Is AI About to Change How PT Practices Transition?
A professional transaction takes six to eight months today. Paul Martin joins Mikulas Zach on Consulting Rainmakers to talk about what AI is already doing inside PT clinics, how MHA uses it, and how it could shorten the path to a transition.
Full transcript
Generated from the episode audio and lightly edited for readability.
You're taking your life savings, essentially, the biggest asset that you'll probably ever have in your life, and you're going to try to then take that business and sell your business, and you're gonna be the only person at that negotiating table that has never done this before.
welcome back to Consulting Rainmakers. My guest today is a president at Martin Healthcare Advisors, Paul Martin. What a coincidence. And also a podcast host, which is also very interesting, and he has a impressive backlog. Martin, let us start at the beginning. It's good to have you here today.
Thank you, Miklos. It's great to be here.
So tell me, you've been running a business where you advised practice owners through transitions. How did all of this come together? What's the story?
Yeah. So the story is gosh, going way back, I went to Gettysburg College, played football at Gettysburg College, and that's really when I had an idea in my mind that I wanted to start a physical therapy company.
And I think the confidence I gained from how hard I worked in football and the results that we had, prompted me to then go to physical therapy school. But from the very beginning, I knew that I was in physical therapy school to learn how to build a physical therapy business. We did build a business, myself and two partners.
We grew a business to 21 clinics. We used an advisor to sell that business to NovaCare all the way back in 1996. I spent three years with NovaCare, primarily working in their acquisition department. And in 1999, I left NovaCare and started this company, Martin Healthcare Advisors. And in this company, we really do three things for the physical therapy business industry, and that is we help businesses grow, we help businesses prepare for the market, and then we run a full professional process, taking companies and taking them into the market, finding the best partner.
That's great. And from your experience, what sort of industry do you serve the best? Yeah. We serve really only one industry, and that is the outpatient physical therapy industry. ABA, applied behavior analysis, has sometimes been another industry that we have done some work in because there's ABA clinics that have therapy and therapy clinics that have ABA.
So we've done a little work there, but we've really become complete specialists in, as I said, growing, preparing, and taking physical therapy businesses, small, medium, and large size businesses into the market, getting them the best price and terms and the best partner. Yeah. That's great. The kind of power of niching down, as they say, and being expert on one industry, I think that's a big thing that most firms don't do, right?
Is they boil the ocean, as they say, and they offer everything to everybody, and Tell me more from your experience what sort of mistakes do you see these physical therapy businesses make when it comes to transitions?
I think the first mistake is they try to do it themselves, and I think that is the biggest mistake you could ever make.
You're taking your life savings, essentially, the biggest asset that you'll probably ever have in your life, and you're going to try to then take that business and sell your business, and you're gonna be the only person at that negotiating table that has never done this before. And so I think that becomes the biggest mistake I think that business owners can make.
The other is choosing the wrong advisor, and I say that because when I built Martin Healthcare Advisors, I had attained a degree called a certified business intermediary and a mastery level intermediary. And in attaining that degree, I learned how Main Street business brokers work. Main Street business brokers are really good at relationships with their clients, walking them through every step in the process, staying right by their side.
I also learned about how investment banking companies worked. Investment bankers and investment banking companies that lead mergers and acquisitions, they have a discipline, they have a process, and they have a way of putting all the companies on the same starting line at the same time and running that process.
What we've done is we've taken the best of both of those worlds. We've hired investment bankers, but we also have physical therapy, former physical therapy business owners who have built companies and have sold companies, and we put our entire team on the line when we are working with a company going into the market.
There are questions that investment bankers related to due diligence will never be able to answer because they're physical therapy questions. They're down in the dirt operations, clinical-type questions. And our physical therapy business owners, they're able to answer those questions without a problem.
So we've assembled a team that I think is very unique, certainly to this industry, and for our clients, we've built the best team.
Tell me about your hardest call that you had to make throughout all of these years that you've been running the firm.
Yeah. It was a very difficult call I had to make.
It was probably eight months ago, and somebody who had been working at the firm, an analyst had been working with our firm since 2017. And It just got to a point where his skill level was not matching the folks that I put around him. And so folks in the company started losing some trust. Great guy, great with our team, but just could not keep up with the, at the level that we had become.
And so I had to make the decision to replace him, and that was a very difficult decision.
Yeah it's... I can only imagine when you have a relationship that's strong throughout all of the years, and then... But it's for the better of others also. You have to keep them accountable and yeah. When you look at AI, I think we talked about this off record.
Where do you see AI really changing the game for you, either in personal or business life?
Yeah. So in our business, we use AI primarily for research and efficiency, and there is research that AI can do that we always, absolutely 100% always ask AI to then give us the links so that we can go in and check the research that has been done.
And so we've used AI for, again, research. We've also used AI just to make us more efficient. And so if we can feed into Claude how to build certain models and how to build certain spreadsheets, and we're able to then go in and double-check that, we're able to work faster, and it'll improve the efficiency of our process.
I think where it has helped the physical therapy industry, I think first and foremost, it is helping the industry in helping physical therapists who are very difficult to hire and who are... Many of them are young, wanting to use AI, and they're able to no longer go home at the end of the day with a stack of notes that they have to continue to do on the patients that they've seen.
And, front desk is able to get verifications with an AI agent. So I feel like at the level of the clinic, that AI has been transformational in allowing physical therapy businesses to be able to see more patients and to be able to be more efficient and to not have to, burden physical therapists with having to take home stacks and stacks of notes at the end of the day.
Tell me more about your podcast. You have a much more episodes recorded in the backlog, so- Yeah ... tell me what, what has been some interesting kind of takeaways now looking back, at all of the episodes that you have done?
Yeah. It's the learning that I'm able to experience when we're reaching out and we're talking to business owners, we're talking to CEOs of companies that are the acquirers in our industry, finding out and understanding their strategy and the types of companies that they're looking for.
So it has also been just a great way for me to connect with folks in the industry. We go to all the conferences and, we're out on social media, somewhat. But, for, to be able to, as when you do a podcast, that could be the start of a relationship with somebody.
And I have found over and over again that when we are doing podcasts and we are able to engage folks to come on our podcast, it's a great way to, again, for me to learn, as well as to put great content for those in the physical therapy industry to be able to come and watch, and a great way to engage folks out there to stay connected.
Yeah, that's exactly spot on what I found out. And, for me, the, the bonus is I can improve my English speaking skills. So it's a, it only has benefits, at least from what I found out.
Your English is A-okay, Mikulas. A-okay. You're good.
Yeah. By, by Cambridge, it's somewhere between B2 and C1, but I really don't think it's at the level where I can have these conversations without stuttering.
So I'm still getting the hang of it. Tell me, you've already answered my next question, but in terms of your marketing efforts what has been really working to, drive new business for you? Is it people referring you from the great work that you've done, or are you running ads?
Yeah, really good question. I think the place that we get the most of our clients are attending conferences. We attend just about every large physical therapy conference where there are physical therapy business owners, and I speak at those conferences almost every year. I think second to that are referrals from former clients, and that's where we see a lot of our business coming from.
And, when you have a referral, there's already trust that built-in trust. And then after that, I think it is the video work that we've done and putting out videos, putting them on every podcast Link that you can possibly have. And what we find that does is it's a way to build trust.
Once somebody has been able to be on and watch you on a podcast, and, they almost feel like they know you, and getting to know somebody, I think is the first step in trusting somebody. So we've done a lot of work, and what we find is once somebody has watched our video, they call me and they say, "I've been watching your videos for a number of years."
And immediately I say this person has that first step in, in the trust category." And I think that's a big part of the clients that we do have, is that we have to build their trust, and if we can do that online and in other ways, we certainly start there.
Do you have any good advice around just business and entrepreneurship that you've learned throughout the years?
Yeah, I do. And I do a lot of that work especially for the college right back there. You can see the Gettysburg College Bullets. I've stayed in very good contact actually recently was inducted into their Athletic Hall of Honor. And I have a whole handful of football players from Gettysburg, as well as other students at Gettysburg, that I talk to routinely about where they're headed, whether they're going to physical therapy school or business school, whatever it might be.
And what I tell a lot of them is that, being successful in business does not have to be completely reinventing the wheel. Look for people that are three, five, 10 years ahead of you. And what do you strive to be? And if there's someone out there or maybe multiple people out there that are what you want to be, you can learn from them.
Now there's opportunities to watch some of these people on their podcasts, but you can also just pick up the phone and talk to them and see if they would be willing to talk to you about how you could achieve what they've achieved. In many industries, there's not only one successful person in the industry.
I can tell you back when I was in physical therapy school, there was a guy by the name of Pat Croce and he had a large physical therapy business, and he also became the owner of the Philadelphia 76ers. And when I looked at him, he and what he had accomplished, said, "You know what? I think I wanna be him someday."
And I went and visited him at his beach house. I had many breakfasts with him, and he was never shy to help me along the way. There was a guy by the name of Jim Cory, who would be on the radio and talked about staying in shape and, and that was something I also always wanted to do, and I did that for a period of time early on with my company, with Physical Therapy Sports Services.
I got on the radio and talked about how to stay fit and how to stay healthy, et cetera. And so again, it was seeing people that were ahead of me and then trying to understand what and how they did it. And I know you younger people think you need to change the world. But there is ability to be successful and follow what others have done and then put your mark on it, and I feel like I've put my mark on the physical therapy industry.
Yeah. I think you're totally right about this, and I think it's one of the kind of biggest misconceptions that for example, I'm still in university and some of the things that I learn, for example, are very useful. But there are, there, there are some concepts like, as you said, reinventing the wheel and start, trying to start the next SpaceX, which is not needed. Like most people don't want to be billionaires, and most people just want to have and make good living and help people, and you can do that with a existing model, and so totally with you there.
And I'm all for if there's somebody out there that's a billionaire and you wanna follow that track. You can follow that track.
There are pluses and there are some minuses of being a billionaire, right?
And, that's the big question, if you're ready to take and make those sacrifices.
Absolutely. Absolutely.
What I found pretty interesting is on your LinkedIn headline, you have something that says that the leverage an owner needs at exit gets built years earlier.
So tell me what does it mean? And if you could go back kind of to, year one, 27 years ago when you were starting out what's one thing that you would have built sooner?
Yeah, I think as far as physical therapy business owners and them, preparing years before, in the physical therapy industry, when you sell your practice in the physical therapy industry, many of the sales are really partnerships.
So I sell 70 or 80% of my company, and then the big company becomes a partner with me. They own 20 to 30%. And so because of that, most physical therapy acquirers are looking for former owners to stay on for a minimum of three years, and in most cases, more like five years. So if you want to prepare for your ultimate exit, it can't be start preparing three years before you want to be out and not working anymore, because you can't give then that acquirer that three to five-year commitment.
So business owners in the physical therapy industry really have to start somewhere between seven to 10 years, because in most cases, it's two to three years of preparation to really get your business ready to sell, unless it's something that you've been doing, since you started it. Unless there's been some consultant that's been working with you to make sure that business is always be ready.
But most business owners, their business is not ready. It takes a couple of years to prepare. Then they do their deal. Then they have another three to five years. So as far as physical therapy business owners, I think that's seems to be the timeframe that they need. I started looking at this business, Martin Healthcare Advisors When I was in my final year or final three years of being in my business called Physical Therapy and Sports Services, we hired a consultant in 1993 by the name of Alan Cox.
He would come and spend one week a month on site with us, and I learned so much from him. First, he helped us grow from three clinics to 21 clinics, and in his company, it was called Cox and Associates, he had some others, and he had run a large physical therapy business of over 100 clinics. So he was the perfect company and person to help us through our transaction.
And having that assistance through our transaction, I knew right then that I need... I looked at Alan Cox, I said, "I wanna do what he is doing someday, help companies grow and help them successfully partner and sell." And so I modeled this business really after a lot of the things that he had taught me, and then as I mentioned earlier, trying to bring it all together with the investment banker approach, the Main Street business broker approach, and the approach of physical therapy business owners who know inside and out how these businesses run and operate.
Yeah. It all comes down to finding someone that's as you said, few steps ahead of you and really walking the same path as them.
Absolutely. Absolutely.
What's your next goal in the foreseeable, 12, 24 months? Everyone talks about growth, but what is it for you?
Yeah. My clear goal over the next 12 to 24 months is to continue to try and work on ways that we can serve companies in this industry that wanna grow.
They wanna grow, and they're gonna need recruiting, they're gonna need marketing, they're gonna need all the things that drive the top-line revenue down to the bottom line. That's charge capture, that's schedule management. And for us to just continue to get better and more efficient at helping those companies get to the point where they wanna get to sooner.
So if in the past it's taken us one year, two years, three years, I wanna take that down to one year, six months, three months. So that, that's my primary goal on the growth side. On the execution of a sale process, and a professional sale process, I want to be able to have our team be able to move that process even more efficiently than we do currently, and we move it very efficiently.
I know we can get better at that process. We can start to streamline the due diligence process, and in some ways, if we're working with acquirers that are also utilizing AI, I think we can squeeze that timeline from now, which is a six to eight-month process, down to a three or four-month process, and I'm hoping the acquirers are gonna come along for the ride because our business owners that we represent, they're ready to do it faster.
Six to eight months going through a transaction is a long time. We take the bulk of that work on us, but it still is a long time, and it's very emotional for business owners. So those are my two biggest goals, on the growth side for physical therapy business owners and on the transaction side.
Wonderful. We'll see how it plays out, and I'm happy to do another one. This was Paul Martin. Where can people find you? What's the best place?
Yeah. On our website, www, the name of our company .martinhealthcareadvisors.com. My email address is pmartin at the same, martinhealthcareadvisors.com. But we are on YouTube, NEXTLEVEL Owner podcast.
We are on LinkedIn. We are on Facebook. We are on Spotify. We're on about, just about every podcast, and it's NEXTLEVEL Owner, Paul Martin.
Paul, thank you for joining.
Mikolas, this was fantastic. Thank you for having me.
Want to talk about your own business?
Marlton, NJ 08053