AI Took Our Medical Practice From 3% to 30% Profit, with James Bates

Mark Gordon: My name is Mark Gordon. I'm here with a very special guest today. His name is James Bates. He is the CEO, chairman, and founder for an awesome company in the medical space, AdviNOW. Tell me a little bit about your journey and the company, James, give yourself an introduction.

James Bates: Yeah, I appreciate it, Mark. So James Bates, founder and CEO of AdviNOW Medical. AdviNOW Medical uses artificial intelligence to completely automate the medical practice. And in today's world, you hear AI in every single sentence, but the reality is nobody actually knows what the AI is actually doing, and they just think, AI. Well, what we actually do is the AI will engage with the patient before the visit.

James Bates: We'll do a comprehensive review of the patient medical record. The AI will predict every single question the doctor's gonna ask, and then it will ask the patient all of those questions before they ever see the doctor. The AI will then prep any order. It'll predict if the insurance company will pay for it. It'll predict the treatment. It'll predict if the insurance company will pay, and it will predict if there's any liability or compliance concerns with the patient. And then it will prepare a summary for the physician.

James Bates: And all the physician needs to do is click on "I agree." When the physician does that, the AI scribes it and codes it and sends it out for billing. So the key metrics for clients that use us are, you know, obviously profitability is a measure of any business, and profitability goes up a thousand percent once they adopt our platform, from net three percent to net thirty percent. It's just massive.

James Bates: Change of life for them.

Mark Gordon: Yeah, makes sense. They could see more patients. They can have, you know, a clearer head when they're doing it. That all makes sense. So I love talking to people who have products like this that seem like kind of a no-brainer, right? Because you feel like if you build an amazing product, it's gonna be easy to get it out in the market and sell it, but we all know that's not always that easy. So I always like to ask, coming into this, what are some of the hurdles and obstacles that you have in your go-to-market here? Well, and before I get into that, let's just say what section of the market are you really targeting? Independent practices? Are you trying to go to the bigger, more corporatized health systems? Kind of what's your target market?

James Bates: Yeah, I mean, any entity that does a medical encounter can use our platform. So people like Mayo Clinic are one of our clients, they're, of course, really well known in the hospital industry. They have three very large locations, all the way down to single practitioners. On our website, we have Dr. Wynn's Gloer and Pediatric that talks about us, and he's a single practitioner in Austin, Texas.

James Bates: And so for us, it's not really the practice type or even the size of the entity. It's just: can we integrate with their existing systems and basically populate all that information into the medical record for the physician? If we have access to do that, we could make it use us.

Mark Gordon: Yeah, so tell me about that. So what are some of the obstacles with the systems stuff? Are there certain industry players that you don't have integrations with, or is there so many players in the space that it's hard to have integration for everybody?

James Bates: A little bit of both. I mean, the electronic medical record market, or EMR market, or EHR, the terminologies people use, electronic healthcare records. There's a couple of very large guys, and then there's a ton of small guys. And so the large guys, like the Epics or the Cerners or the Athenas of the world, you can integrate with them, it's just very painful.

James Bates: You can do it, and we can do it, and we are. I mean, guys like Mayo Clinic use Epic as an example, but they're not friendly to work with, so very, very hard to work with. The smaller guys, or the smaller-ish guys, like Athena Health, they have a couple hundred thousand doctors that use our platform, very easy to integrate with, very easy to work with, great partners. So we kind of default in our go-to-market to people who utilize, like, Athena, just because it makes our onboarding significantly easier.

Mark Gordon: I've had this almost exact same conversation with somebody selling a very different product, but with the same EMR-type issues that you're running into there. So how are you discovering who's an Athena customer or not, as you kind of think about your go-to-market approach?

James Bates: Yeah, so we've gone through a very interesting journey in the history of the company. When we founded the company, our initial focus market was retail medicine. So Safeway pharmacies had little clinics next to them, they utilized our platform. CVS, their mini clinics, they were utilizing our platform. We had some great large as well as smaller clients inside of retail outlets using our platform, and our platform was very narrowly designed for them.

James Bates: The pandemic hit literally immediately after we released our product to market, and we actually had to pivot. Why? Because nobody wanted sick people in their stores. If you have a grocery store, the last thing you want is a COVID person to walk through your door and be diagnosed with COVID in your store, because then you're shutting the doors, right?

Mark Gordon: Yeah.

James Bates: So everybody shuttered the clinics, and we had to pivot to large hospital systems. And when you went into a large hospital system during the pandemic, it was very easy, you go in there and say, "Hey, your doctors could see 50% more patients per day. Your shortage of healthcare professionals," which was a serious reality in those days, "we resolve it." Signing up clients was easy. The go-to-market was nonexistent. I had network into a C-suite and all of a sudden we can sign a contract.

James Bates: But the real go-to-market challenge was: how do you integrate into their existing systems? And that's where, if you're dealing with a large hospital system, there's like 27 committees that all have to approve your platform, and then you have to work with an EMR vendor, which is less excited to work with you. So it really brought a challenge of: who do we actually focus on?

James Bates: You look at a peer market size, and a very standard market approach is, "Hey, here's our SAM, here's a big chunk of it, these 20 hospital systems. We get 50% of the market, but it'll take you five years to win that business." As a startup, you don't survive that, right? So we...

Mark Gordon: Pivoted.

James Bates: ...to the smaller guys. And the smaller guys, you know, they're not hospital systems in general, but they could be very large medical practice groups, a hundred locations, thousands of doctors. And those are the guys that we've learned to focus on in a go-to-market. Now, from that standpoint, we do zero outbound today. We hope to transition to actually needing to do outbound, but today all of our clients are inbound. They hear about us, their friends use us, word of mouth is a wonderful marketing tool, and we're abusing that as much as possible.

Mark Gordon: No, it's fantastic. I mean, it's so funny because there are industries where the people in that space would never get together or have conferences or really talk to each other. But in the medical community, it's not like that at all, it's a very collaborative community, and you can have that word-of-mouth and network effect to get that going. So I guess, well, first of all, amazing to do that. So then what are your constraints to growth? Is it simply just how long those integrations take? Is it the approval process? Is it the manpower behind that? It sounds like you guys have great traction, but what are the obstacles you're trying to overcome?

James Bates: Yeah, so our challenge now is the speed of onboarding. If you think about a medical practice, let's just take a single office, there's probably 20 or 30 staff in there that all currently manually collect data and enter data today. The unfortunate reality in healthcare is that every medical doctor practices medicine differently. You would love to say that there's a clear standardization across the industry, but there's just not.

James Bates: If the AI is collecting all the data and preparing summaries for the physician, but that summary doesn't look exactly the way the physician wants it to look, the probability is that they're not going to be happy with the solution. So what we have to do is configure our artificial intelligence so that it exactly mimics the way every doctor works, the way every front desk works, the way every nurse, the way every medical assistant, the way every medical biller, the way they work today, we have to mimic.

James Bates: So our partnership with Athena Health gives us access to the raw data in structured format, and we have access to their data lake for our clients, and it gives us everything we need to be able to infer those workflows. Today, we manually do that, but we're in the middle of automating that whole process. So it's an AI that onboards an AI, too many AIs in the same sentence, I'm not sure how much value that actually brings your listeners, but it is a whole different product to onboard our other product, and that thing will be released in Q4. That will take us from six-to-nine months to onboard a client to literally weeks. So we're really excited about that, and that should really skyrocket our growth from a revenue standpoint, and hopefully make the word-of-mouth go-to-market not sufficient anymore. I'd love to get to the point where we're actually finding clients instead of just telling clients to please wait.

Mark Gordon: For sure. And it's funny, one of our first major clients we had here when we opened was actually an MSP that is specifically focused on the healthcare space, so that's how I kind of started learning about all these different areas. Have you thought about trying to do different partnerships as you go to market with those types of players, is there an advantage in the MSP space to having a partner like this, where they could actually be the one making the introduction or have that integration, or does it make sense to kind of stick with the Athena route or go direct as you think about that going forward?

James Bates: It's all about the data. The only way we speed the onboarding is by inferring the workflows, that's the only way. Nobody can tell us. If you go to a medical doctor and say, "Tell me the way you practice medicine," they're like, "I don't know, I just do it," and it's unhelpful, actually. So it's very difficult to partner with somebody who's gonna help onboard it. If you know anybody who's ever implemented SAP or Oracle or something like that, it's worse, right? Because in those days, when we were going for those big ERP implementations, you have a bunch of people that manually do all these processes, and now you're trying to put them in this big massive software platform that can never really do what you want it to do.

James Bates: Well, what AdviNOW is, is we automate every possible medical situation that practice will ever see, and we have to automate it the way they do it today. It's not what does peer-reviewed literature say, what are best practices, because to every doctor, their way of doing it is best practice. So it really makes it unique, and I didn't really understand or respect that when I started going on this path, but I've learned to accept it. Do I respect it still? I'm not sure, but I've definitely learned to accept it.

Mark Gordon: It is amazing though, because until this very recent era of AI, what you're talking about would have literally been impossible, right? There's just absolutely no way to do it. But now, somehow, it's the expectation, even just to get in there. It's like how fast the expectations have moved. I guess my guess would be, in the current EMR world, doctors have to adapt to the new system. Even looking at it from the MSP angle, we would have doctors losing their minds over any change the administration tried to make about their technology. But somehow with this product specifically, it's like, "Well, if you can do that, you have to be able to pull off this other miracle over here as well," right? Which, kudos to you guys for taking it on. It sounds like if you can get it done, that'd be great. I guess, do you have other competitors in the space? Is there a race to get this going? Or do you have a kind of a unique viewpoint or product-market fit, at least at this point, maybe there's some people playing in the space, but not really a direct competitor.

James Bates: We don't have any direct competitors for our approach. There's many people that do pieces of what we do. The only other platform-type approach takes a very different view of the world than we do, that's what all the EMR vendors, everybody says, "Hey, we're now AI-enabled." Well, to them, what AI-enabled means is: we have an AI bot listening to you speak to the patient, and then we summarize it for you and try to predict the right codes.

James Bates: And then, of course, that leaves doctors as the experts in all the payer rules, Medicare requires these things for medical necessity, or Medicaid requires these five things for medical necessity, or they don't pay. And doctors end up having to be the experts. Well, no doctor wants to be the expert in insurance companies, or "the lawyer wants these five things in the note, or you get sued," right? And so the doctors end up really focusing on compliance and payment instead of the patient. And that's what they hate today.

James Bates: I mean, when I started down this journey, I come from outside of healthcare. I ran a billion-dollar business in self-driving vehicle technology, any car on the road that has auto brake or steer, most likely, 80% probability, they use my previous company's products. We sold that company, and as an officer of the company, it was a good time for me to retire.

James Bates: And I retired with a very strict non-compete, till I had to give money back, which wasn't gonna happen, so I accepted the non-compete. But the non-compete basically said you could do anything you want in this world, James, as long as it's something you've never done before, for the next few years. And so healthcare was that for me, and I dove into healthcare.

James Bates: And I originally thought that I would just come in and buy some medical practices. I thought I would roll them up, get economies of scale, do a classic private-equity type of play. Well, when I dug in and started doing the financial analysis of the medical practice, that's when I realized that the financial model of these businesses was fundamentally broken. Everyone thinks the whole medical industry makes a lot of money, and doctors, they do okay, especially surgeons, they make a good amount of money, but the businesses they work for?

Mark Gordon: Struggling. Barely making money.

James Bates: They're barely surviving. So the whole concept of a roll-up doesn't make sense unless you can fix that fundamental problem. So I went into the medical practice and did a Six Sigma lean analysis, and kind of what that means is I literally walked in with a stopwatch and measured the movements of every single person in the practice.

James Bates: And then I correlated it to the outcomes you're trying to achieve. And the whole lean concept is: if it doesn't correlate, cut it out. Make yourself lean. What I realized is that every medical practice, regardless of specialty, has really three outcomes they're trying to achieve. Number one, positive outcomes for the patient, every doctor will describe it differently, but yeah, we want that. Number two, you want to be paid consistently and reliably for every single patient that you see. And number three, you don't want to get sued for doing it, you don't want to have the Justice Department knocking on your door.

Mark Gordon: Or you want to see as many patients as you can.

James Bates: You do, but that's kind of a money thing at the end of the day.

Mark Gordon: So it is a business, right? At least in this country.

James Bates: It is a business. And I leave that out just to focus on the three things, the fourth, seeing as many patients as you can, kind of goes along with the fix. Because what I realized is, when you track the physician's time in that extreme detail, the physician spends 70% of their time trying to get paid and not get sued, and only 30% of their time practicing medicine. And if you go to a doctor and say, "You know what, you see 20 patients a day, I want you to see 30," the doctor says, "Hell no, I already do 12 hours a day. My wife is going to divorce me already. I like the house in the Hamptons, but I can't do any more." So the whole "see more patients" thing, they don't even want to hear.

James Bates: But when you go to them and say, "You know what, that's 70% of your time that you freaking hate, the AI is going to do it for you. And by the way, when the AI does it for you, that leaves 70% of your time that you can just happen to see more patients." And so that's the sales pitch that the doctors really love, because if they can actually do what they went to medical school to do, they can forget about the insurance company rules, they can forget about all the Justice Department regulations, which change quite frankly every six months, then they can actually make more money. Revenue per doctor doubles once our platform's adopted. Revenue per patient goes up 20%. The whole financial metrics of the medical practice change, and it becomes a good business, when you allow the AI to basically take over the getting-paid-and-not-getting-sued part, and you allow the doctor to do what they went to medical school to do.

Mark Gordon: Yeah, I'll tell you, I'll share this. I talk to at least two founders a day, every single day, many of whom are now using AI and doing different things. I would say that what you just did here in the beginning of this, you're in the top one percent of what I would consider problem clarity and solving. And I'm sure that's a big part of the reason why you haven't had to have a really elaborate go-to-market motion, because when the problem is so obvious and big, and when you're talking about going from a three-percent profit margin to a thirty-percent profit margin, which sounds like 27%, but as you said earlier it's a thousand percent, you're solving a lifestyle issue for the doctors, a frustration issue, a financial issue. There's really not a lot of downside, except people have to be willing to change, which, a year ago, even I think there was some hesitancy, some people holding out.

Mark Gordon: I don't really know, maybe this is hype, I think. Almost everybody in the business world now has come around to the idea that we're changing, it's changing. Now the question is: are we good at this change? How do we embrace this change? How do we make those decisions, on what timeline? And I think, as you solve this integration problem, your timing, you probably feel like it can't happen fast enough, and I'm sure that's how I'd feel if it was my company, but I actually think you're gonna be hitting that right as it's really coming around, which is: there's gonna be so many people that are just kind of psychologically ready to make that change come that point. I think you have a really, really exciting time ahead of you.

Mark Gordon: We have something here that we do at my company, these proprietary go-to-market assessments. I'd love to show it to you because I think it's really awesome. In the areas where you just crush it, you crush it, and there's some opportunities here. I'd love to show you, do you mind if I share it?

James Bates: Please.

Mark Gordon: Awesome, I appreciate you letting me do that. So we wanted to create a test, a zero-to-a-hundred score that really measures: okay, when your ideal customer finds you, how quickly will they know that they're your ideal customer? And by the way, you're doing a great job on that part of it. How good are we at capturing that information, meaning, knowing that this person came to our website, what's our automated follow-up strategy, and all those different pieces that go to market. And then, from a credibility perspective, reviews online, AI, what people might find.

Mark Gordon: And we find that these scores are really indicative of how much you can sell, or how sold people are before they talk to you. And again, you're not even having any of these issues, you're already crushing some of these areas. I know that score looks slow, but it's actually above average, 55 is average, but we do find that companies that score over 70 grow significantly faster than companies that score under 60, about two and a half times faster overall. I just wanted to share it with you because you might find it helpful. First of all, I just want to say, clarity, market fit, an amazing score.

Mark Gordon: And it doesn't surprise me based on the conversation we just had, you know who your ICP is, you know what your problem clarity is, your value proposition and sharpness is amazing. One area we did flag is that, being a newer company, it's probably hard to have some of these outcome proofs, you probably only have certain clients you can even say you're working with. But we did see some opportunity for outcome proof, demand visibility, website discoverability. There's some things there that could use some improvement. And then, again, that third-party review section.

Mark Gordon: Is it hard to get reviews in this field? I would imagine it's pretty hard to get somebody to go online and leave you a review when you're dealing with an institution in the medical field.

James Bates: That's the way medicine works.

Mark Gordon: Yeah, it's a tough one. And so, again, none of these things, I think you're doing a really great job, it's just some opportunities for advancement. Conversion infrastructure, when someone's coming to your website now, do you feel like you have an automated path to engage with them and get them to engage with you on the sales side?

James Bates: We do, that's all we do today. I have one person.

Mark Gordon: You have one person? Yeah, no, you guys are crushing it.

James Bates: Yeah.

Mark Gordon: It sells writing scores again, explaining what you do, who you do it for, and it really sets up well for the LLMs. I think you're doing a really good job of having objection-handling signals in there, the sales narrative is really solid. So, again, really great job on those things. We did see some opportunities around additional CRM-type automation and tech-stack depth, but again, for where you're at right now, you're already crushing it, and those things would be overkill.

Mark Gordon: Last thing, generative SEO score at five out of ten, which is actually pretty good again for where you guys are. Most of the companies ahead in this game have been around for a really long time and have had a consistent value proposition. So you guys are doing a really solid job across all those areas, and it shows. As you think about what that outbound motion might look like going forward, or at what pace you'd like to scale, do you have a vision for where you're trying to get to, overall, three years, five years down the road, from a market-share or revenue perspective?

James Bates: Well, we're going from less than five million of revenue this year to over fifty next year, and we've already booked over three hundred for the following year. So for us right now there's zero focus on go-to-market, a hundred percent on just trying to keep the clients who have already signed up to use us. So my guess is we'll sell the company before we actually reach that third year, but you never know. So right now we're just trying to speed the onboarding of the clients that have already signed up to use us.

Mark Gordon: I have to tell you, I said this earlier, I'm not in the habit of saying things I don't believe. I think you have amazing product-market fit. I think you do an amazing job of, in a very succinct way, explaining the problems that you solve. It doesn't surprise me that you're having the success you've had. Really looking forward to following your story and rooting for you the rest of the way, and in that acquisition mode. Anything else you want to leave the audience with? Anybody's listening, we have lots of business owners listening, probably some doctors out there. What's the message you want to leave with them before we let you go?

James Bates: If you run a medical practice and you want a thousand-percent increase in profit, reach out. james.bates@advinow.com.

Mark Gordon: I wish every guest could come here with a one-liner at the end that was like, "Hey, we'll increase your profit by a thousand percent." James, congratulations on all the success. Again, a transition from another industry, I went through a similar transition, coming from 20 years in the mortgage industry to getting into go-to-market consulting, so I know how hard that is, and how brave you have to be to do it. And the fact that it's working out for you like this is amazing. Thank you so much for coming on and sharing your story with us.

James Bates: Thank you, Mark. I appreciate it.