This CEO Built a Growth Model That Protects Independence
This week, Paul sits down with Health & Rehab Solutions CEO Blaine Stimac, as he recounts how his company scaled to 38 clinics across six states with a partnership model that keeps owners independent.
Full transcript
Generated from the episode audio and lightly edited for readability.
Good afternoon and welcome to another episode of Paul Martin's Crucial Conversations. I'm Paul Martin, founder and president of Martin Healthcare Advisors. And in today's episode, really excited. We're continuing in our series that has been focused on multi-site privately held physical therapy businesses and business owners. These are the leaders who have successfully grown and scaled their practices and continue to drive growth in those communities as well. And our goal is to get inside their heads, learn what makes them unique, and try to uncover some of the mindset and strategies behind their incredible success.
And as I said, I am so excited because today's guest is Blaine Stimac. How you doing, Blaine? Good, Paul. Thanks. Great to have you. Blaine is a physical therapist and he is also the co-founder and CEO of Health and Rehab Solutions, better known and much easier as HRS. Blaine has grown HRS into a thriving network consisting of 16 partnerships, 38 clinics, and currently in six states with their central office being in Montana. So Blaine, if you're ready, let's jump in. I'm ready. Again, we want to get to it.
We want to get inside your mind, buddy. All right. So, many owners are very content to stay small or let's call it locally focused. What was different about you and your mindset that pushed you to pursue growth when others around you may have stopped? Well, shoot, Paul. If I if going back probably to preceding my business owner and physical therapy days, I would say I've always kind of pushed for an upper level performance. And when I had an opportunity straight out of school to start a practice, that was kind of one of those moves that was at the time the teachers in my in PT school that I had were like, "Oh, you shouldn't do that as your first move out of school." And I'm like, "Well, I'm going to do it right.
This is this is a big move. It gives me a chance to play on the next playing field up and I saw that right off the bat. So I jumped into right making that kind of move. I've always enjoyed I think trying to play the next level up from where I've been both athletically right before PT and before starting a practice. And so I've had these opportunities throughout my career to do that and that's kind of the mindset. So, and then when I jumped into that practice and I went through the what I would say is the hardships of an early private practice owner and very classic trajectory and pathway that I went through.
And so in that and I had to look at that five years in and say, right, recognize I was a good PT, but I was really struggling on how to run a business and realize that was the next thing I needed to lean into to do well. And and as I started to do that, right, my excitement around the business side of the of the practice grew. I can't tell you that I was always that excited about growing the business because I didn't feel like I had the skill set.
But as I developed that skill set, then I got very excited about business growth and honestly built the HRS and the multi-site partnership model concept because I recognized two things. One, you are going to need to grow to out overcome what is our market restriction and changes. One of the ways to beat it is to out is to grow. Okay, that was going to become critical. That became very real to me I want to say in like 2008. And so, and secondly, I knew we would have to grow, but I also felt like when I looked at the other large groups out there, I felt like we could do it better and I felt like we could differentiate and I felt like we could support our partners and we could create a partnership platform that was unique and those were the two reasons we launched HRS.
Very cool. So Blaine, you're telling me you left physical therapy school and started a practice? Started a practice straight out of school. Yeah, I was meeting with doctors before I technically had my PT license. So fortunately, I passed my test. It could have been weird if I didn't. Wow, that is impressive and I extremely unique. I think I was out a year, so I was at least a year behind you, maybe a year and a half, but that is really impressive. So talk about planning a little bit.
Think think way back to the early days. How did you first approach planning and then over these years how has that planning process evolved as you have grown? Yeah, in the early days I think we the big change here, Paul, has been probably the magnitude in which we plan and obviously when I planned my practice before HRS and that was more around, you know, can we can we bring on one or two therapists maybe throughout the year and can we can we do that effectively? Can we continue to pull the referral sources out of the market?
Can we continue to get the patients we need? And then when we found someone, right, do we bring someone that's a good fit for our clinic? And if all that was there, we typically were successful in making those moves. But we definitely wanted to bring on, you know, a couple therapists throughout that time. Now, as I moved into HRS, a lot of what we do with our partners is much more now it's much more now focused toward helping them. Like each one of our partners, we strategically plan their companies separately.
We have an annual planning process and a quarterly planning processes. Very strong financial modeling. So, we're very intentional and diligent in the moves that we make because I think it the thing that's different now than it was back then is your room for error has narrowed significantly. Absolutely. You know, the financial side of the game has tightened quite a bit. We used to get away with a lot of things not being great and could be mediocre in a lot of areas that you can't be today.
In order to truly expand, you have to be really tight operationally, financially. You have to know how to make your moves. You have to know how to weather the dips because you're not every move is going to go perfect. And if you can't weather that dip properly, sometimes you never get out of the dip. And so our planning process today is much more like around and it's very strong backed on the finance side of when we decide to make a move. We help each one of our partners with their own individual plans for their clinics and it's a little bit more I would say it's a lot more comprehensive in than it used to be but the general process is the same but far more backed with financial acumen in today's world.
Yeah. So, you've gone from planning your own growth in your own clinic, more therapists, improved operations to now planning for others with your partners and kind of leading them into that planning as well. Yeah, good stuff. Really good stuff. Yeah. So, I'm sure you have a number of things that are unique about HRS. But what do you think is one of the, you know, one or two really big things that makes your company stand out and how is that uniqueness fueled your ability to continue to grow?
Yeah. When we when we launched HRS in 2012 and did our first partnership in 13 there there's a few more private partnership groups in the last let's say three, four, five years, but we were pretty unique at that time. And to be building a partnership model as a self-funded bootstrapped group not with a within with no capital partner. And I think what was what made us unique, Paul, was the way that we looked at our partners. We saw them as a partner and we invested in them and a lot of how I built the model was designed to invest in our partner and support them in a way that was distinctly unique from what I actually saw and studied in the other partnership models that were in that were out there at that time.
And I still think what we do, I think there's a lot more smaller groups that have cropped up in the last, like I said, three, four years, but I still think the way that we built our model and how we support our partners and what it's designed to do is unique. And like on the surface, we may look very similar, but we're not. And and so what we do is we with when we look at what it takes to succeed in running a private practice, there's a recipe to that and there's actions that are proven successful.
And when those actions can be replicated and can be done consistently, you're going to have more success. And the difference between these two clinics is really right, can we effectively execute on the necessary successful actions? And so the way that we support our partners and we don't just say, "Hey, you're here. Go figure it out on your own." We're shoulder-to-shoulder with them in kind of overcoming that. And every one of our partners and every one of us as business owners has our natural strengths and we have our natural things that we're not good at.
And so knowing how to balance your strengths with your weaknesses and how to lean into your strengths and close down your weaknesses, right? There's if you can do that well then you're going to right add up a lot more success than if you're missing the mark there and [snorts] I think it's the way that we work with our partners to help them again right attack their weaknesses while leaning into their strengths and how the model supports and builds on the successful actions over time. If you think back to 2012, 2013, to my knowledge, all of the partnership companies, and there weren't that many back at that time, but all of them were backed by significant capital or the biggest partnership company is publicly traded company.
They have had the partnership model for, you know, since probably back in the 1990s. But yeah, when you say you were unique as a privately held, privately funded business doing partnerships at the level you guys have been doing them, you were stand out unique only one in my opinion. So very commendable. Very commendable. It's not always easy. There's always some rocky roads. What were some of the biggest roadblocks that you face as you tried to continue to grow in the partnership model that you adopted and how did you o overcome them?
Yeah, we've you know the challenge of scale exists in any business and you start to study what true scaling is and the percentages of businesses that scale and the ones that don't it's very fascinating and we had to go through and learn that and I always break up HRS's our phases so far into three different phases. The first phase I would say is our first six partners because we had 18 partners over the course of our time. Now we're down to 16 today only because two of our partners exited and two of our other partners acquired theirs and wrapped their brand up inside of theirs.
Right? So there was an expansion move for some of our existing partners and an exit opportunity for two of our other partners. So same number of companies however were now run by two less partners. But I would say the first six partners that we had, right, it was really just us knowing what to do with the clinic and meeting with them every week and kind of walking them through it and handholding, right? And as we had success there because our success in that proved one, it proved that we had proof of concept.
It proved that we could go outside of our existing practice and create success beyond industry norms. Okay? And which is what we intended to do which is how do we create highly successful practices that outperform the industry and we proved we could do that but it was very labor intensive with myself my management team and being able to like kind of like work with our partners and we hadn't built the systems we needed to build we did internal to a practice but we hadn't built the systems and how we would replicate HRS's systems and functions so the second phase was us starting to build our systems and replicatability so what we recog recognized as we kept adding partners is we couldn't continue to meet with them the same way in that first phase that we did in the second phase.
So we started building in a team of experts around different areas of running a practice from front desk to clinical ops to marketing and sales. Okay. And so we started having various teammates that could teach that portion of what we wanted to do there and starting to spread out that action through that. And then in the in the third phase I would say right we got to a spot where we really recognized that right we had to evolve significantly from where we were at and I ironically we opened up five companies we had five new partnerships or companies Paul within one year of co wow timing was not great right from an acquisition and five startups an acquisition five startups so six partners within that timeline so that put us in certainly a scramble mode that had we not hit co at the same time it would have been very interesting because we would have had to solve the next piece and really co put that on pause for two years to be real right we didn't really tried to solve our next component of scale and as we came out of COVID and then we dealt with like a lot of the labor changes that and labor market changes and challenges and the great resignation and some of that gave us new challenges of what we had to be good at to run a PT practice so for a couple years our attention went into the way that the industry was changing and coming through COVID and then we got back on the other side of that and we've kind of been where we're at today which is like really recognizing for us to go next level and really consider ourselves a national player and to really continue to create the impact that we wanted to on private practices and helping private practice owners and keeping them private practice owners.
Right, we had to restructure our whole model. We had to restructure even our team, our executive team. And we had to really kind of lean into really a stronger executive team, a stronger internal structure, better systems and processes, and really recognize what it takes to scale. And that's kind of been where we're at now. And and we're really in a spot where we feel very confident, especially as a self-funded company because we continue to be a self-funded company that we want to continue to be that for quite a while because it allows us to do things and to operate differently.
And we are at a spot now where we've been able to take advantage of our successes in a way that we are prepared for another growth push grow cycle. Yeah. And it sounds like you know not at the CL clinic level but at the administrative level you've been able to build a really strong team beyond the original owners and the original ownership team. H how has that gone and what were some of your strategies in trying to build out that team? That's probably been one of the harder spots and I think the areas where it's hard to have a roadmap for like what can I study to do that right I mean now more recently I' I've leaned into various you know areas of study you know John Maxwell is an excellent resource when it comes to leadership and you start to actually lean into that as a specific skill set that you know you need to develop right and you start going okay I need to be better here.
It's not just these processes and the areas that we're good at. And it's easy to lean into what you're good at, but sometimes it's like, well, what are we not good at? Where am I sometimes hurting this, right? Where am I where am I the problem sometimes? So, it starts with you. And then, you know, I've tried to bring people on that I think balance the strengths across our team and lean into that. And people who are just growth oriented like they intend over they want to grow and they're willing to also recognize where they're not good, what they have to be better and we're willing to be very candid with each other and what we do well and what we don't do well and we own it and we learn to work together in that regards and there's a lot of good references and data out there right of how good leaders start to work together but are different and so I would say that what we started to recognize is we needed you know people who had that really strong growth mindset for themselves as professionals.
Yeah. And and wanted to grow. And then we spend a lot of time in just evaluating our effectiveness and how do we do how do we help our partners as much as possible and where did we come up short and what could we have done better? I think that allows us to grow. And I think when we're in that like constant learning and growth mindset is a sign of a good leader. And and so they're very open, they're humble, they're trying to answers and they're willing to be wrong, which is important.
And I would imagine that with that real strong leadership team that there's less concern about the next partner that comes in and what teaching, training, guiding, building, you'll be able to, you know, do with that with that next partner in number 17. Now, absolutely. And that's exactly when you when you feel that like you just nailed it. Now you know you've got you're prepared for scale when you know you can control consistently what happens there and that's the next thing that we need needed to be in through those phases and be able to do it broadly.
And then you know we obviously have to strengthen every year not only can we can we provide can we achieve that with our partners but how do we offer more and more to our partners every year than we offered the year before. Sure. Right. How do we strengthen the partnership from that angle as well? Yeah, great stuff. Great stuff. So, for some of those business owners out there, they may have one, two, or three clinics, but they really want to grow. What do you think are some first practical steps or what are some tips that you might give them?
Here's the number one thing I would say if you're going to grow self-funded. And almost all those situations are exactly what you just described. [clears throat] you'll hear me say, and it's something I've adopted because it was one of the hardest things to teach our partners, which is what I call finance first mindset. Right? If you can't look and understand the finances of your company, it's one of the areas I think naturally as small business owners were very good at our trade. And right, the reason I did very well in the early days was not because I knew how to run a business, but I was a good PT and my wife and I, my wife is an OT, I was a PT and we were good at what we did and we established a good reputation because of it.
And that reputation alone grew us and then we started having problems because now there was a business to run and what we knew how to be was be therapists and right and do a good job with our patients and then build off of that PR value that we created through the community. But we didn't know how to run a business, right? And I will even say and I and so I started my first practice in really right at the end of 2000 or 2001 straight out of school and with my wife who was an OT and and then we had an opportunity to buy the very first private practice in our town that was started in 1988 and the largest practice in our town in 2007208 and even when I made that acquisition move and I merged my company with that company.
It was I was still I was much better in a lot of areas, but I would say I was still weak on the finance side and I didn't know how to actually really financially plan the company and how to really understand the financial levers of the company and how to really manage it from that angle. And it wasn't until I wasn't that I was not hitting the success points that I want before I realized I needed to shift my angle. And so from a finance first, you basically start with what you need to have and then you work backwards, reverse engineer from there.
Really recognize that, right? How finances have to operate because again, if you're not strong fiscally as a as a business, no matter whether, right, no matter how good our product is, if we have if we're in bad financial condition, we aren't really helping our staff, we aren't helping our communities, we won't be there if we're in bad enough shape fiscally. So, we aren't taught that in PT school. We're we're actually kind of taught sometimes, right, that profits or finances are bad even, I would say, right, which is totally wrong because we should be the stronger our company is, the more that we can serve our communities.
The stronger our company is, the better we can serve our teams, right? And when we're not in a strong position and not running well, and I actually considered it our job to run our company well enough to take care of our team, right? To be here tomorrow because if we aren't here tomorrow treating the patients in our community then our patients are going to the hospital right and the hospital outpatient department and that's not good I usually tell people of all your competitors in town how many of them would you send your mom to and they're like oh 10% I'm like good so it's our job to be here tomorrow right to be the best PT company in the town and we have to actually make smart decisions and we have to balance the tough decisions across the company and there are many tough decisions to make but that's what is the job of the owner right so but that ability to truly start to understand the finances of the company and to really be able to financially model and recognize how your operations and the different things that you have to have control over from spend to strong operations strong culture was really where what was the most critical element and honestly if we hadn't gotten good at that Paul, it would have been very hard for us to scale the way we have with HRS because we had to be so successful with each move we made in our first, like I said, six partnerships and six companies that we launched because if we weren't really strong in those companies, we never would have been able to do the next deal because we had no capital backing.
We had no bankroll to operate out. But we had to take our success and then roll that success into the next absolutely partnership. Yeah. And into the next company. And we had to be so good there that we could do it again. Right. And that required us to be very precise and very knowledgeable in how we run the company. Yeah. And as you know, we both know most physical therapy business owners are physical therapists. And so you know, as a therapist, your comfort zone is not in financials.
And you took a complete turn on that and said, "No, you have to push into where you are very uncomfortable and learn how that drives your business." And it is such a great point. Because it allows you to do so much more staff-wise, treatment wise, etc., etc. Are there some opportunities that you are seeing for independent PT companies and how they could grow over the next three to five years? Kind of some of those opportunities in this current market or the future market that you're kind of keeping your eye on.
Yeah, I think there are opportunities a lot for some of the smaller practices and a lot of that comes around Paul, we know that, right? One of the biggest challenges of growth and success is going to be labor market, right? And and getting therapists, recruiting therapists, being able to recruit and retain therapists. And I think this is where the smaller practices, the mom and pop practices have an advantage over the larger practices, right? They they're going to be able to offer things. There are things that they will be a not be able to do that the big guys will be able to do, right?
But there are things that they can do that the big guys can't do. Absolutely. That's culture development, right? The way that they spend time with their team, what they can give their team. It's what I really like about our model because it's meant to keep the mom and pop feel but gain the advantage of being a larger group. And that's why we're individual brands, but we are kind of affiliated in a way that we get the advantages of a large group, but still operate at a brand level, much like you would expect a small company to feel from some of your big dogs.
So, I think the advantage there is the way that they can lever into that and do things that the big companies can't. And right, they don't have investors to pay, right? They don't have things to do. So they can use their successes I think a little bit differently than the big model can. I think that's an advantage and I believe that allows them right their biggest growth opportunity. I think there are going to be other smaller practices that probably decide that the game has gotten too tough and they run a hang up there.
They want to be done. So I think there's going to be some opportunities for some smaller practices to roll up with some other smaller practices that may that and those smaller practices may not quite be on the radar of some of the big guys from an acquisition standpoint. So it's almost a better opportunity for the smaller practices, right? For one to roll up with the other one and start to capitalize off the increased market share, right? Some of the advantages that you can create there. So, I think there's going to be a ton of that opportunity over the next three years.
The game's just gotten tough, right? And if it's a grind, and I think for practice owners that have been around a while, sometimes there's too much resentment in that change. And it's hard to change when you're when you resent versus how do I succeed in that market? What would have to happen here? And I think that's opportunity for those that have a different mindset, which is how do I succeed? What what would I have to be? Someone's going to win in the market. Yep. Yep. Someone's got to win.
So, what would it take to win? And and can I can I be that business owner? Yeah. I mean, every in every market there's a competition for the best talent. And the best talent. Yes, you know, maybe they're going to go to the hospitals because they'll simply pay them more money, but if they want to be an independent private practice, they're going to go to the company that has the best people plan and really truly invest in their people, whether it's time, maybe money, but, I think, you know, time and teaching and training and learning is what young physical therapists need and want. [snorts] Yep.
Exactly. So, on a personal level, and I've known you for a fairly long time, Blaine, what have you learned as a business owner during kind of this journey? And how is it how has it shaped the way you think about your role and now the future of HRS? Yeah, I think gosh, that's a that's a great question. I would say the biggest things I've learned personally that I think have changed me personally, Paul, that I wish I would have known earlier, which is right, the how I look at failure, how I look at missing, right?
I have not generally as an athlete, right, you don't want to fail, right? And and generally in business, you don't want to fail. So, we don't usually embrace those as learning opportunities and we don't always embrace that. I heard again John Maxwell talk in a in a live once and he talked about how to get the most ROI out of failure and I loved that concept and I didn't have that viewpoint all the time and I and had I think we would have grown faster and I think that that's something I've learned on a personal level that right those are lessons that I wish I would have gotten taught sooner but I've learned through business and where to be humbled and how to get humbled and how to actually embrace that opportunity for growth and not see it as more negative than it needs to be.
Right? That's one thing. And then secondly, right, and this is something if you study a lot of high performers, let's talk business athletically, but you study high performers, you know, minus your Elon Musk and your Jeff Bezos, they're rarely just completely like just smarter than everybody else out there. And they tell you that I wasn't the smartest guy out there. Most of them dropped out of high school. They didn't off college, excuse me, they had bad GPA. They weren't the highest performers and right outside of a certain level, but what they will all say consistently, right, is they just didn't quit.
And that grit, that tenacity, that willingness to keep kind of overcoming odds, and boy, in the PT world, we have a lot to overcome, right? We do not have an easy business environment. And that's just the reality of it, right? And so, you gota have tough, you gota be tough, and that's something that's tough to teach. You got to have some grit and you develop that through those hard times because we all know it's like everybody handles easy times well, but how do we handle some tough times, right?
You know, it hits the fan at the practice and we go through a tough time, you know, industrywide and or direct to your practice and can we grow from those moments because if we can, we get better over time. If they beat us up too much, we don't. So I would again just come back to that grit and learning what that means and then starting to almost embrace it, right? And just like be okay with it. Yeah. And I'll give you a book and I'm giving everybody a book.
My wife went to a seminar and one of the speakers was Synindra Campf and she wrote a book called Beyond Grit and she currently works with executives, entrepreneurs, NFL players, Olympians, college athletes, but beyond grit. So you brought that word up, Lane, and it resonates for sure. That grit and you know I think from young people today that tends to sometimes be something that's not quite as accepted you know that grit is a part of all this but absolutely I love that you say that Paul just one more point right because I think if you can put it in this light it will make sense what do you want your like you know I've got three boys I got one that just 19 17 it's like what do I want them to have when they enter this world yeah absolutely Absolutely.
It's not always knowledge, right? Knowledge can be gotten, right? I want them to understand hard work. I want them to understand grit and understand where success happens and that willingness to kind of work through failure, right? So, yeah. So, I just I hear you say that and that sounds like a phenomenal book, but I look back and that's like that's what I want my kids to have. Yeah. Yeah. For sure. For sure. Yeah. Well, Blaine, I cannot tell you how much I and our audience, I am sure, appreciate your time today.
You have given them an enormous amount of value from our conversation today. I appreciate it. Awesome. Thanks for having me, Paul. And so, for any of you out there that would have questions or would like to talk further with Blaine or myself, just click below and let's talk. Have a great rest of your day, a great weekend, and thanks for joining us today.
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