Physicians with the letters, REI, after their names don’t come cheap.
“Any Fellows you can introduce us to?” I’m often asked at PCRS and ASRM (the Pacific Coast Reproductive Society and American Society for Reproductive Medicine annual meetings, for those not in the field).
“Third years?” I demur, “Nope, they’re all signed. Second years? What month is it? Nope, they’re signed too. I know some first years. Want to talk to them?”
“Yeah, I guess so,” the hiring physicians usually concede.
Reproductive Endocrinology and Infertility (REI) specialists are in such demand, soon enough, we’ll be recruiting med students. So when you’re fortunate enough to find someone who may be able to purchase equity of your practice, allow you to exit for retirement, or at the very least, meet current or growing patient demand as an employee, you probably want the relationship to be successful.
It seems to me, however, that the trend of practice partnerships who break up and associate docs who leave before becoming partners is on the rise. I say “seems” because our sample size of 1,200 fertility specialists in North America is inherently small. I don’t have any data, but I know eight associate doctors who thought they were on a partnership track AND left their practice in the last eighteen months. I know of three other partners who broke up in the same number of time.
I spoke with four associate fertility specialists who wanted to be in independent, private practice and who wanted to become partners. I de-identified their information and they allowed me to share their stories with you. They were brave in doing so, and did as much for the benefit of younger fertility doctors selecting a potential practice and practice owners recruiting a potential partner.
There are multiple sides to every story which is why I take good care not to name any of the practices nor physicians involved. Having negotiated many business deals in the fertility field, however, it is not difficult for me to picture the scenarios as they were described to me.
Any recent client of Fertility Bridge can tell you that I insist on being explicit and redundant in the early stages of an engagement. I have found, almost without exception, that the more strictly expectations are expressed in the beginning, the less likely they will actually ever need to be enforced. The results of the anecdotes you are about to read thread a common pattern wherein the prospective partners and the practice principals clearly had different expectations. In my estimation, crucial expectations were neither explicitly nor repeatedly agreed upon by both parties before teaming up together.
Perhaps carefully considering the accounts of these four brave REI physicians will give you better insight to prevent a long and costly signing or hiring mistake.
Fertility Doctor #1
left a small independent practice in a small market to join a large practice group in a large market.
When I was looking at the first practice I joined, the initial discussions always started with what they were looking for and what I wanted from them. The contract was then offered, and the details negotiated. My salary was a total low-ball offer and it became tense when I countered, but in the end we agreed to a number. I had been offered a partnership in verbal discussions, but it was apparent there was no plan for this to actually happen. I was quickly aware the promises were shallow. It was mentioned that it would be an option after I proved to the practice I was worthy and there would be a monetary buy-in. The initial discussions leading up to the contract took 2 weeks.
This practice verbally offered me a “sweat equity” ownership where I would be paid less for the first 4 years, then would be given 25% of the practice free of charge. The other non-partner who started 2 years before me was offered the same arrangement and, as of 3 years into their employment, a legal contract was never put together to make them a partner. From the beginning, it seemed fishy and that didn’t reassure me.
The partners never attempted to reassure my feelings. I asked them to draft a contract for the other potential partner, believing if they did, I would be reassured. They ignored my requests.
Within two months of joining, I was suddenly aware that the promises and the culture of the practice were not consistent with my goals. I officially resigned after 8 months.
There were so many red flags that I realize now indicated that it wouldn’t be a good fit. Mostly, the promise of free partnership with no buy-in sounded too good to be true, and I was always skeptical. When I started, the “vibe” was very odd, too. The staff seemed unwilling to accept a new person and there were a lot of “behind closed doors” discussions about how to respond to “new ideas,” aka standards of care that were not being followed, but I suggested we adhere to. It was also made clear early on that my other interests, such as academics and professional committee membership was not supported by the practice.
When it comes to selecting a practice for new REIs, start with knowing where you want to be geographically. Most people either want to live in a city, or they don’t. Then see who is available in the town or city you choose. Check SART stats and ask friends/colleagues about the group. Decide if you want to be in academics or not, but really, this will be dictated a bit by how geographically selective you are.
Be sure your salary, bonus structure, and benefits are very clear. Don’t expect partnership to be set in the original contract.
Be skeptical of overly vague or short contracts—most are very wordy and lengthy. Ask to speak to other group members, especially new ones, to see how their contracts and promises matched up. Partners rarely discuss details of partnership, so don’t be bothered by some secrecy.
Fertility Doctor #2
left a small independent practice in a small market to start their own practice.
I can share with you that you never exactly know how a position is going to go prior to you joining, no matter how good the planning. However, in my position there were signs both subtle and others like a glaring siren that perhaps the practice was not picture perfect after all.
I was embraced by the support staff. However, the physicians were standoffish. In retrospect, I believe that they were all the while looking for an employee and not a partner, despite saying they were looking for a partner constantly.
Ultimately, the practice I believe is/was looking to sell. I learned of that by accident and did not want to be a part of the sale. I decided that my values were not aligned with those that I worked for. I did not believe partnership was ever going to happen because of a sale or potential sale. If my values weren't aligned with my bosses, then I felt the situation would really never improve--I would be out on an island. I felt that I had much more to contribute to my community and I wanted my contribution to resonate with my value system, have a wonderful work culture, and build something that would be impactful for the patients I serve.
It is for that reason, and many others, that I decided to open my own place.
To new REIs, I would say, if possible, visit the practice when they are working to assess the things that don't come out of an interview. Even then, they may be on their best behavior. But if they seem standoffish, defensive, that will probably be what they are like to work with.
Fertility Doctor #3
left a small independent practice in a small market to start their own practice.
I was at a university program and I went to the only independent private practice in the area. There were multiple doctors on the verge of retirement, so I thought it would be easier to become partner by buying out the retiring partners rather than starting my own practice.
The partners wanted to lock me in so they could sell to a private equity firm, so partnership was offered immediately. I hired an experienced medical practice consultant that cost me $15-20,000 over the course of two years. He didn’t believe in 10% growth year over year with multiple doctors who were nearing retirement. He felt that I would lose between $3 and $10 million dollars in selling to private equity over the course of my career. So, instead of immediate partnership, I agreed to work as an employee until partnership was agreed upon or not. A non-compete wasn’t required. This agreement was initially set for a year, and then it was extended once I realized it was going to take longer. It took 6 months to reach that agreement.
In equity deals, older doctors have the upper hand.
The initial appraisal stated that the practice was expected to grow by 12% in EBITDA in my first year as an associate, but it actually decreased by 5%. My consultant determined that the practice may have been overvalued by 50% to 100% and advised me to see what valuation would look like if projections weren’t met. Since the initial projections weren’t met, the contract allowed for a dispute of the appraisal, but the partners refused a second one.
At this practice, the physicians had a reputation for being very business-oriented and trying to get their way in a negotiation. A previous associate physician left practice before buying-in. Three doctors previously had chance to buy-in and did not. Those should have been my first red flags.
I decided to leave when I realized that if I had bought in at the appraised price, I would be bankrupt right now. The partners weren’t willing to reassess the appraisal and practice valuation. My consultant felt that the appraisal process had been hijacked, and the partners did not acknowledge this point of view. So, I decided to start a practice with my own culture.
If you’re a new REI heading into a new practice and partnership is discussed, hire a consultant on day one, before an appraiser even gets involved. Once the appraiser sets a valuation, they have to save face. Appraisals are not necessarily objective, especially if all parties don’t put their input in from the beginning. Do not wait for the appraisal process—you must have your input from the very beginning. I’m a young physician who knows nothing about the business of medicine. It took me a good year or two to understand how ownership works.
Partnership is going to mean several million dollars over the course of your career, even if that means spending money on a consultant when money is short right out of Fellowship. Try to negotiate against a non-compete if partnership is offered immediately. If partnership is not offered immediately, non-competes are essential because the partner physicians help the associate to build the practice.
You can’t put everything in writing. In my case, we had terms in writing and they were not honored. You have to work with people who you can trust, though you can’t trust people implicitly.
Fertility Doctor #4
left a small independent practice in a large market to join a large fertility network.
I chose to join the small practice in the first place because it was in the city I wanted to be in. I thought there was opportunity for growth, both in my career and financially, and have autonomy.
I wanted to be on partnership track from the beginning and thought I would go on to become one of more eventual partners. The understanding was that I would become an equal partner after two years, after meeting certain benchmarks. The original contract was a standard employment contract and it included one paragraph about opportunity for partnership, but it was vague. I had such little interaction with the practice owner(s).
The benchmarks were set, my buy-in and what I had to bill would each be a certain amount . That’s when the owners’ character really started to come out--in the contract negotiation. Partners can say that they work harder than others to justify a higher base salary for themselves or to retain more control or equity. The contract had a clause in it that stated if/when partners violate the terms of an agreement, you can’t sue them, so partners always had the upper hand.
In the practice itself, things were told to me that they were a certain way and, it turned out, they were not. The practice was inefficient and there was double booking of physicians. I wanted work/life balance, but it never really seemed to get there.
As new REIs, we don’t understand our power. We feel compelled because of our medical training. I felt like nothing was ever up to par and I often made suggestions that went unheard.
After talking to several other potential employer and partners, I finally found a new clinic. The new group I joined supported my initiatives, operational recommendations, and preferences for work-life balance. I wanted a group approach and so did they.
Because of my experience, I was gun-shy about joining a new partnership track, though my new group pushed for it. At this time, I just didn’t want it, so I signed on as an employee.
If you’re new to the field, make sure you have the same goals as the people you are joining, both day-to-day and long term, in financial and patient care. Investigate red flags and warning signs. No one will give you what you want if you don’t ask for it, including scheduling, compensation, vacation, partnership, continuing education. Hire a good lawyer from the beginning--someone who will advocate for you, not just draft a contract.
Keep the plan clear.
It’s a better experience for everyone.
It is very difficulty for REI practice principals to find new doctors and it is equally hard for young fertility specialists to choose their career fertility center. It is tremendously expensive for both to make the wrong decision. It drains your mental and emotional energy.
In episode 9 of Inside Reproductive Health, I speak to Holly Hutchison, co-owner of Reproductive Health Center in Tucson, Arizona. You might listen to Holly’s advice on how to set expectations between reproductive centers and fertility doctors. From the accounts you just read as well as more extensive business development work with IVF centers, here are some of the expectations that you want to clearly define before any partnership track or even employment agreement.
What percent of equity will be available for purchase? Minimum? Maximum?
Over what time?
New Patient Visit Requirements
Procedure Volume Requirements
Multiple of salary required to be billed to buy in
Terms for reassessing practice valuation
To hiring principals and young fertility doctors alike, it is incumbent upon both to agree to these expectations, conceptually, verbally, and then in detail and in a legal contract. They must be repeated ad nauseum.
You may be worried about walking away from a deal. Don’t be. I do it all time. I don’t want happy prospects. I want happy clients. So too is it for you who want a long, healthy, profitable, happy partnership. Better a few uncomfortable conversations and some hours invested, instead of two years, hundreds of thousands of dollars, and your mental and emotional bandwidth.
What other expectations did I not include that you believe are requisite?
We have helped over a dozen fertility practices align their vision among their partners and staff. If you think our methodology would help you, learn more about the Goal and Competitive Diagnostic.