Episode #517: Chris Craytor on Innovative Strategies for Health Club Growth and Member Retention

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I am super excited to announce that we now have a formal partnership

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with The Prospect Wizard. And when I say wizard, I

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mean wizard. Obviously, you have a website. This allows

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you to convert your website traffic visitors directly

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into leads. It's not just another chatbot, and it's not AI,

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but it allows a visitor to call, text, or leave a voice

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mail, immediately goes to you, your sales team, or anyone else in the club

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instantly. MIT shows a study that if you contact the lead

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within 10 minutes, chance of them converting goes up 9 times

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that of the average. We got the Atlanta Clubs on it, Vida

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Fitness, Gold's Gym, Mountainside, City Fitness

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Philly, College Park. Become one of the

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next halo companies to deploy the wizard. It's easy to

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use. Go to the prospectwizard.com. Get a free

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30 day trial. Talk to my boy, Dave Gallon. He will get you all set

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up and let the leads flow based on the

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wizard. Go get them.

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This is Pete Moore on Halo Talks NYC on location,

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IHRSA 2024, to be known in the future as the Health

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and Fitness Association. I have been able to get Chris

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Craeder for 30 minutes. He will be here uninterrupted. He

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is the chairman of the IHRSA board. A lot of street cred for

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that and everything we've done to get through the pandemic. We're gonna talk about

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Ursa. We're gonna talk about ACAC clubs, acquisition strategy. And we're

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gonna then talk about Weld, which is a software platform you need to know

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because it's probably your easiest and best revenue stream that you are not

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optimizing. So, Chris, welcome to your first halo talks. Maybe we'll do

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this annually. Thanks for having me, Pete. Glad to be here. Awesome. So,

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look. During the pandemic, everyone's like, Ursa's not doing enough.

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Ursa's not doing enough. I was like, dude, we haven't funded Ursa to do what

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we need to do. So let's actually try and fund it properly and get the

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right people on the boat, and then you could actually make change. You can't just,

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like, flip a switch and say I gotta run a trade show and research it

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down. It's supposed to be, like, your $50,000,000 lobbyist group also. So talk

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about when you got involved, some of the things that you, like, had to address

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head on, and then, like, how we got to here. Sure. I I came on

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the Ursa board in 2018. So at the time, it was primarily

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a trade show company. You know, the vast majority of Ursa's revenue, still

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is, trade show. And now officially known as the Health and

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Fitness Association after the rebrand this week. Great I think it'll be good. I

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think we were a smaller, trade trade

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association. We're not very well known in public policy realms,

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certainly in DC. And you compared us to other bigger trade associations,

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we were not swinging at the appropriate weight. Right. You know, they had bigger

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budgets. They were they were writing bigger checks and so on. And most of our

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industry was kinda blind to why advocacy was important and

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why being in front of your congressional leaders was important. So 2020

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hits, and everyone's really upset because we got shut down. We weren't essential. Mhmm. And

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now that we're not essential, everyone's wondering why haven't we done enough? Yeah. Yeah. Getting

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anyone to to cough up even a $100 for advocacy

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purposes was, met with a lot of, noes. Yeah. Yeah. And so that was a

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real challenge. When I came on the board, it was very difficult to raise money

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for advocacy. Now, fast forward to today,

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is IRSA with Liz Clark as the CEO and making that hire strategically Yep.

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To really point us towards advocacy as a critical pillar along with

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education and along with research as the three things that IRSA, now Health and

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Fitness Association, is gonna be doing. Yes. And that switch happened

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because of the pandemic. I think many more club operators are aware of

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how important this is. And as we move forward, there's going to be

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increased effort to get into state houses because state level advocacy

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is where a lot of bills are, introduced and a lot of battles are won

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and lost. So I think getting more club owners involved and aware was a

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great byproduct of the pandemic, but we're still not where we need to be. Is

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that, you know, with Kevin McHugh and doing his, like, his team team

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435 Mhmm. Is that kinda under the auspices of

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of Ursa as, like, a as a kinda sub, you know, guerilla marketing

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group, or is it completely separate? It's actually part of IRSA. So Yeah. Okay. The

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National Health and Fitness Alliance is the, advocacy group

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for IRSA that's, based on based here in the US and for US

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advocacy. Yep. There's obviously the Global Health and Fitness Alliance, which does this on

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a on a global scale. But on the NHFA, the Project 435,

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to have a club captain in each of the 435 congressional

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districts, was really around making sure that we had local constituents

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who were advocating for our industry across the country. Every

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congressional district has a health club, so why shouldn't every congressional dis

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district have an advocate for health clubs to their elected official? Yeah.

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Sure. You know, one one of the things that kinda struck me is, when I

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got involved in the, the National Health Fitness

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Association that, you know, sub subcategory, committee

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a couple years ago, I was kinda shocked that everyone did just say, like, let's

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add a dollar to every, you know, take a dollar of everyone's, like, $400

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membership. Go through ABC. You know, Daxko, we'll just collect it. We'll give

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it to, and there's 60,000,000 members. Bam. You got $60,000,000. And I was

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like, I don't wanna charge another dollar to my members, or I don't wanna share

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that dollar. And, also, I was I was I was kinda convinced that if we

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just said to a member all of our members say, like, hey. Click here

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and, like, send money to the Ursa pack or the HFA. I feel like

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they would do it. It's like, is there a reason why we're not, like, hitting

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up consumers? During the during the pandemic, as an

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aside, I listened to a podcast series about the, National Rifle

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Association. And I was just, like, shocked that, like, they have all these members that

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pay an average of, like, $40 consumers a year, and they got, like, a

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$100,000,000 budget. And they just you know, they they make shit happen. Not anymore,

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but, like, I feel like we have the power to do that. Do you see

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us, like, going downstream and actually having members participate in this? Or

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is that, like, maybe, like, 3 steps ahead and, like, hey. Let's just get everyone

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in here and see both? Yeah. It was it was really challenging in a couple

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of ways there. 1, getting everyone to agree on what to do Mhmm. Was really

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chall really tough. I mean, everyone has their own perspective on how they wanna handle

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it. Yeah. Additionally, everyone had their own legislative priorities. Like, Like, what's

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important to a big, large national club chain may be different than what's important to

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a smaller local regional operator or HVLP versus studios

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and on and on. So getting everyone to kind of agree on the priorities. Because

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with a group like the NRA as an example, everyone can understand what they're about

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and what they stand for. For fitness, we had lacked a focus Yeah. In that

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true north star that would get people attached to this is what we're

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doing. You know, if I go to the grocery store and check out, you know,

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I can add $3 to my bill or whatever for Right. Right. Or you get,

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like, a like, a red nose or something that's yes for a dollar. You know?

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Exactly. And that's 1,000,000 of dollars of, like, you know, donations that we made.

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Absolutely. But it's it's very clear what that charity is about and what it does.

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Yeah. Triple And so I think for us at, Health and Fitness

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Association now, it's going to be about how do we create that singularity of purpose

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that everyone can get behind. Right. And we're working on the strategic vision now

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for the organization, which should help. So if we have better alignment, I think that

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door could be open. Yeah. We have 70,000,000 members. Right. You know, we have massive

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part of this whole country that is engaged in some way with our

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business. So we're punching way below our weight in terms of our ability to

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make an impact. Yeah. And and not that not that, you know, Ursula or the

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HFA or whatever have, like, a voting block. Right? Whenever we have, like, say, we're

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gonna vote for this candidate. But, I was talking to Greta yesterday,

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you know, from Chelsea Piers who's been on the board for a long time. And

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I say, like, probably 65 to of the 70,000,000

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people actually vote. Right? Because you've got active people that actually give a shit about

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themselves, give a shit about their communities, and and that that's somebody that

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has a say. I'm not telling them which whether it's democrat, republican, independent,

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whatever, but it's gotta be certain things. And I was watching CNBC the other

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day, and I was like, there's people that came out of the voting

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booth on Tuesday, and they said, I'm a single issue cat

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voter. I'm a single issue voter. Like, there are probably a lot of people in

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the fitness industry like, I want more parks. I want more bike lanes. Want my

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health club to be tax free. I want all my shit that I buy to

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protect myself to be tax free. And, like, they might vote on

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that platform. You know? And and and and a candidate should say,

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like, I'm for the HFA or I'm against the HFA. And if you get to

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HFA, like, you're against, like, longevity,

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health. You're you're against, like, everything that, like, we know scientifically

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is is is is a way to to live your life. Yeah. It's been pretty

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crazy to watch this because, you know, politicians, clearly logic doesn't

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dictate what they do. Right. Right? So Money does, unfortunately. Even though we think we're

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in a democracy, we would've paid for play democracy. Yes. We are. And so when

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you look at, even our the FIT Act, which has been around for a while,

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getting HSA and FSA dollars to pay for health club memberships. Yep. Passed

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in 2018, and we haven't been able to get get it that far since. And

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why is that? Well, because everyone's like, well, HSA, FSA,

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some people think it's only for people who have a lot of money. Other people

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think it's for already healthy people. It's not hitting the population. It's gonna cost too

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much money and all this. Whereas we can put on our just logical hat and

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say, wait a minute. If more people are getting healthier, that's probably a good thing

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for society and has good economic value. That doesn't play into how DC

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makes decisions, unfortunately.

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This is Pete Moore. I wanna let you in on a little secret. There's this

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company called Promotion Vault, and what they do is they give out rewards

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from retailers that allow you to incentivize your

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members without having to do 0 down and 1 month

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free or giving away shakes or giving away t shirts.

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What you wanna do is build a rewards program that lasts,

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that people value, and that doesn't discount your own products and

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services. So here's the deal. There's something called rewards vault.

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The rewards vault is going to allow a member to set up their

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own profile. They are going to answer questions. You are gonna get those

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answers. You're gonna be able to target those members, and you're gonna reward

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them inside your club, inside your spa, and outside of

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the club, and outside of the spa to get them to become loyal,

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to get them to pay their monthly dues, and to be

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rewarded properly for the actions. A lot of companies are cutting back on

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rewards. You shouldn't be. Promotion Vault's your answer. Trust me.

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This is real.

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I'm shocked that there still needs to be, like, clinical studies done. Someone's like

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was mentioning another podcast. Oh, yeah. There's this clinical study on, like, exercise that

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helps you do x y z. I'm like, dude, it helps you do everything. Like,

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why do we still do clinical studies? Like, we know the answer to all this

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shit. Yeah. It's just yes. Driving me fucking crazy. Yeah. Anyway alright. So let's pivot

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over to, you know, where where you started on at at ACAC.

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Talk about that club footprint, you know, how you guys are kinda leaning

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into more on science and and medical than the average health

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club. And, let's talk about some of the growth opportunities, you know, as you run

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that that side of your, you know, trifecta, I'll call it. Oh, yeah. I mean,

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ACAC Fitness and Wellness, it's a club company founded in 1984. Been around a

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long time. I've been there for 20 years. Been the CEO for

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part of that time, not the whole time. And we're based in the mid Atlantic

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states. Charlottesville, Virginia's home. And, you know, our club has always

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been about trying to get people into the club who typically were not part

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of the club marketing strategy. You know, when ACAC was founded, all the gym

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ads had really buff people, really strong people, very much,

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ideal body types and so on. Yes. And so the idea was could you craft

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a club from the ground up that made everyone feel comfortable? That was more of

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a community, center than it was necessarily a health club. And

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so this idea of getting everybody to come in who normally wouldn't has really

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been the foundational kind of aspect of our business. And that related to

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medical. So when you think about the medical side, you have a lot of folks

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coming out of their doctor's office who are being told you should exercise more.

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Probably most people. But there wasn't that really easy way to say, well,

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what should I do? What's the answer to that question? The doctor might say, oh,

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you should walk more outside, or do you like gardening, or whatever. You know? So

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we developed programs for physician referral, and this was 20 years ago.

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And we were pre pandemic doing, you know, 7,000 referrals every every

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year, turning those into thousands of paying memberships every year. So it's

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a great membership pipeline, a great lead generation tool, but at the same

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time, having positive outcomes on people who needed to start exercising.

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So putting all that together, we really started, you know, diving into medical. We

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started doing more we we became a Medicare,

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certified, diabetes prevention program supplier, so we actually built

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Medicare for that. We developed a lot of relationships in our local communities with

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doctors and hospitals. We co own a, 6 location

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physical therapy clinic, group with a local hospital. We

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have, done, medical programs for our corporate partners,

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on and on and on. Because our thought process is really that if we can

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change someone's life and make a positive impact, we're gonna have a higher chance of

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keeping that member for a longer period of time Sure. Because we made a difference

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in their Just so people obviously are not gonna see images of the

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club, but give an analogy of what the club looks like. Does it look like

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a lifetime fitness? Does it look like a big club? Give me some analogies. Yeah.

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Those are good comparisons. I'll take either one. Alright. You know, we we

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tend to run larger format clubs. So, we operate at the higher

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end of our market. We're not an elite club, you know, so we're maybe, you

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know, a little bit less than some of the clubs you mentioned in terms of

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price point. Yep. So we do wanna be a little bit more accessible. But

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we obviously wanna have a first class, 1st class club with equipment

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being cleaned. You know, again, at a price point that is kind

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of above what I call the HVLP or middle market that's kind of in the

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accessible more accessible luxury category. What what are some of the amenities that are in

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each one of the clubs? Sure. Like, our our larger clubs are gonna have, indoor

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and outdoor aquatics, spa, summer camp, childcare,

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obviously functional training, 5 group exercise studios, on and on and on.

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So really, racket sports, as well. So we have a

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pretty broad section, of club offerings. Got

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it. And when you take a look at, onboarding

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someone from a 7,000 referrals that come

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through. A lot of clubs have tried to do this, but they either just don't

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you know, they might play zone instead of man to man. It's like, hey. Somebody

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comes in. I gotta get them in front of, like, either a nutritionist or personal

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trainer. Like, how do you guys define who that, like,

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entry point person is? What does that look like? Because obviously, there's a a significant

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amount of cost versus, you know, some things that are, like, revenue shares

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or having somebody in there. So and second part of that question

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is, what does it take for somebody that's not

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a a high end club to pull this off? Yeah. It's a great question. Obviously,

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finding the right people to run any program is crucial Yeah. In any business. I

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think we have hired, folks either with health care

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backgrounds. In some cases, we've had nurses in the clubs. In most of our larger

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clubs, we employ nurses even on a part time basis to help administer the programs.

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Believe it or not, there are a lot of nurses that are burned out on

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being nurses in a hospital. And so, you know, coming to our environment

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is a, you know, a nice a nice change of pace. We've also

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been able when they onboard, you know, most clubs offer onboarding personal training

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sessions. Most clubs offer some kind of goal setting. It's no different than

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that. You know, you're really assigning someone to find out what the member's needs

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are and run them through a program. The the big differences are

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in that initial goal setting, you're talking about health history. You're talking about

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limitations. You're talking about, you know, what brought them in in the 1st place? What

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are their fears, about coming to a club? And so on. So it is a

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little bit of different interview process. We do do assessments. So we wanna

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mark on the 1st day of the program and the last day of the program

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how do they feel Yeah. About themselves, about their energy level, and so on.

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But also what kind of impact potentially have they made on their biomechanics

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or their demographic information, like, did you lose weight? Did you your blood pressure

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go down, etcetera. Yeah. So The the one thing I and I've been saying this

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phrase that I got on the back of my jacket here. You know, you can't

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have artificial intelligence until you have intelligence. Mhmm. So it sounds like

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this entry point is basically like filling in real data of, like, what are the

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triggers? Like, diagnose this person. And then who do you who's your software provider?

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Club Automation. Club Automation. So it's something Club Automation can say, hey. I could layer

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AI on top of your, on top of your eye, where a lot of clubs

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are like, yeah. I got the birthday, and I got the credit card. You know?

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Like, you don't really know your member, and then the 300 members leave, and you're

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like, oh, you know, we lost 300. It's like, nobody played

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man to man on any of those people. Like Yeah. They'll hold them accountable.

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Where do you see the medical side of this going now that you

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have all this data and you're gonna get more and more in your deep? We're

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gonna talk about well in a second, but, like, you know what the you're in

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a unique position right now as an individual as well

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as, like, a company knowledge of, like, what these

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companies like Optum and and Tivity and

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Humana and Blue Cross Blue Shield. Like, you know what they're looking for,

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and then you know that they're at some point, they're gonna reimburse most or all

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or more of this. So how are you kinda, like,

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pulling in information and results and, what what'd you

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call it? What what is part of the results? Your Outcomes.

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Outcomes. Thank you. Thank you. Outcomes. That's the word I was looking for. Very good.

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We should be on that that show, like $100,000 Pyramid together. That show. I'm turning

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that around. I love that thing. So outcomes.

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I feel like you're like a couple like, you've you know what's around the corner.

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And and so how are you thinking about, like, packaging it up and, like, having

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that knowledge base of, like, this is where it's going. I'm actually, like, skating to

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where the park's going. Yeah. It's really interesting. You know? One thing

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that someone told me a while back was you can spend 1,000,000,000 of dollars trying

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to change health care, and it's still gonna change when it wants to. Right. Right.

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You know? So, you know, this industry has been waiting for preventative health care to

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get covered for a long time. So what we're seeing out there is

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programs and services being covered by payers that typically

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haven't been from those types of groups that are typically not losing

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their customers. So from a purely health insurance perspective, I'm talking

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about Medicare, Medicaid, and some of the retiree health plans, where this

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is health insurance you don't lose. So these folks are starting to cover prevention.

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You're starting to see some inroads in those areas. And why is that? Well,

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because I have a model in those insurance plans, or they have a model

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rather, where, gosh, I want you as healthy as long as I can possibly get

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you healthy Sure. Sure. As long as you're on my plan. Yeah. Whereas if you

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go to a a health care from your employer, you might switch every 2 years.

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So why would why because they're changing their health plans Exactly. Based on cost.

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Exactly. So then why would a health plan cover prevention so the next guy gets

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the benefit? Interesting. And so then they keep but they don't realize that they might

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get that person back in 4 years when they rebid on it. So You know

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what's interesting about that is just an is analogy and, like, you know,

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sidecar conversation. A lot of the software companies in this space, when you

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do a renewal, they're saying, like, if you're on a SaaS play with us

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at at ABC, it's a 5 year agreement. Because I'm not gonna deal with you,

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like, switching, and I gotta move your data back and forth. Like, I'm either your

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partner or you're not my you're not my my client. You

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know? That may be one of the answers to, like, this whole health

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plan thing, but then they the the corporation is gonna be like, well, then they

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hold them hostage for 5 years versus, like, getting their return on outcomes.

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Well, it's so tough because thinking about that out loud here with you. They well,

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they wanna evaluate their claims on a on a annual basis. So Yeah. They're looking

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and say, hey. Did you lose me money? Okay. I gotta reprice it. Right. Right.

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And a lot of these health plans will buy down year 1, and then they

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charge you more year 2 knowing the switching costs are such that, you know, if

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they're close, they're in the game, they're gonna be okay. It is a challenge though.

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We we actually by the way, sidebar. We bid a, for our property and

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casualty insurance. We signed a 3 year agreement where it was a fixed price in

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the fall of 2019. So for 2020, 2021, and

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2022, we had no increases whatsoever to our our property and

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casualty, which ended up saving us a lot of money. Yeah. Yeah. Well, I think

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LA Fitness actually sued their property and casualty insurance company because they

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said 1200 of their employees got COVID. Therefore, COVID was on the

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equipment. Therefore, that's a property claim, and they

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got fucking paid for it. Really? Yeah. It was unique. And they also went back

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to all the landlords and says, like, I don't have quite enjoyment of my

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location, so you have to reimburse me the rent. Oh my gosh. That's like 8

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pound £800 gorilla talk. I love that. Doing that. Got it. For

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00:19:50,280 --> 00:19:54,035
sure. Yeah. So, on the ACAC AC AC side

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before we move on, give me, like, specific states. You know, sometimes people

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like to say, hey. I'm gonna bounce to different cities. I can get on a

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southwest flight wherever I want, or I'm gonna basically build this in, like, concentric

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circles. So if if someone's an operator right now

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thinks that ACAC is potentially good home for their business and a

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good rebrand and has some of the things that we're talking about here on the

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amenity side, what states would you say or what areas of the country do you

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wanna be in the next 36 months? Sure. That's a good question. I think we

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look for clubs that well, first of all, we're in the Mid

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Atlantic. So we're in Pennsylvania, Virginia, and South

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Carolina. You know, we typically go to markets that are maybe

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not quite the biggest market. You know? We're we're not trying to go to Washington

345
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DC, for example, and compete very competitive. A lot of good clubs up there.

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But kind of the mid midsize markets, we look for clubs that have a wide

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amenity set. You know, we love offering all those things that I told you about

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earlier, whether it's tennis or pools or spa, you name it.

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And anything we can basically make a long day's drive and get to Okay. You

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know, is gonna be primary. But we would still look outside of that for the

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right opportunity. You know, great clubs are hard to find. And I think you know

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this. I think everyone in the industry knows this. We're not building any more of

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them. So when you can find a great club that that potentially is looking for

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a transition, that has a compelling either real estate position,

355
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when we don't mind owning real estate also. In fact, we like it. We own

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a lot of it. Yeah. Sure. And a market that has a, you

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know, nice competitive landscape? Absolutely. You know, I think we you know,

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what we probably won't do is find clubs, you know, which probably not in our

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wheelhouse as much as clubs that are going to be, you

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know, what I would say kind of outside of our typical operating model, you know,

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because I think those would be harder for us to transition into what we do.

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Sure. Sure. And when you say just to make a point here, you said, we're

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not building any more clubs. Because I feel like a lot of

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groups are coming to me right now and just saying, look. If I could buy

365
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something at a reasonable price, it it's a better return on

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investment than actually the the ramp up, the building, the permitting, getting

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it actually constructed. Is your comment related

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to the cost and the timing timeline? Absolutely. So if

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you look at what clubs are even built being built in the

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US, right, the ones that would kinda fit our model Yeah. Right, these larger

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multipurpose type clubs, who's building them? When's the last time you heard of

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somebody deciding just to build on their own? Only only municipalities that

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have some endgame that just trying to, like, lure

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some professional sports teams or, like, there's some there's some underlying

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sports complex that's addressing either youth market or

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addressing trying to pull in, like, some professional Right. Leagues in some capacity, I

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think, is the answer to that. I mean, if you look at this, right, who's

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growing? Private equity backed groups. Right? Where they're they're they have money behind them. That's

379
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a different kind of capital. Publicly traded groups, I mean, your lifetime can is

380
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building these bigger bigger clubs, obviously. Build 10 of them a year or whatever.

381
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But and then franchise operators. Right? So franchises are continuing to grow. You still see

382
00:22:47,735 --> 00:22:50,875
some of those, but some of that's even slowed in the last couple years. So,

383
00:22:51,015 --> 00:22:54,855
you know, if you look at the pace of new club construction, it

384
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is not that fast right now. You have high construction costs,

385
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high interest rates. So if you're gonna go into a market and say, I wanna

386
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build a 100,000 square foot, multipurpose fitness tennis type

387
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club, unless you're charging a lot of money, it's gonna take you a long

388
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time to get that money back.

389
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This is Pete Moore. Here's the last tip for you of the podcast.

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00:23:19,045 --> 00:23:22,565
We are partnered up with a company called Higher Dose, higher

391
00:23:22,565 --> 00:23:26,185
dose dot com. They are the leader in workout

392
00:23:26,245 --> 00:23:30,000
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393
00:23:30,000 --> 00:23:33,600
light masks, neck enhancers, and other

394
00:23:33,600 --> 00:23:37,299
products such as PMF mats and sauna blankets.

395
00:23:37,760 --> 00:23:41,280
If you have not gotten on the workout recovery train

396
00:23:41,280 --> 00:23:44,905
yet, your time and your stop is now. You

397
00:23:44,905 --> 00:23:48,445
gotta get these products in there before these workout recovery and spas

398
00:23:48,665 --> 00:23:52,425
end up saturating your market, having your members walk out of the club

399
00:23:52,425 --> 00:23:56,105
and going into one of their locations for $200 per

400
00:23:56,105 --> 00:23:59,570
month where they're paying 39 to you. Let's become an

401
00:23:59,570 --> 00:24:03,250
expert in workout recovery if we are already an authority in

402
00:24:03,250 --> 00:24:06,929
workouts. Higher dose, check it out, is a

403
00:24:06,929 --> 00:24:10,515
wholesale code, and we look forward to helping

404
00:24:10,515 --> 00:24:14,195
you augment your products and services to meet the demands of

405
00:24:14,195 --> 00:24:17,975
your members. And, hey, let's get people happy, healthy,

406
00:24:18,035 --> 00:24:21,815
and sweating, and the recovery should be just as good as the workout.

407
00:24:25,690 --> 00:24:28,750
Well, we we got a couple of minutes left here. So let's talk about,

408
00:24:29,290 --> 00:24:32,890
weld. And, you know, you and I have been, friends for a while, so I

409
00:24:32,970 --> 00:24:36,010
I've seen the growth of it. I've seen the final, like, the kinda, like, the

410
00:24:36,010 --> 00:24:39,855
tidal wave of, like, it kinda finally, like, hit the inflection point where,

411
00:24:40,015 --> 00:24:42,655
you know, when I say wealth to somebody, they don't ask me what it is.

412
00:24:42,655 --> 00:24:46,015
Right? They just tell me, like, I'm evaluating it at this point or they're they're

413
00:24:46,015 --> 00:24:49,695
already on the system. So talk about, you know, for a club

414
00:24:49,695 --> 00:24:52,815
that doesn't know about Weld, why they should know about it, what you guys do,

415
00:24:52,815 --> 00:24:56,240
how easy the implementation is, and I'll ask a couple more questions. Absolutely. So Weld

416
00:24:56,240 --> 00:25:00,080
Health is a software platform that connects health clubs and other retail settings

417
00:25:00,080 --> 00:25:03,679
to health care payers. So on one side of the business, we have the longer

418
00:25:03,679 --> 00:25:07,360
term medical programs like diabetes prevention, cancer programs, and the

419
00:25:07,360 --> 00:25:10,625
like. We do a lot of that work with YMCAs, medical centers, and that type

420
00:25:10,625 --> 00:25:14,325
of thing. We've been doing that for a long time, since about 2017.

421
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What's really grown rapidly in the last 3 3 or so years has

422
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been our ability to process check ins for 3rd party reimbursed

423
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programs. So think those offered by, insurance based programs

424
00:25:26,380 --> 00:25:30,220
like Optimtivity, ASH, FitOn. And then now moving into

425
00:25:30,220 --> 00:25:32,355
some of the corporate programs where you have

426
00:25:34,115 --> 00:25:37,715
the likes of Gympass and Xiamo and ClassPass, FitOn

427
00:25:37,715 --> 00:25:41,554
also, Husk or Global Fit, all those operating in that space. You know,

428
00:25:41,554 --> 00:25:45,315
the reason why that's really taken off is that, number 1, those types of

429
00:25:45,315 --> 00:25:49,060
memberships have taken off. They're growing twice as fast as regular club

430
00:25:49,060 --> 00:25:52,040
memberships. So from 2010 to 2024,

431
00:25:53,140 --> 00:25:56,760
members have grown about 3% a year, roughly. Right? These are IRSA stats.

432
00:25:57,300 --> 00:26:00,040
Health and Fitness Association stats. Anyway, so,

433
00:26:01,095 --> 00:26:04,615
right now, you have about 8% growth rate in the insurance based programs. So you're

434
00:26:04,615 --> 00:26:07,015
seeing a lot of growth happen there. You're seeing a lot of clubs doing it

435
00:26:07,015 --> 00:26:10,775
well. The problem is this isn't a set it and forget it. So you

436
00:26:10,775 --> 00:26:13,495
have to find out if they're eligible. You gotta put them in your member management

437
00:26:13,495 --> 00:26:17,080
system. You have to train your front staff. You've gotta submit your visits. You've then

438
00:26:17,080 --> 00:26:20,360
gotta hope it reconciles. And then you gotta figure out how to fix everybody. Yeah.

439
00:26:20,360 --> 00:26:24,120
Yeah. And then how do I turn somebody off in my member management system once

440
00:26:24,120 --> 00:26:27,400
they're ineligible? So there's all these steps that are involved in the process. And at

441
00:26:27,400 --> 00:26:30,760
scale, it's a problem. If you're a single club and you see 10 of these

442
00:26:30,760 --> 00:26:34,335
folks a week, you know, it's it's a little easier to manage. Or maybe 10

443
00:26:34,335 --> 00:26:38,115
a month, something like that. But if you're a bigger club and you have potentially

444
00:26:38,174 --> 00:26:41,855
tens or 100 of thousands of these members who are part of your system, it

445
00:26:41,855 --> 00:26:45,455
can get kinda scary kinda fast because you're talking big dollars and big

446
00:26:45,455 --> 00:26:49,200
revenue. And what do you think? Well, I I think you know the

447
00:26:49,200 --> 00:26:52,880
answer to this, like, actually quantitatively. But if you give for

448
00:26:52,880 --> 00:26:56,180
example and say, like, hey. You were getting, a $100,000

449
00:26:56,800 --> 00:27:00,020
from, from your Medicare Advantage

450
00:27:01,005 --> 00:27:04,845
client visits through whatever portals that you work through. Yep. And

451
00:27:04,845 --> 00:27:08,225
then you overlay Weld. Like, what is the differential

452
00:27:08,525 --> 00:27:12,205
between that 100 and what, like, they've lost in something? They

453
00:27:12,205 --> 00:27:15,659
even lost in, like, they should've let that person in. The revenue, for some

454
00:27:15,659 --> 00:27:19,260
reason, didn't show up. There was a data ish like Yeah. What's the

455
00:27:19,260 --> 00:27:23,100
magnitude? I got a 100,000. What what would I get on Weld on average?

456
00:27:23,100 --> 00:27:26,860
Or, like Yeah. It's a good question. So, there's a

457
00:27:26,860 --> 00:27:30,275
wide range of the types of errors that come through. So we've seen a lot

458
00:27:30,275 --> 00:27:33,955
of clients are typically in that, you know, low low single digits,

459
00:27:33,955 --> 00:27:37,554
maybe up to 10% of rejection rates or bad data. Okay. And then you might

460
00:27:37,554 --> 00:27:41,315
have a member file that's, like, half bad. I mean, you could get thousands

461
00:27:41,315 --> 00:27:44,980
of bad members in your database that shouldn't be there. Right? So,

462
00:27:45,040 --> 00:27:48,000
Weld, we clean up your database, and then we go through and try to process

463
00:27:48,000 --> 00:27:51,760
a clean set of visits. So to give you an example, I was

464
00:27:51,760 --> 00:27:54,640
talk talking to a large customer here at the show. I asked them, I said,

465
00:27:54,640 --> 00:27:57,520
hey. Well, you know, what's your typical this is a potential customer. I said, what's

466
00:27:57,520 --> 00:28:01,305
your typical rejection rate? It's at about 5%. Right? So if

467
00:28:01,305 --> 00:28:05,145
you looked at it on a $100,000, right, assuming it's $5,000. Right?

468
00:28:05,145 --> 00:28:07,945
Makes sense. Let's go straight to your bottom line. Right? It's the cost associated with

469
00:28:07,945 --> 00:28:11,785
that. For Wealth Health, you know, our large one of our larger clients, we got

470
00:28:11,785 --> 00:28:15,380
the rejection rate down to 0.12%. Wow. So when you're talking about the

471
00:28:15,380 --> 00:28:18,260
scale of that, you know, by keep but it just puts more dollars back in

472
00:28:18,260 --> 00:28:22,020
the pockets of the club, and there's better certainty that you're getting

473
00:28:22,020 --> 00:28:25,380
paid for those who who are coming in and using your facility. Got it. And

474
00:28:25,380 --> 00:28:29,195
and just so people understand the magnitude of

475
00:28:30,075 --> 00:28:33,615
without naming names, like, what are what are some of the size checks

476
00:28:33,835 --> 00:28:37,675
that are going to either an individual operator or, like, a 10 club

477
00:28:37,675 --> 00:28:41,429
chain from Medicare Advantage Programs? Oh, I mean, I'll

478
00:28:41,429 --> 00:28:44,309
talk to you about my clubs. Right? So we have ACAC I was gonna do

479
00:28:44,309 --> 00:28:47,529
an invisible NDA right now. Yeah. It's fair. It's fine.

480
00:28:47,990 --> 00:28:51,750
But, you know, so for ACAC, it's in, you know, north of

481
00:28:51,750 --> 00:28:55,510
50,000, you know, plus in these a month that are coming through, which is which

482
00:28:55,510 --> 00:28:59,175
is good. I mean, for, yeah. And for for some, though, the larger chains, it

483
00:28:59,175 --> 00:29:02,695
could be 1,000,000 of dollars every single month coming through on these programs. So you

484
00:29:02,695 --> 00:29:06,455
have about, in our industry, 2,000,000,000 plus of revenue being

485
00:29:06,455 --> 00:29:09,995
driven by these programs and growing. I don't think anybody realizes

486
00:29:10,320 --> 00:29:13,440
when you do the math on how much opportunity there is. And I was saying

487
00:29:13,440 --> 00:29:16,720
to a couple of groups the other day when I was doing a, like, business

488
00:29:16,720 --> 00:29:20,320
optimization playbook. I'm like, look. You know where these

489
00:29:20,320 --> 00:29:24,159
people live. Okay? They're they're on assisted living facility. Right? They your

490
00:29:24,159 --> 00:29:27,825
your the counterparties might actually tell you where they are and give you, like, a

491
00:29:27,825 --> 00:29:31,505
scatter chart. Go pick them up, dude. Like, send them an Uber, dude.

492
00:29:31,505 --> 00:29:34,065
Like, you actually go in and just have to go, like, a mile to pick

493
00:29:34,065 --> 00:29:37,825
up money. Yeah. And it actually change the results of your community. Just go pick

494
00:29:37,825 --> 00:29:40,919
them up. It's it is amazing. I mean, you have, you have a lot of

495
00:29:40,919 --> 00:29:44,120
these programs that are everywhere. So I had a friend of mine who's running clubs,

496
00:29:44,120 --> 00:29:47,080
and he was debating whether or not to put them in or or or take

497
00:29:47,080 --> 00:29:50,840
them out and or these programs. He said, look, all your competitors are offering

498
00:29:50,840 --> 00:29:53,820
these things, so you can decide if you don't want this business or you do.

499
00:29:54,034 --> 00:29:57,875
Now, obviously, every program is different. They're not all right for every model. But for

500
00:29:57,875 --> 00:30:01,315
Weld, the idea is let's streamline this thing. Let's make the clubs as much money

501
00:30:01,315 --> 00:30:04,674
as possible. I'm a club owner too. Yeah. And at the same time, for the

502
00:30:04,674 --> 00:30:08,240
insurance payers, they're excited because there's fewer issues. There's fewer

503
00:30:08,240 --> 00:30:11,760
phone calls. Their back office gets less. So Yeah. Really, you're creating a win win

504
00:30:11,760 --> 00:30:14,320
win up and down the system, and that's and that's what we're trying to achieve.

505
00:30:14,480 --> 00:30:17,620
Like, back in the day I mean, I'm in this industry now since

506
00:30:17,920 --> 00:30:21,760
2000. 1999, you've been in it for 2004. Yeah.

507
00:30:21,760 --> 00:30:24,945
So I think it used to be where if you had a SilverSneakers,

508
00:30:26,045 --> 00:30:29,805
there was only one club. It was, like, exclusive to, like, little micro territories. Right?

509
00:30:29,805 --> 00:30:33,645
So now everyone has the opportunity. It's not exclusive anymore. Everyone has the opportunity

510
00:30:33,645 --> 00:30:37,280
to participate in this. And the one question the follow-up question before we end

511
00:30:37,280 --> 00:30:40,820
is, like, who manages who's the best person internally

512
00:30:41,360 --> 00:30:44,980
of a club chain to actually be to manage their Well to Health

513
00:30:45,440 --> 00:30:48,880
relationship? And who's the one that should be thinking about how do we market to

514
00:30:48,880 --> 00:30:52,105
the Medicare Advantage community and actually find out where they live and pick them up

515
00:30:52,105 --> 00:30:55,805
and do, like, we're doing stretching, we're doing bagels, and we're doing coffee.

516
00:30:55,865 --> 00:30:59,225
Okay? And I know that, like, the math works for me on the bagels and

517
00:30:59,225 --> 00:31:03,065
coffee Yeah. That I'm gonna pick up $300, you know, an hour. So who's is

518
00:31:03,065 --> 00:31:06,300
it is there somebody who has a title or should have a title inside of

519
00:31:06,300 --> 00:31:09,179
a health club chain that you're like, that's the person that needs to manage it?

520
00:31:09,179 --> 00:31:13,020
Because I feel like sometimes people get lost in the wrong department. Sure. You

521
00:31:13,020 --> 00:31:16,780
know? So number 1, on a bigger club chains, you obviously have, you know, bigger

522
00:31:16,780 --> 00:31:20,355
resources. Right? Yeah. Yeah. You know? But, you know, for somebody, like, again, like for

523
00:31:20,355 --> 00:31:23,955
ACAC, right, we have somebody who is dedicated to customer

524
00:31:23,955 --> 00:31:27,315
retention, and that's the person who manages this program. Right? Who it should be, customer

525
00:31:27,315 --> 00:31:30,675
retention. Whoever's in charge of your retention efforts a lot of times goes into this

526
00:31:30,675 --> 00:31:33,980
because they're gonna have an understanding of how to work with your member database, who

527
00:31:33,980 --> 00:31:37,680
these people are. You know, they're not gonna be necessarily technology afraid.

528
00:31:37,900 --> 00:31:41,420
Right? What I don't wanna do is put more and more burden on, say, a

529
00:31:41,420 --> 00:31:45,085
general manager, for example, a manager like this. And is there, like, a chief revenue

530
00:31:45,085 --> 00:31:48,225
officer in some of these places that are like, hey. Like, we gotta actually, like,

531
00:31:48,525 --> 00:31:51,965
put the pedal down on this because we're not we haven't they don't even wanna

532
00:31:51,965 --> 00:31:55,804
think about. The chief revenue officer is gonna like us. Right?

533
00:31:55,804 --> 00:31:59,000
Because we have more money coming in. But what we find is those people who

534
00:31:59,000 --> 00:32:02,760
are actually doing the accounting really love us because now their job

535
00:32:02,760 --> 00:32:06,039
just got a lot easier. Instead of having to chase down stuff in 10 different

536
00:32:06,039 --> 00:32:09,240
portals and go through a bunch of spreadsheets and submit it on their own, we're

537
00:32:09,240 --> 00:32:12,245
automating a lot of those items so they can really focus on That's great. On

538
00:32:12,245 --> 00:32:16,085
their job. Awesome. I mean, this is a great example of you had a

539
00:32:16,085 --> 00:32:19,845
frustration. You figured out that I there's nothing out there. I gotta figure out

540
00:32:19,845 --> 00:32:23,230
how to solve my own frustration. And once I solve my own frustration, then that

541
00:32:23,230 --> 00:32:27,070
becomes a business. Absolutely. I feel like a lot of entrepreneurs don't throw

542
00:32:27,070 --> 00:32:30,750
stuff together that you think there's an opportunity until, like, you have a personal

543
00:32:30,750 --> 00:32:34,429
frustration or business frustration. You figure out how to solve it, and then that that

544
00:32:34,429 --> 00:32:37,755
turns into a business model. And then try and figure out what the special sauce

545
00:32:37,755 --> 00:32:40,715
is of the model, how to price it. Right. So great to have you on,

546
00:32:40,715 --> 00:32:43,674
man. Good talking to you. We've been talking a lot lately, so I'm glad that

547
00:32:43,674 --> 00:32:47,115
we became friends. I wanna first say thank you for your service

548
00:32:47,115 --> 00:32:50,580
because we needed leadership here, and and you provided that steady hand.

549
00:32:50,820 --> 00:32:54,659
Getting Liz whatever role you had in approving that or convincing her,

550
00:32:54,659 --> 00:32:58,419
awesome hire. I think a lot of people who have leadership position don't get

551
00:32:58,419 --> 00:33:01,460
credit for the hires they make, so thank you for that. And,

552
00:33:02,100 --> 00:33:05,895
look, managing like a 3 stool, you know, platform with ACAC, IRSA,

553
00:33:06,055 --> 00:33:09,515
Ursa, and, and well that I've seen the growth of all 3 of them. So

554
00:33:09,575 --> 00:33:11,975
congrats on that. I hope you get a little bit of time to, you know,

555
00:33:11,975 --> 00:33:15,415
work out, hang out with your family, and, you know, watch some football. So thanks

556
00:33:15,415 --> 00:33:18,855
for that, and, you know, definitely get in touch with Chris. He's very

557
00:33:18,855 --> 00:33:22,600
accessible. Get on these platforms. They're they're powerful on the

558
00:33:22,600 --> 00:33:26,380
wealth side. And, hit me up if you want to, become an ACAC.

559
00:33:26,440 --> 00:33:30,120
And, you know, you could go on to your, post retirement plan. Love it. Hey.

560
00:33:30,120 --> 00:33:32,620
Thanks for having me on. Alright, man. Good to see you. Cheers. Awesome.