Streamline Your Document Processes with Meddic Metrics for Insurance Industry

How to create outlook signature

hello this is dr eric bricker and thank you for watching a healthcare z today's topic is 15 metrics for healthcare companies now this comes from a gentleman by the name of phil fisher and he wrote a book called common stocks and uncommon profits and sure i'll get it right now here's the book it's a fantastic book i highly encourage you to read it now this book is about investing and phil fisher was one of the most influential investors of the 20th century in fact warren buffett said that like 15 of his investing strategy came phil fisher and then the other 85 percent came from ben graham and in terms of bottom-up investing in terms of investigating companies and then investigating him like phil fisher was hugely successful at this now he used a technique that's referred to as scuttlebutt investing what does that mean that means again that he did bottom up investing and he essentially worked as like a almost like a private investigator when he was investigating companies i mean he would literally stand in front of the front door of the headquarters of the company and like talk to the employees on their way in be like hey how are you doing because he wanted to gauge how the management was doing at the company and by applying these 15 metrics to the company he decided if he would invest in them or not and this is important for healthcare companies because healthcare companies especially healthcare companies that are forces for change in terms of higher quality lower cost increased access to care like the organizations that are going to bring about that change in health care also have to have these 15 qualities so let's go through them now one it needs to be a sizable market so you don't necessarily want to be in the health care market of just like cotton swabs maybe cotton swabs is not a sizable market now health care is so big that even if you have a niche within the three trillion dollar healthcare market it's probably going to be a sizable market point number two determination to create new products well obviously if it's a startup then it's it's foundation is a new product and that's the key is that it's new and that it's ongoing in creating new products and of course probably the number one example of creating new products is obviously amazon because it's always trying to create new things with probably amazon web services and it's cloud computing being the most successful recent iteration of that but it has failures too right it had the fire phone right and nobody buys an amazon cell phone right so the poi but the point is that there is determination to constantly work on the creation of new products next up that they're able to actually execute on the r d on the research and development you know in today's part of lands we would call it actually be able to execute on the on the innovation right and so you know one might argue that companies like you know microsoft have had a really hard time executing around innovation i'm probably going to get in trouble for saying that but you know maybe they're doing better now than they used to but right but that's where you know it's super important that the company the healthcare company is able to actually be successful in its research and development next up aha it has to have a great sales organization you can't just have great products you can't just have great innovation you have to have a great sales organization i'm going to say that one word one more time sales next up it has to have a worthwhile profit margin in other words it has to be a going concern it has to be financially sustainable if the company doesn't make any money then how is it going to stay in business and i would argue even for non-profit organizations the point is it needs to be financially viable okay and this is where some non-profit hospitals had said look our source of profit margin is going to be terrible donations and we're just going to go after big donors and that's their sort of strategy but the point is is that in healthcare if it's a for-profit any that's fine there's many for-profit entities in healthcare that can work towards higher quality lower cost increased patient access but even if you're a not-for-profit company or organization in healthcare the point is can you be financially viable makes sense next up can you improve your profit margin in other words can you become more financially viable over time and again obviously that applies to for-profit companies but it also applies to the not-for-profit companies as well and i'll even say look for hospitals that might even mean like changing your business model such that you start a medicare advantage plan or actually start taking on risk and so the actual amount of care that you deliver might actually be less for the sake of improving your margin okay so it doesn't have to conflict with higher quality lower cost increased access to care it doesn't have to okay next up great labor relations in other words the employees have to be good teammates with management and the employees have to be good teammates with each other there is no way an organization can be successful if they do not have good teamwork next up great executive relations so let's say the employees get along great but if there is a squabble at the top if the top executives cannot get along and function as a cohesive team then it will not work and you know i just have to say fantastic example there's like the dallas cowboys i won't go any further than that okay next up the management has to have depth listen executives are going to leave executives are going to retire sometimes executives have health problems and there has to be a depth of management in order to replace those boat folks if it's thin then obviously we have seen huge companies dare i say like ge where they just didn't have the depth of management and when jack welsh left like you see what happened okay next up they have to have cost and accounting controls if you can't keep track of the cash and if you don't have an effective measure for controlling your costs then you're not going to be a successful company and this you know this is the prime example with hospitals where they don't do cost accounting right so here you have a major point of cost control where essentially there's a huge room for improvement and i've talked about this in previous a health care z videos there's huge huge room for improvement on the hospital side but that goes for any healthcare business next up specific industry quirks okay now this is kind of a hard one to explain but he says like in phil fisher says like in retail actually negotiating good leases for your retail space is incredibly important for the success of your retail company um likewise i would say in and that's kind of a quirk to retail in other businesses you know the negotiating your your space uh and your lease might not be that big of a deal but in retail especially in his time in the 20th century it was a huge deal so in healthcare i would say one of the the quirks about healthcare that's really important is that your organization is actually able to successfully achieve some degree of behavior change in your customer because if we're dealing with higher quality lower cost increased access to care then that almost de facto requires some degree of change by people's behavior and let me give you a couple examples so one teledoc they were the first ones to actually get people to see a doctor over the phone and you could say if it was high value or low value what i mean but the point is no one really did it before teledoc and they were able to successfully get people to change their behavior and monetize it next dfinity healthcare they essentially invented the consumer directed health plan like back in 2000 2004 and then dfinity was bought by united health group and essentially became the cdhp solution and so here you could say well the employees really didn't change their behavior with the hsas and the copays going away okay listen that's a whole nother video for another day but you know what they did do they change the behavior of employers in terms of buying health plans that were not co-pay-based ppos they convinced hr and cfos and ceos to change their behavior to actually buy a health insurance product that did not have co-pays and they were successful in that and that caught you know and over 30 percent of americans through their employer now have some sort of consumer drug helping so you can argue about the pros and cons of chps but dfinity got people to change their behavior and were hugely successful as a result of that okay next up do they have long range profit goals in other words do those long profit goals do they supersede these short-term short-range profitables and again amazon is the prime example of this where they were not profitable for like over a decade right and they because they knew long term that they were using that lack of profitability to grow in size and scope and then become hugely pop cash flow positive over time okay likewise if you're going only for short-term profitability for the sake of the organization that in phil fisher's mind is not the right strategy to look at long-term profitability next up um is the organization going to require equity financing in order to grow and the point here especially from an investor standpoint is that your ownership or your shares are going to be diluted if they keep having to issue more shares in order to grow so in other words you want to be an investor in an organization that actually does not require a lot of equity financing okay and this is important for startups right because startups you know in this day and age they end up selling equity like crazy and the point is is that is that really the right strategy to use again i'm not here to debate that i'm just saying for what phil fisher was saying as an investor like if you're an investor you don't want to be deluded okay next up the management needs to be transparent when there's trouble they need to be transparent with their investors they need to be transparent with their employees all businesses have problems all businesses have problems the point is is that those problems are much more effectively solved when the executives are transparent about those problems right it's not the crime it's the cover-up so to the extent the organization does not cover things up they are actually much more likely to be successful next and finally the management has to have uncompromising is the word that phil fisher used integrity and we're in healthcare and we're working to improve quality of lower cost and improve access to care that is the most important thing and save for the end now this holds true for startups it's not just for investors so if you are running a startup or thinking about working at a startup or do work at a startup like i would evaluate your startup in terms of these 15 things if you are looking for a job you are investing more than money you're investing your time and your life so arguably when you're looking for a job like it might be helpful in healthcare to look at these 15 things for the companies where you're interviewing to see which one might actually be the best option for you for employment so i just wanted to share this framework phil fisher's incredible guy please go out and get his book it's fantastic and thank you for watching a healthcare see