Academic clinics, independently-owned private clinics, network clinics. With a variety of options for a new REI to choose from, it’s hard to decide just which one is best.
After working in almost every REI path, Dr. Samuel Brown decided to go out on a limb and start his own practice. Today, Brown Fertility is a flourishing independently-owned fertility clinic located throughout Florida.
On this episode of Inside Reproductive Health, Dr. Brown shares his experiences in all types of career paths and what led him to decide to form his own practice. He tells it all: the ups-and-downs of owning your own clinic, some tips on handling business challenges in a fertility practice, and why he chooses to remain independent despite a changing field. Dr. Brown also offers his perspective on the future of the independent REI clinic.
To learn more about Dr. Brown and Brown Fertility, go to brownfertility.com or find them on Facebook or Instagram, @brownfertility.
Mentioned in this episode:
#93 - Dr. Eric Forman
#59 - Dr. Michael Alper
“The Great Game of Business”
”Toxic Charity”
To get started on a marketing plan for your company, complete the Goal and Competitive Diagnostic at FertilityBridge.com.
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Welcome to Inside Reproductive Health, the shoptalk of the fertility field. Here, you'll hear authentic and unscripted conversations about practice management, patient relations, and business development from the most forward-thinking experts in our field.
Wall Street and Silicon Valley both want your patients, but there is a plan if you're willing to take action. Visit fertilitybridge.com to learn about the first piece of building a Fertility Marketing System--The Goal and Competitive Diagnostic. Now, here's the founder of Fertility Bridge and the host of Inside Reproductive Health, Griffin Jones.
JONES 2:38
Dr. Brown, Sam, welcome to Inside Reproductive Health.
BROWN 2:42
Thanks, Griffin. Glad to be here.
JONES 2:43
We're going to talk today about your group, which is Brown Fertility, and what it is like to be an independent practice in 2021. What the future for independent groups are. What you see as the advantages, and then maybe some disadvantages, too-we'll explore that. But give us some background of how you started your own group. How did you come to make that decision?
BROWN 3:08
That's a great question, Griffin. You know, coming out of the Jones Institute in Norfolk, Virginia--very institutionalized Johns Hopkins-based setup, they had the first IVF baby in the nation--I joined a large group, an independent group, and was very fortunate to have high volume do a lot of this for many years. And I saw doctors coming and go from our group and seeing how the stressors that a large independent practice had. And then I departed to join another group, a large group that was part of Integramed that was owned--where it was owned by a company basically. And even though the doctors did have some flexibility, I was able to be exposed. I worked in that for three years or four years or so. And then I broke free and started my own independent practice. So I do have experience on both sides of the stick. And there's definitely pros and cons to both no doubt about it.
JONES 4:05
Well, it sounds like you've got experience in multiple facets and I keep finding myself having to make the distinction--even though I've made the distinction 1000 times and I've even done it in writing--I still need to go back and correct myself every time I talk about private practice versus academic practice, let's say, within private practice, we now have independently-owned private practice and then we have network-affiliated private practice.
BROWN 4:25
Exactly. You're right. There's a third group--there's actually four groups. There's your equity firm or large corporation-owned fertility practice. There's your independent practices, but you're right--there's fully academic physicians that are part of academia. And there's academic positions that are kind of a quasi between academia and independent practices. So there's really four different ways to go to be honest. You're exactly right.
JONES 5:00
That's true. You can split academics. We talked about that on the show with Dr. Eric Foreman, and Dr. Michael Alper, I believe. So we've still got the private side and the academic side, but you can split each of those two ways. And it sounds like you have practice with academic, with independently-owned private and with the larger equity network. Am I characterizing that correctly?
BROWN 5:24
Yes, I've kind of experienced all four of them!
JONES 5:27
So, at one point, you decide, okay, of the four that I've experienced, this is the one that I want, why not the other three? What led you to choose the fourth?
BROWN 5:38
And, you know, just from my own experience, not speaking for others, I was pretty happy. Coming out of fellowship joining a large non-academic, individual self-sustaining practice, I enjoyed that it was it was like a second fellowship, and this independent practice where they kind of did their own thing, and there's some facets in this practice you liked because you're used to them in academia, and to some degree, and others you didn't like your ‘Well, it's kind of weird, is that just money driven?’ type weird things that they make you do or the culture of that practice. But I enjoyed it. There's collegiality, there was at first, like a second fellowship, when you first come out of training. So the independent practice had more control. And generally they make a little more money than a lot of the other practices. Then when I changed, I needed to--for me, it wasn't about money, it was more autonomy. And joining a large institutional practice, it was less money and less autonomy. So I was still okay with that, I didn't mind making money for the man, I didn't mind that at all, I just wanted to be comfortable and have a sense of security. So I didn't mind working hard for others, per se. And I was actually okay with that I could go home and sleep a little better. And there was good in that. I made a decent income, I wasn't shooting for the stars, I just wanted a good income. And then it became a little bit of a pressure, you know, where we went through a phase where males versus female doctors. There was a pressure, there were male physicians that got a little more threatened. The owners of practices would kind of threaten you, “Okay, your job is not so secure here, we're gonna replace you with a younger female, more vibrant female.” So you felt a sense of insecurity. And I think we've gone through that phase, I don't think that phase is still there. But that was a phase where you need a sense of security to go with making a living. And then ultimately, and I didn't mind working on protocols that I know if I worked for other people or other institutions, if they have protocols that didn't quite jive with my feelings, I was okay with that. Because, you know, there's multiple ways to do things. There's not one way to do things, I came to that realization. And for me then starting my own practice independently, it was all different altogether as well. You definitely don't have collegiality, you don't have people to lean on, when you have those stressful moments, which we all have, and it's a little difficult to normally reach out to your friends at other centers for advice. But just starting out independently is a little bit tough, and the business side does bite. Then you start realizing just man, the business side is a lot more than I thought, you know, there's contracts that have to be signed, some staff that's got to be fed. You know, the pressures-- there's good times and there's bad times and boom, when you're an owner of a practice, you know, all of a sudden, the practice of medicine becomes easy and dealing with your staff becomes a nightmare, or is a very, very difficult challenge. And then becoming a larger independent group with multiple physicians makes it somewhat better. But you know, fighting the daily business battles is a challenge. There's a little more financial reward, yeah. There's always the argument, is that financial reward worth it? Is it better to just be in a group and not deal with the aggravations of running a business? And there's always that argument.
JONES 9:24
And it could be a draw with the financial side of the reward. I know owners of independent practices that do a lot better than they would in a group and I know some that do considerably worse than they would do in a group.
BROWN 9:38
Not all doctors are built for it. It definitely takes a certain personality, because--it's strange, you know, physicians, I think, but in general, physicians and nurses, we’re pleasers. I think part of our personality subset is that we're pleasers and, man, when you're in the setting of being a business administrator, it's a different hat where it's not a good place to be a pleaser. And you're right, I've seen physicians who have that strong pleasing mentality, not do well running a business. It definitely takes a--it took me a lot of change and development because I was that typical physician that just wanted to be a pleaser, and man and being in management that doesn't work so well.
JONES 10:20
What are some examples that--can you think of some examples off the top of your head of where you had to calibrate your personality? Now I'm used to catering people when I'm talking to patients, but now I've got to make some decisions. Can you think of some examples that come to your head?
BROWN 10:34
Two come to mind. I'm not sure if this answers the question completely. But number one is, when staff comes to you and every year they want a raise. As a pleaser, you just give them what they want and then after a while, you realize this is going to bankrupt the business.
JONES 10:48
Yeah.
BROWN 10:49
And you have to have a systematic regulated way to give raises to staff and physicians. Because every year they come at you, “Hey, where's my raise?” And we're like, “Hey, it was bad year, you can’t have it,” and then they quit. So learning how do you keep--how do you keep staff, you know, without pleasing them this way, especially financially. And the other layer is like corrections when they make mistakes. You know, we all make mistakes, doctors and staff, we all make mistakes, it's part of life, and learning to not so much be a pleaser, and say, ‘Oh, it's okay.’ And actually writing them up and reprimanding and educating to a level where they're not so angry that they quit, is also very much a challenge. That was one of the bigger challenges for me, is learning how to correct staff or educate staff, onboarding of staff--very challenging.
JONES 11:48
All of those could be tied to a-- well, they can all be linked together, I suppose, those different challenges having to do with personnel and how you evaluate their performance, particularly is related to compensation, like you brought up. Have you come up with that system for giving raises? Are you still working on it?
BROWN 12:08
It's a work in progress, for sure. And I'll try to model--I've learned--for me, my answer is I've tried to default. Like, I’ve seen how hospitals do it. And I hired business level people who have experience in business. Most of the time, we'll model ourselves after a hospital system that is usually effective. For me, I think where I'm at locally, the Mayo Clinic's a very effective model and, and learning how they do basic business practices of raises and corrections and their model’s good. And most hospitals have a good model set in place a little better than a smaller practice would have, typically.
JONES 12:52
I'll give the listeners some other model to consider, too. And if you ever heard of open book management, or read “The Great Game of Business”?
BROWN 12:58
I have not.
JONES 12:59
So it's--I want to also clarify to listeners, where we're a marketing and business development firm. We’re business development and marketing advisors, we're not human resources, advisors. I'm just sharing my perspective as a business owner of what we're going through. And I also haven't cracked this not either, Sam. I'm still working on it myself to have that system. But what I did decide that I want it to do is I want it to be related to the performance of the overall company. And the ethos of open book management and “Great Game of Business” is that everyone in the company either meets their goal and gets bonused, or they don't. Now that doesn't, that doesn't totally address the scheme of individual raises, but it could for some time, if this keeps coming up for people. The premise is that the group is educated on how to share their books and what to share it--essentially you're sharing the big numbers. You're not sharing individual salaries in almost every case--I've never heard of anyone sharing individual salaries, I think that would be a really bad idea. But they do share, “Hey, this is our payroll expense, our office expense, this is what we paid for toilet paper.” And here is the revenue coming in. And then there's a bottom line percentage, which is--nobody gets bonused on--if we do less than this, nobody gets bonused. And then if we do more than this, then everybody gets a percentage of their salaries. So we're working on implementing that. Now, I don't want to consult anyone on it because we're still figuring it out and doing it, but it's something for people to look into if they're interested. And I'll be able to give people a much better report this time next year.
BROWN 14:46
And just to further that, you touched on something that's very important in my mind in running a business. And just as an experience that I've had that may help the listeners, is my administrator. I have a really good administrator, he's an MBA. And when he came to practice, he saw that we were doing some unhealthy practices where, when I started my goal as a naive business owner, when I came into the practice was, man, everyone's got an incentive plan. Everyone has a plan, where if they hit a certain marker above that, they get bonused, blah, blah, blah. And from every level in the practice, from those answering phones, to the nurses, to the medical assistants, the doctors, that everyone had an incentive plan, and he educated me. There's a book out there called--so he educated me about a book called ‘Toxic Charity,’ from giving charity to those in need in Africa, where it can become poisonous. And the six principles they mentioned are with toxic charities you give once and you create an appreciation. If you give twice, you create anticipation, if you give three times you create expectation, if you give four times you create entitlement. And if you give five times then you create dependency. So what we have learned is that it's really challenging, you know, you want to be giving, you want to be generous, but it's human nature that you start expecting these things. And then when you don't have this expectation, they're very upset, they'll quit. So it's very much a challenge on how you are generous with your staff. And it's a work in progress every year, can I find a better system and how can I? How can I be generous, yet not sink the battleship, and also not create a dependency on such a payment
JONES 16:49
So to clarify, with open book management, there is a basement number for the whole company that it is net profit. So if it's under a certain net profit amount, then it's very clear, we aren't getting the bonus. I don't care if we're under a quarter percentage point. And everyone but one person pulled their weight enough for us to get there, we don't get there. And so that's why I chose that system. Because you're absolutely right. And what you just described in those five different steps to between appreciation and dependence is why I don't do Christmas bonus. And it's not because I want to be a jerk at the holidays. I do like bonusing my people, I just do it in different ways at times that aren't that aren't expected, because I don't want to create the expectation or otherwise, to your point, it's not a bonus anymore.
BROWN 17:41
And I think this is important in running a practice. I think this is a very important function. I agree with you.
JONES 17:47
So this was one of the challenges that you find in managing personnel, evaluating them, particularly with regard to compensation and implementing that plan of when it's connected to financials of how they're actually paid. And you said, running a business was harder than I thought it was going to be. Do you remember what you thought it was good? It was just something vaguer, how did you think it was going to be when you first made the decision?
BROWN 18:16
Oh, you know, I made the decision to start my own practice, I never really wanted to write a line of practice, I really had no lengthy education or pre concept going into it. For me, it was kind of just forced into the next phase of my life to do this. And I went into pretty ignorant I and, and but I felt comfort that I would hire the right people to help me. And you know, and that did help. You know, hiring people with experience, hiring people that you can trust helped. But yeah, I was very young. And looking backwards, you know, ignorance was kind of bliss going into it and just having at it. And we've grown to a big entity, we're now the largest or second-largest in Florida, where, you know, it was just 10 years ago, we were very, very small. We started this in a bad economic time. And it's more of looking backwards. And I had faith and courage and went into this and it's worked out. But not without hard work.
JONES 19:26
Did you think that the concept of hiring people and hiring good people would be it that was, you know, I'll hire the good people, they'll do this stuff, and then I won't have to worry about it was that in your periphery?
BROWN 19:39
That was that was the mindset except I knew that I didn't want to be detached. I knew that. Even though I'm not educated in business, I did not want to be ignorant. So for me, I did something unique. I didn't want to say ‘Oh, just let's hire the smart people that can do all the business and I'll stay detached as a physician.’ I knew that I had to keep my feet into it. I actually learned that because I owned a restaurant. And I learned that if you weren't a part of the process, well, it could really fall apart.
JONES 20:08
When did you own a restaurant?
BROWN 20:10
Yeah, years ago. It's a good story. My brother is a classically trained French chef. And after years and years of working at the best restaurants in Potomac, Maryland, and other places, he went back to school, became a lawyer, broke my heart. My chef brother became a lawyer, and I thought the good food would be gone. And then years after practice, he happens to be practicing law in the same town that I live in. And he called me and said, ‘Hey, Mr. Doctor, are you ready to open your restaurant?’ And I was like, ‘Yes. Let's do this.’ I'm looking--
JONES 20:45
So you’re already a physician at this point.
BROWN
I'm a physician.
JONES
So you’re already in REI--you've already specialized.
BROWN 20:52
And he was looking at me as Mr. Moneybags, I could financially support. And so we start. So he looks at me and says, ‘Hey, we're’--I said, ‘Okay, where are we going to start our French restaurant?’, and he said, ‘We're not doing French--barbecue. Like, you got to get a French chef with barbecue? And he was right in culinary school to teach them the need for that community. And where he was looking to start the restaurant, there was a real need for barbecue. And that was a heck of an experience. For me, it was really my first touch in business ever, you know, seeing how businesses run truly, from the outside, from the working business part of it. And wow, that restaurant industry, and a lot of doctors go there. It's a rough one, it's a tough one. It's a whole different conversation. But your hires, your management, it's similar to managing medicine, but different. It's a whole, it's a different animal. And a lot of doctors go into that with an ego or pride, like they want their restaurant. And many of them leave licking their wounds. And for us, it went very, very well. And ultimately, life changes. And we put management so we could manage this and sold it and did well with it. But it was a heck of an experience for me business wise. Absolutely.
JONES 22:16
So you left this experience knowing that you were going to be more involved in the next?
BROWN 22:22
Yeah, so that yes, my bad. And that's where we like to--so when I started my practice, my goal is to be more involved, like you said, and so I actually did my own billing and collections. You know, this is back in the paper chart method before we went to electronic medical records. And I actually did my own billing and collection. I learned how to do it, the computer and how to submit codes and fees and then how to the 30-60-90 day collection method. So I learned to do the billing all by myself. And then I started hiring staff to do that, for me that had experience. And because I didn't want to be bamboozled, I wanted to know every facet to some degree, even if it was a little degree. And I think that it did, it gave me a great experience, you know, arguing with insurance companies over their contracts, and arguing with insurance companies to get fair reimbursement for something you actually did the checks and balances involved. And that was very educational for me. I'm glad I had that experience.
JONES 23:21
And it gives more context for managing people and being able to hear their reports afterwards when you have context from your own personal absence from having done it. You mentioned Julius as far as only, who’s your business manager, and I'm acquainted with Julius and you mentioned that he's an MBA and I know that because I'm acquainted with him. I know that he has more business experience and a lot of people in that position. Did you start off with a business manager? Did you have an office manager? What was the beginning structure?
BROWN 23:52
Oh, I was the beginning manager. I was the beginning administrator, and hired billing staff and clinical staff myself, I was the one doing it. Yeah.
JONES 24:03
What was that experience like?
BROWN 24:05
I was fortunate where I hired--I had good hires. I had people that had experience in the industry and, and I had trust with them. And it was actually pretty--it wasn't that bad. You know, even though I didn't do the day to day, as much as I did have a touch with the day to day that they did. I felt like I could communicate well with them. And when we were a small entity that was easy, when there were 10 of us or 12 of us. But then once you get up to 50 of us and definitely more than 20 of us, then you definitely needed a sort of help with management for sure.
JONES 24:43
So it was just you and staff, no office manager between reps at that time?
BROWN
Right.
JONES
And so when did you bring on management? Was it at that 20--?
BROWN 24:52
We reached a level where I brought in management when our critical staff numbers got to 20 ish, probably above 20. Then I definitely needed assistance in management.
JONES 25:07
And what was that structure like? Was that person an office manager, a practice administrator, a business manager?
BROWN 25:13
Yeah, it was people. Initially, it was a nurse who went back and became an MBA. So I hired an MBA with clinical background. And then as we grew bigger and bigger, hired a purely business educated staff that weren't clinically related.
JONES 25:34
Do you have experience on talking about the difference in those levels of administration and management? And what I'm alluding to, Sam, is that when I see people, often they have, let's say, an office manager, and they think that that's a business manager. And it's not the same thing. And it might not be the same thing as a practice administrator, either. I believe that there are different levels and people--Oh, yeah, I've got somebody doing that. And that person is just doing everything that's not in their purview. So can you describe the different things that you play with?
BROWN 26:09
I think what I learned is, I didn't want the mom and pop situation, you know? You had the physician, who has his wife running the practice, who has no experience in business or management. And I'd seen that I've been exposed to that setup, in my prior work experience. And it was very non-sophisticated, very emotional, very subjective, not objective, you know, I'm gonna hire who I like, and who I don't like, you know, I'm glad I never fell into that trap. And I believed in talent, you know, find the talent, hire the talent, that it's not so much the mom and pop setup. And, you know, so hiring non medical people to come in to learn medicine or clinical things for the first time as part of their business management. It was a good thing to do, I think it was the right thing to do, at least for my structure. And it does take a while for non-clinical people, it takes them a year or two to really get it, you know, the flow of the clinical and how that pertains to the business, financial accountability, in holding managers responsible and accountable, became more of a challenge. But, but it works and much better than I could do as an individual or as a mom and pop setup and hiring talent, people with education that can do these things. But it does take time and the educational phase takes them a few years to really understand the concept, especially clinically, especially with infertility. This is kind of a subspecialty, it's not so easy. And generalizable like I would guess, an OB/GYN practice or a family practice. It’s extraordinarily complicated.
JONES 27:58
There's not just one or a handful of stock units that you're selling, be doing all of the different billing, all of the different insurance companies, now employer groups, and all of the different services from ovulation induction to IVF, to multi-cycle packages and all the financial people that come into play and all of the steps on the journey of the patient journey that can expedite or delay that. It's almost a bottomless pit. And so it sounds like you've certainly had experience training some of the business folks to now be a part of the practice where they have not clinical experience, but at least that clinical operations in their purview. Is it easier to get business folks caught up on clinic operations or clinical folks in business activity?
BROWN 28:54
That's a good question. And I guess it depends on the individual, you have some people that have the aptitude and the intelligence and energy to from either direction--from the business side looking at clinically or the clinical side, looking into the business side. It really is very individual. And I've had experience with both. Going from clinical to business is a little easier, I think. But it comes with baggage. For example, that nurse that went back to school became an administrator. She understood clinical really well, but she was also a nurse, she was a pleaser. She had those basic personality sets that are not so good on a business side of things. Where I prefer the other, I'd rather have at the level I'm at now, I'd rather have somebody coming in from the business side learning clinical. It does take long--it takes a while, takes a long time. It's not a quick learn, but I'd rather I prefer that angle than I do from the clinical end.
JONES 30:00
Comment about the reason why you chose that you didn't want to just have the mom and pop where it's someone's spouse running one facet of the business. And I have to comment. I see that beyond the mom and pops, I'm seeing that with some of these networks now, particularly some of the ones that are starting. It's like, that's someone's spouse that's in that seat. And I don't know if that's a good idea.
BROWN 30:22
Yeah, I don't know enough of it to judge there, I assume there's good and bad. And that just depends on the individual, I suppose. But I haven't seen many mom and pops get very big.
JONES 30:35
I just, I really have to believe in someone's ability to, for me to have, at least in my own, in my own company, for them to be able to fire anyone. And like, I don't say that easy. I don't like firing people. It's just, we're going in a direction as an organization. And I've done a really good job in vetting to where it hasn't happened too much. But it does happen. It's part of business. And I think that when you have a spouse, or sibling, or anything else involved, that it makes it really difficult--that just add something else that person has to consider before they can make that business decision. I had my brother as the producer of this podcast when we first started, and he was late twice on deadlines, and I fired him in front of everybody just to set an example, and my own brother no longer produces this podcast.
BROWN 31:32
It's very hard.
JONES 31:33
Well, and there's emotion with that. There is some emotion. And it's one thing when it's, you know, an hourly audio engineering position, I think it's another thing when it's someone that owns equity in a group that has a management role, I think that that's all the more difficult.
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JONES
You talked when you were making this decision in the first place to go this route of the independently-owned practice as opposed to the three of the other four channels. When you were in a larger network group, you felt like--it's like well, there's less money in this arrangement and there's less autonomy. So what is the benefit for someone in a larger network group? If there's sometimes less money and there's almost no less autonomy?
BROWN 34:38
I think it's a good question. I think being a member of a large network their security, you're less likely to have patient flow interrupted I suppose. So I think there's more job security. You know, there's this bigger entity with extra staff, extra personnel, are constantly working on things that you can't touch on a weekly or daily basis on contracts or knowing what's going on. So I think there's probably some security in a larger group of longevity, maybe, at least for the managing partner. And there's probably, you know, they would always sell those situations saying that, ‘Oh, we're gonna have you better educated, we're gonna have podcasts or seminars amongst our own people, and keep everybody more educated than you would if you were a smaller entity.’ I'm not sure if I quite believe that. I don't--I actually don't believe that, from the entities that I've seen. I haven't seen that to be true where, you know, being part of a bigger network, you have more ability to interact with as a clinician, as a physician, with others that somehow make you a better doctor or a better group, I have yet to see that in the level of reproductive endocrinology and infertility or OB/GYN.
JONES 35:58
How do you make up for that as now you have colleagues that work with you in your group, but you didn't in the beginning? And so how do you make up for that when you don't?
BROWN 36:08
Independently, I think we do have a little more interaction. And if we go to conferences, there is more sharing. When you're in a large group, I think it gets a little more selfish, where you are not sharing, or team bound together. So I think actually, from my experience, I actually learned more from my colleagues in an independent setting that I have in a group setting.
JONES 36:26
I will say that I do see at least some level of where and I'm not speaking to the clinical side. So I don't want this to be taken the wrong way. I think there's lots of people throughout the field that that share with their colleagues, particularly on the clinical side, but I can say at least on the business side, that there are so many people that are a part of larger groups that have sold equity, and they can't talk about anything, Sam. They can't go to peer meetings that I've hosted, they can't jump on a Zoom call to talk about--sometimes they can't even come on the podcast. And, and I am not here to promote one or the other. I think there's pros and cons for independent, I think there's pros and cons for being part of equity. That's just one that I would consider. And I know for myself, that I don't ever want somebody to tell me what podcast I can and can't go on and what I can and can't talk about. I know there's plenty of MBAs and plenty of things that people could sign even if they are independent, that would bind them to a similar arrangement.
BROWN 37:36
I could definitely see that. Where they're a little more controlling the larger, a little more controlling with any information from that group. Yeah.
JONES 37:44
So I think one advantage, though, at risk of running networks through the mud, because I do have many associates that work at those networks. And I feel very good about those people at risk of disparaging them, I will give the plug that I think that a lot of the things that you talked about are things that a lot of physicians don't want to learn and don't have any business learning with regard to human resources, compensation, billing structure, location, purchases, location expansion. And I think that that is much less, much better left to a front-office group, or those physicians that are a good part of the group. And it's a great opportunity for some people to buy in sometimes and not have to do any of that stuff. And you sort of alluded to that when you were talking about the personality type. So what do you think what personality type is required to not just be successful at going off on one's own but to actually enjoy it?
BROWN 38:44
You know, it's a good question. And I think it's important, my administrator, Julius has made that very clear to me, and we've brought in consultants to do personality testing and to educate our staff on, not only for interactions between staff, but also staff-to-patient and I'm really seeing--I really believe that that's important. And I'm not an expert at it yet. I see the utility in it. And I think it's something that I have missed for years. But there are different personalities, we there's like four different subsets of personalities, at least from the one genre that we buy into with our consultant. There's four different personality styles and he's variations of that and how to interact with the different personality styles and who's good at management, who would not be good at management. We hope to do this with our hires more so and we've had good management along the way. And I'm seeing the power in that. I'm a believer, I think it's something that we're new at and I think it is powerful and I think it's gonna bring good things.
JONES 39:55
Do you remember which personality test service you use and Myers Briggs or KOLB or DISC?
BROWN 40:00
DISC I think this is what we were using. Yeah.
JONES 40:04
I played around with each of those for a while. I don't really believe-- this is my personal experience, I don't believe it matters which one you choose, as long as you understand it, and you're using it as the source of truth for the whole organization by basis of comparison. But I think that's a great piece of advice for the younger associates listening and for the fellows that when you're thinking about what you want to do, take one of those tests. Just take that--I don't care if it's DISC, I don't care if it's Myers Briggs, maybe not strengthsfinder. But even then any one of those tests, you could take it, and it will give you a little bit better insight as to what you might be sued for.
BROWN 40:45
For physicians, most of us are exposed to it. I remember in medical school, most of us had to go through a Myers Briggs and we all kind of laughed about it, you know, we all thought it was kind of silly, and it's kind of giving you a label, and it wasn't well accepted. It just kind of, Oh, you didn't want people judging you, I suppose I don't know. But I can remember med school having that and really giving it to everyone gave it zero energy or thought. And I've come around completely the other way I've been made to believe that. I really think there's a lot of strength and power in that.
JONES 41:20
It’s a great idea for those considering the next phase of their career. And it's being a next phases of career. I'm not a private equity guy. But I know the optics of a group like yours, you're one of the largest in a very large state and a non-mandated state in a state that's growing, in cities that are growing. You got colleagues and you got a good structure. I know that you're getting the calls, and you haven't taken them yet, apparently, why not?
BROWN 41:49
Oh, that's a good question. We've been approached, I think in the last 5-8 years, the economy's been doing well. And there's a lot of money on the sidelines, a lot of equity firms. It's really a process where a lot of medical practices are getting evaluated and being shocked. And we've been exposed from a few. And I think it's worked well. I think it's worked fairly well. I'm guessing on the OB/GYN level more of it's a larger system, OB/GYN networks, on this subspecialty level, with reproductive undergraduate infertility, there's been a few like Shady Grove and a few others out of the West Coast. At least the East Coast system kind of faltered and kind of fell apart and are trying to reorganize, and I don't know so much about the Western groups. But it doesn't seem to be mainstream yet, at least, throughout the United States. I have plenty of--it's a very small world in reproductive endocrinology and infertility and not I'd say the minority of us are in these large groups. And I think it's a little bit of a challenge in that. What we do is very specific, and it takes the other one of the challenges for us is it takes a lot of money to operate it. I think you'd be challenged to find an entity that costs as much money to run before profits made. That's why this doesn't work well in academia.
JONES
Segue into that a little bit.
BROWN
You know, for let me give you the example of a university infertility program. When you have a chairman, business-wise you have a chairman, a clinical person that's an OB/GYN doctor, that's the chairman of their department, and they have infertility is one of their specialties they have to pay for. They also have Maternal Fetal Medicine/GYN oncology generalists, and your generalist you know, to run them it may cost $2 to make $1. And for GYN/Oncology, it might be up to make $3 to make $1 in profit. But in reproductive infertility, you gotta generate probably $8 to make $1. So there's a cost. It's a lot of revenue to make some profit. Generally speaking, the chairman who determines the allotment of money is a generalist that doesn't quite understand why do we need that much money to run this operation? Why do we need that embryologist that costs $200,000 a year or are they all these extra nurses that the infertility doctors need where the other specialties don't? It's a very--so it usually fails so then that Chairman who needs to allocate resources to that department won't do it. So then infertility practices in academia fail typically because they won't get them the new incubator, or the a few more new ultrasound machines, or the extra two nurses they need, or the extra embryologist they need to grow that program. So there's too many chiefs and that don't have the same buy-in and so that's why in academia reproductive endocrinology and infertility usually fails. Now the same problem is with the equity firms, hey, they're there to make a buck. They need to make $1. They got to show their shareholders that they've made some profit off this purchase. And man, again, it takes a lot of resources to make that bond. So I think that's why it hasn't become so widespread as it is with general practices like a pain management practice or an OB/GYN practice. We're a pretty complex animal to manage. And I think it is coming. I think they're, you know, as long as the economy keeps rolling, there's a lot of money out there--that were practices can be bought, I think more and more will buy into this concept. But we're pretty, I think it's because we're complicated. And I must say that from an egotistical way, I really, really genuinely believe that, that we are one of the more complicated areas of medicine.
JONES 45:52
That seems to be that way. From my perspective, that's why I'm constantly viewing. So I'm assuming that we're talking about net profitability if we're talking about $1 to $8. And we're talking about 12.5% net profitability.
BROWN
Exactly.
JONES
And so I think someone looks at that, and they think well, damn, Dr. Brown. That's why I don't want to start my own group, because I would rather let somebody else worry about that. Just take my salary. And maybe I can do much better than that. And I can leverage systems, I can leverage people. And we can build an economy of scale where we can do much better than that. But maybe I can't, that's not a big margin for me to start with. And so what do you view as the future of independent REI practice?
BROWN 46:35
I think it will always exist, I think they'll always be larger and smaller practices, just the nature of our patient, the nature of people who use us, our consumers. They're very--it's an interesting consumer, it's a very different consumer. It's very emotional. If a patient doesn't have success at one organization, we call them p powers. They'll go from one office to the next office, and God, they don't have success on their first try somewhere else, they're going to the third place. Our patients, unlike any other area of medicine, our patients jump from facility to facility, so there'll always be opportunity for more practices, small independent practices, larger practices, I don't see it. Looking into the future, I don't have a good gander. I think it's gonna stay the way it is, for a while for at least I would guess for the next decade that they'll still be 30% equity-owned practices and 70% independents or 50% independence and 20% academic, I think I'd be surprised. It'll be interesting that when we hit the 50% mark, that 50% of practices are owned by equity firms. That'll be interesting for me to forecast. But I don't see that in the next 10 years, or maybe even 20 years.
JONES 47:55
Is there any reason you don't see it, besides the profitability dynamic that we talked about?
BROWN 48:01
From what I gather, the profitability is just not for the amount of expense, the profitability is not that great to be attractive for the equity firms to want to buy us, like a pain management practice. It doesn't take a lot of resources. They're paying them large monies to buy their practice, these equity firms are buying them. And paying a lot of a lot of money. For example, I know an independent pain management physician who sold his practice, he and another controlling partner, they made about $14 million. And they're still employed there. And they do very well. But the reinforcements are wonderful for their services. And the overhead cost is, in my mind, not so bad. We're the opposite. You know, I think, we got, again, you got to spend $1, to make a net of one where you have to spend $8 in our industry to make a net profit of $1. They don't--the large firm says they see that they're smart. They see how complicated it is. And they're not that interested in most of them and working.
JONES 49:02
I wonder, Sam, I see what you're saying. And I don't disagree. It could be that case. But I also see that same dynamic being used to say, you know what, that's why you've got to buy in with us, because we're the ones that can deliver the economies of scale to reduce that overhead. Because if you're all off on your own, then your overhead is going to be higher, but with us, we can negotiate it down. And I know that overhead is a big point of frustration for practice owners that I often hear people describe, everyone just wants a piece of our pie. And the pie is not--the pie isn't that getting that much bigger for us. But everybody taking a slice is just more and more. And one thing I see that--
BROWN 49:49
I think the one thing that makes us unique is that we have a cash product. Unlike how long though, we're that well that's the point where once if it's 50/50, now let's say it's 50 percent insurance contract reimbursement versus 50% cash. You're right, eventually if it becomes 80% insurance reimbursement, I can see more throwing in the towel, and allowing equity firms to deal with economies of scale to make it easier for them. But I think the cash is what keeps the independent alive, I think they can just up their prices to their competitor and still do well. I think that keeps them gives them strength to stay independent.
JONES 50:29
And so what about someone that wants to say, ‘Okay, I'm more interested in the independent side, but I don't want to start from zero, I want to buy in with someone else.’ And especially because there are a lot of baby boomer docs in their early to late 60s right now that are thinking there's, I would say a quarter of the people listening to this show are probably on the fence if they want to retire in the next five years or not. And then the other quarter people, the sharp people that are getting into those groups. So what should those people consider if they were to join a group like yours, let's say? Should they start off as an associate? Is that a good place to end? As well as that, you know what, I'm good here, should everyone that's joining a private group try to go for a partnership eventually? What's your perspective on that
BROWN 51:19
Yeah, it's interesting, especially for the older doctors, the older reproductive endocrinologists, you know, they want to work five or 10 years and, by the way, that's where you see the equity firms come in and swoop those practices up. The senescent programs, they're ready to throw them--that older doctors ready to throw the towel in, they're more likely to sell to the large equity firms, for sure. It makes sense. I mean, they're in the last five years of their practice, or 10 years, and they're not going to get what they want out of their practice, typically. They sell it. So having the equity firm come in and give them some money, it's kind of a smart way to go. Your younger age docs, they want, they want the ability to make more profit, they want the ability to make a better income than the average income they're seeing. Looking at this differently, like if you're that doctor, and you have five or 10 years left, and fortunately, I haven't been experienced with this, we have a lot of living in Florida, we have a lot of people who want to retire here. So we have a lot of older doctors that are leaving their practices up north and they want a part-time or full-time job in Florida. And we've been very successful in hiring these physicians. They've been great. We give them a strong contract. It's easy to put in some type of partnership, absolutely. Depends on what type of partnership you're talking about--full equity owner versus profit-sharing type partnership, it just depends on what type of partnership we're discussing. But if they have five years left, and they’re not adding in, nobody's gonna sell them their practice. Richard Scott has a lot of interesting stories about this, where people would want to try to buy his practice and when they would value their practices and for them to buy in, you can't get that nobody can raise that kind of money to really truly become an equity owner. So it just depends on how you define the partnership. I think it's a really good opportunity for those docs, I think they still make great money. They can make great salaries and bonuses and it depends on how you structure your partnership, I think those doctors are sitting in a great position to do well before they retire. We have a gentleman that's working with us now, he’s in his low 70s and he's ready to retire and he's done really well. I'm pretty proud of the way he structured his career looking back.
JONES 53:38
What would it take for you, say, I'm putting myself in the position of a fellow. And I'm also thinking that when I see a lot of relationships break up, it's very often associates at the two to two and a half year mark and the associate says, ‘Okay, I'm ready to buy-in,’ partner says, ‘No, you're not.’ And whatever is happening there. I'm not in most of those conversations, so I don't know what's happening, but I can tell you it's one person who had one set of expectations and the other party had another set of expectations and they weren't agreed to enough. They weren't agreed upon explicitly enough. And they weren't reviewed ad nauseum. And I always tell people, I don't care if you're getting annoyed with each other in the negotiation process because you're just repeating things. Do it then as opposed to two years down the line after you both have much more sunk cost. And so if I’m someone leaving fellowship right now and I want to move to Orlando because I've got family down there and I'm a go-getter, Dr. Brown, I'm going to I'm going to build your practice so big and I'm going to see so many patients and I want to buy into partnership. How do you sit with me and say, ‘Okay, Dr. Jones, this is how we're going to agree to it or not’?
BROWN 54:49
I think your approach that question perfectly, it's about communicating upfront. And generally speaking, the fellows will come out and they will say just like said, I'm gonna grow this practice, I need to own part of this, I'm going to be a part of your explosive growth and success. And you know, explaining the different partnerships was never really done to me at any practice I've ever been a part of. I think we do a fair job of it. We have a really good communicating staff, our administrator does a good job of explaining, I try to explain. The fellows have never been exposed to this before. They don't know business. They're not Business School graduates. And, you know, when somebody owns an entity, what does that mean? Like what company owns this--has put millions of dollars into this practice? How's it fair for somebody coming in--how do you sell it to them? How can you let them buy into it over time? We've learned personally to be very creative about it and we're very open-minded to all forms of partnership and ownership. But when the fellows generally see the numbers, when they actually get this education, gingerly by us or my administrator, they're like, ‘Whoa, I had no idea Dr. Brown did, you know, you actually had to put $4 million into a building and somehow I gotta buy, okay, if I want to be a 50% owner, I gotta buy two $2 million in that $4 million building.’ And then you can structure that over time over years. And one of the best groups for this, Dr. John Schnorr around Charleston, South Carolina--great business mind, great reproductive endocrinology and fertility mind. They had a nice structure, it was a seven year buy-in over time, there's ways to do these things. Is that new fellows starting a practice willing to invest over time? You can't get loans for that. Nobody's worth--you know, you go to the bank-- I actually, I was, in one of my previous experiences, I was offered to become a partner I was making, I'll be honest, I was making $300,000 a year and they showed me the numbers in a real logical, mature sense. They said, you know, it's gonna cost you somewhere around $5 million, to become a 50% Owner. You can't get that money unless you're independently wealthy. Actually, I had a partner that went to a relative and got the money, and then tried to buy in and it didn't work with it. It was just the personality of this situation. It didn't work well, the partnership wasn't structured well. But it costs a lot of money to set up a practice. And then that fellow thinks, well, I can just start my own practice and just start from scratch and more power to you. I mean, there's noncompetes. You know, it's not like family practice. It's not like our call radius is only a 20 mile radius, your call radiuses are typically two to three hours because we’re a subspeciality. So I didn't answer your question. But all these complexities piled together--
JONES 57:53
You answered it--just when do you hit and--by the way, the phenomenon that Dr. Brown is describing is called trapped equity. There's trapped equity in the practice, because the buyer can't afford what it's worth to the seller. And so you did answer the question, but when do you have that conversation? Do you have that conversation before they even become an associate?
BROWN 58:14
It's definitely as they're coming in. For sure. Before they sign that original contract, being as clear, as honest as possible, trying to explain all these situations and different possibilities--do they want to be an equity owner? Do they want to be a profit-sharing partner? All kinds of ways of defining partnerships? Absolutely.
JONES 58:36
What else are you looking to qualify for partnership, besides the money required to buy-in? Is there a certain amount of volumes, other responsibilities taken at the office? What else should people delineate before they agree to go into partnership with each other?
BROWN 58:52
Yeah, I think, you know, just as a quick answer, I think they got to be productive. I don't think you can know that coming in. And I think it's okay to educate them coming in saying, ;Hey, we're gonna see how over the next three to four years or five years, whatever, can you produce or not?; And so I don't know, buy-in initially coming in is the wise way, because it could just leave. What's the odds that individuals truly going to be productive or not? And I've definitely learned that with hires, you have people that Julius has quoted, that's, you know, there's rainmakers and there's busy bees, and I don't think you know what kind of doctor you are until you've been out, like, Can you really generate? Are you really good at just being a busy bee and making it happen with what's already there? So I think, I don't think any of us know we all think we're gonna be rainmakers when we come out of training. And but with your personality set, are you a Rainmaker or are you a busy bee? And both are needed, both are necessary. So if they can produce and they want to buy in doesn't, they can't really buy-in.
JONES 1:00:06
So can one elucidate what a Rainmaker is in numbers and key performance indicators in the beginning so that they're not having the conversation--I was a Rainmaker. No, you're busy bee. Well, we have different definitions--Can that definition be established in the beginning with numbers? If you hit these, you know, maybe it's this number of volumes, maybe it's this number of procedures, this number of new patients per week, per month?
BROWN 1:00:31
I totally agree. And like for us, we actually calculate that quarterly, from the new patients coming in under that physician? What did they ultimately produce, even if the other doctors are seeing them, that originating doctor gets credit for who came up with a treatment plan. So that's how we determine rainmakers versus busy bees. And we make it pretty clear. They know when they're not producing work. They're on a quarterly basis. They're educated on what they've done.
JONES 1:01:04
And we have some episodes that fellows really stick out, you know, we've done 100 episodes. And there's a couple that when I meet fellows--I really liked this episode, like this particular episode, I think this will be one of them. Would you be okay with fellows reaching out to you if they--?
BROWN 1:01:17
We're a very honest, hardworking group, and we want smart minded strong physicians to join this entity, this entity we hope is going to last for 100 years. This isn't just about my tenure at Brown Fertility. This is how we plan for this structure to be ongoing and not be a common senescent program and be here 100 years from now. So we love strong fellows that would be interested in your educational services. We would love to talk to them about these things.
JONES 1:01:55
I think that's an excellent place to conclude. Dr. Sam Brown, thank you so much for coming on Inside Reproductive Health.
BROWN 1:02:02
Thanks for having me, anytime.
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You’ve been listening to the Inside Reproductive Health Podcast with Griffin Jones. If you're ready to take action to make sure that your practice drives beyond the revolutionary changes that are happening in our field and in society, visit fertiltybridge.com to begin the first piece of the Fertility Marketing System, the Goal and Competitive Diagnostic. Thank you for listening to Inside Reproductive Health.