: Yes, because he's huge, right? So he actually had somebody answering the phones and he had. He had nurses to assist him he needed. And he's a male, so pap smears and things like that. He needed to have somebody of that avail. But yes, so if you grow, obviously you know what you can and can't handle. But come on, like I said, we're used to 1,000, 2,000. I can handle 150. And so that's another question that my colleagues will ask me. And then the other one is, you feel comfortable giving people your phone number? Yes. Absolutely.

John: Yeah because its doable.

Dr. Ati Hakimi: It's peace of mind. When they have peace of mind, they will respect your time even more. I am so close to some of my members that my father passed away and they even came to his funeral. That's what it was about. That's what it is about. That's what I pride myself on because that's what I've created. It's something that fulfills me too. You know, we are always giving, giving, giving, giving, and we need to take back.

John: Yeah. I'm going to have a couple more questions for you, but first, tell us what your website is and maybe your LinkedIn profile.

Dr. Ati Hakimi: So LinkedIn is just my name. A-T-I is my first name. My last name is H-A-K-I-M-I, Hakimi, M-D-M-B-A, and I'm on LinkedIn. And then my practice is called Vegas Direct Primary Care. The website is VegasDPC.com. And I'm also on Instagram. I'm trying to learn that world a little bit. I'm on Vegas Direct Primary Care on Instagram as well.

John: OK. I'll put that in the show notes too and the emails that I send out. Let's see, questions. So what if someone's listening now? Are my listeners, maybe they're looking for other things and they hear about this? What's kind of the first or second step they should take if they really want to learn more?

Dr. Ati Hakimi: So the first step you should take is get online and look up direct primary care in your city. Find one of us. Find one of us, reach out to us, make yourself known that you want to do this. They also have, we also have, you know, there are professional associations with direct primary care as well. There's something called DPC Alliance and there's a couple of OGs that have been doing it for a while, Dr. Paul Thomas, things of that avail, that are also very helpful. But if you get on Facebook and get on that DPC docs group, that is one of the places that I initially started going on and doing my own research. And you will find that we are a very supportive community.

I didn't find that in the fee for service model. I found it a little bit competitive and I don't know why because we have 2 million people in our city now. There's plenty to go around. So that was the other uncomfortable thing about fee for service. But I think that those docs are just so stressed, right? And so they weren't as receptive. I'll tell you something else. I did look into taking on insurance when I first started. They weren't going to deal with me. Insurance will not deal with you if you're a one person show. They want groups now to come on because they want to negotiate paying you crap. Yeah. So that's another reason that I had to go direct primary care. They weren't willing to even bring me on. So, you know, that was the other thing. And thank God they did not.

John: It's worked out great. Okay. Last question. You know, I have listeners and they are calling me sometimes and email me about, well, I'm miserable. I just can't stand it. I have this corporate medicine BS is from birds and I'm, should I retire early? Should I go look for a job in pharma? Why should I do what you're doing?

Dr. Ati Hakimi: Because it will save your soul and you deserve better. And you have worked so hard to be where you are. Stop working for others, work for yourself. Don't let the corporate systems, the private equities. They don't give a crap about us, you guys. And they will never. That is what they are made to do. We can't blame them. Their model is about the bottom line. Their model is about making money. Now, if you choose to work in that environment, you are going to be a slave to their model. That's all it is to it. And this is not disrespect to any of these things, to anybody or corporations. It's not disrespect. It's just how that model works. It's not made for any of us, honestly, I don't think.

It's not humanly possible for you to see 40 and 50 people. And I even have residents that are coming out saying that they're giving them two to 3000 and they're already thinking of looking for another career. We went to school for so many years. We jeopardized things and sacrificed our lives to be who we are. Don't let them take that away from you. Listen, I did clinical trials. I was a PI for things. I did all of those things. There is nothing as fulfilling as being a physician with all due respect to I don't know if you're still practicing, John, but I mean, once you're ready to retire, that's fine. But don't let anyone else take it away from you. This is the way to go.

It's not hard, you don't need an MBA. Please, I mean, my number is online. If you get online and see my number, call me, text me, I'm totally happy to help. We all are, honestly. I'm in Vegas, that's fine. You can emulate this model everywhere, right? It's absolutely reproducible. And it's not hard, you guys, it's not hard. I did a whole thing for the Small Business Association about how to start your own practice, but it's even easier with DPC because you don't have to deal with all those insurance things and having this number and that number and coding and billing and none of it doesn't matter. That's not what we were trained to do. We went to medical school. We didn't go to billing school. We didn't go to coding school. You don't need to do that. Just be a physician and make a difference. That's what you're meant to do and you can do it. Get out. DTFO.

John: All right, that was fantastic. I really appreciate you, you know, sharing your experiences with us. I think it's gonna be great to look at. I love this. All right. With that, I'll say bye.

Dr. Ati Hakimi: Okay. Thank you, John. And let me know how else I can help.