In this episode, Griffin talks to Holly Hutchison. Holly and her brother, Dr. Scott Hutchison, operate Reproductive Health Center in Tucson, Arizona. Holly and Griffin discuss the importance of establishing key performance indicators to ensure that partnerships begin successfully and go the distance. Additionally, Holly and Griffin tackle the importance quality of life plays in their practice and the need to establish boundaries related to that early in a partnership.
Griffin Jones— Today on the show, I have with me Holly Hutchison. She’s from Tucson, Arizona— Tucson, not Tukson. She belongs to multiple professional organizations in our field, and originally started off from the research and scientific side with a degree in biology with a masters in genetics and both from the University of Arizona. She had done clinical group for awhile before persuading her brother, Dr. Scott Hutchison, who is an REI to move back to Arizona and open up their practice, Reproductive Health Center, where they still both operate in Tucson today. Holly, I am thrilled to have you on Inside Reproductive Health.
Holly Hutchison— Ahhh, thanks, Griffin! I’m happy to be here!
GJ— You’re on the show because on one of our earlier episodes I was talking with a fellow about what they want as they start to complete their training— if they join up with independent practice groups or larger practice groups or go into the university system, and then that led to more conversations I’ve been having with so many people. But I want to have a conversation just about this. I thought you were the person to do it because I know that you won’t pull any punches and where we started from, in the past six months, I can think of at least six examples that I know of younger doctors— by which I mean typically 40 or younger— usually not right out of fellowship, but sometimes they are. They’re an associate doctor at one practice, they’ve got one vision in place, their partners have another vision in place, and after two, three, four years of working there, they part ways. Nothing ever happens, they don’t become partners– why the heck is this happening?
HH— (laughs) Oh, the million dollar question! I think there’s a lot of reasons, and it just depends on who you’re talking to and what the circumstances are. I would say the number one things are that they’re joining people who are established and have these kind of old school beliefs, they came out of fellowship in those first wave of fellowship people. They started a business, and the younger person comes in without understanding what it is the other person wants, for one thing. What the original doctor in the practice wants. There are no standards for key performance indicators, there is no mentoring. They’re just kind of hung out on the line, and in some cases— I know in particular cases that I’ve been around, the original physician has built the Taj Mahal of reproductive medicine, and brings in this younger partner that’s gonna be saddled with this very large debt and a huge building, potentially. No one ever talks about it ahead of time— about what the expectation’s gonna be. At the end, it all ends up being a disappointment because expectations aren’t being met.
GJ— Those key performance indicators are huge, because I think in many cases they’re just not being spelled out. Whatever’s happening, when I’m talking to these people, they’re not getting what they wanted out of the practice. And the practice clearly isn’t getting what they wanted from the associate’s end of the relationship. As I’m talking with them, I’m thinking, “What did you agree to? What was spelled out?” You mentioned that very often the key performance indicators aren’t spelled out.
HH— Right. Well, first of all, let’s go back to the fact that they’re doctors. Unless they have a really savvy business partner who lays this all out, what I’ve seen is that there isn’t any layout ahead of time. It’s like, “Great, we have this new doctor. We’re really busy, we need to bring this person in.” It’s a honeymoon period where everything’s great, but no one bothered to spell everything out. They’re not business people, they think they’re all gonna be like-minded, and it’s gonna be this happy thing. That’s what I’ve seen. I’m sure there are situations where there’s really savvy business people that absolutely lay this out ahead of time when they bring in the younger or newer person in with very clear guidelines. But what I’m seeing is when you get this disappointment and expectations aren’t being met, it’s because no one ever laid out what the expectations were. It’s not-- it’s the business side of it is usually where they part ways.
GJ— To clarify, it’s not like practices across the country are breaking up. It’s not like partners walking away from each other all over the place. But there is a trend where the incoming person has one thing in mind, and the person who owns the practice has something else in mind. That’s not super agreed to. The reason I buy your hypothesis so much is that I see it all the time when we’re working with clinics. IC and Fertility Bridge worked together-- you remember how strict we are in vetting new clients. I’m so strict in sales processes, I’m strict in the first couple projects, because we’re constantly saying, “This is what the relationship is, this is what the key performance indicators are,” right?
HH– Actually, to a point where it was like, “Seriously? Do we have to do this again? You’re kind of annoying right now!” (laughs)
GJ— You’re not the first person who’s told me that, who has that criticism of me. I do that to the point of annoyance? Good. I’m glad. I’d rather do it to the point of annoyance— because you know why? Every Fertility Bridge client right now is super happy and we’re having success with all of them. And that, to me, is so much more worth it than just kind of phoning it in and getting to the next… and I’m not even talking about equity! We’re just a strategic partner!
HH— Exactly! Exactly!
GJ– [Inaudible] We’re doing this, because they think the same thing. This is annoying, why do I have to think about all this stuff, this is homework! You’re damn right it’s homework. This is one of the three core functions of your business, and if you’re talking about partnership, then you’re talking about all of your business. What are those key performance indicators that people really need to beat over the head to make sure that they’re comfortable with…
HH— I think there’s many. I sat down last night with Scott, my brother, the physician in the practice, and we talked about that. It was a very interesting conversation. Our resident-- we have a resident physician right now that we’re training in our office in reproductive endocrinology as part of her OB/Gyn training. She was in the beginning of the conversation, which was actually quite interesting. She has absolutely no understanding of business at all. So coming into a model where, if she were, let’s say she was out of fellowship training and she were coming into our practice, she has very little– she needs education on the business side of things. I think outlining what the expectations for the business would be is one whole aspect of it. So is there a building? Are you going to have to be a part of the building? Can you read a profit and loss statement? Do you have business banking relationships? Do you need those relationships? There should be criteria met for the business side of it. You need to understand how the business works, how the business flows, and that’s gonna be one thing that’s part of your mentoring and training. So that’s one whole side of it. The other whole side of it is now you’re coming into a practice where you’ve been under a number of other experts in the field in your fellowship, and you have yet to keep a patient happy, to make sure that you’re empathetic and understanding that patient, to make sure that the patient gives you that feedback that you’re good, and then moving into the whole technical part. Can you do a retrieval? How good are you at surgery? How good are you at ovulation induction protocols? How great are you at timing inseminations? All of those other things that are part of the makeup of reproductive endocrinology. That’s another [inaudible] if you took a partner [inaudible] who was a great person, and you really enjoyed them, but you get absolutely no pregnancies on any of their transfers? That’s a key performance indicator that has been lost. You can’t continue in business if you can’t do that. I’m not saying that somebody would do that, but you have to meet the business standards but the technical standards are important as well. It’s a two-party system.
GJ— Anecdotally from my own personal sample size, it seems to me that a lot of younger doctors do see the value in that clinical mentorship. They are coming out of three years of training, but it would be really nice to have someone who’s almost a private mentor to just go through the day-to-day of the clinic for a little while, to improve in all of those areas clinically. Where I think they don’t see the value is from a lot of the business KPIs that you mentioned, because they’re seeing this as… this is like the old house that needs so much work and I’m gonna get into this with this person and they’re not gonna let me make any changes during that time period. And they’re already 10, 12, 17 years behind on…
HH— Exactly. I have a couple of things to comment on that. Number one, you’re very right. I think that’s kind of where the old school, I remember coming out of my graduate school and moving into a laboratory setting and the very first thing that I… I knew they were doing a bunch of stuff wrong so I corrected it and I got into a bunch of trouble. It was really annoying and super, super irritating so i ended up leaving– after I revamped everything they were doing, I ended up leaving. Because I didn’t feel appreciated, and I felt like I had been put down. So I can understand where somebody coming out of fellowship-- they need to have that input. They are more recently trained, and there are newer things, especially in the model of all the genetic testing, they have much more understanding than some of the old guard-- and I use the term old guard very loosely. It’s very important-- the old guard feels like, “I built this practice, I suffered, and I slaved, and now this youngster’s just coming in, and oh my god, they didn’t have to take as much call as i did, they’re not as well trained,” and that’s nuts, number one. We all know that’s not true. These people are coming out of this fellowship with much more training than the original old guard did, who learned things the hard way. There is that. That’s something I think a fellow or somebody who’s looking to join a practice really needs to feel like the docs that they’re joining or the practice they’re joining-- it is a two-way street. It is something where there’s open dialogue, and there isn’t resentment because they didn’t take as much call or whatever. That’s one thing. Your other thing about buying the house-- the $600,000 that needs a lot of work-- one of my side businesses is renovating homes. I look at that as, you have an opportunity. Versus going into a pre-done, corporate practice, where you’re just going to be an employee. When you go into that $600,000 that needs a lot of work, you get to make it be what you want. And you have an opportunity for it to be what you want, to have the quality of life you want, to have the standard of living you want, to have the time off you want. You get to create that. Where in a corporate structure you’re not gonna have that much input. You’re there to do a job for them. They’re gonna outline what your time off is, whatever, sometimes it’s more flexible than others. But when you get to buy the old house, you get to change the plumbing, if you want to. And have a really nice Toto toilet.
GJ—I think that’s where a lot of the disconnect is happening, because that should be the benefit. It seems like a lot of these newer doctors are not seeing that. What they’re seeing is, “Ok, I’ve got to buy this $600,000 house, but I don’t get to change jack squat until this person retires. And who knows how long-- is that gonna be in three and a half years or is it gonna be fifteen years?”
HH— I’ve seen cases where they don’t ever retire! [inaudible] and their younger partner with putting [inaudible]
GJ— The Jacob Marley of REI…
GJ— They’re on my doorstep with their chains, haunting the practice. And I think that’s what a lot of people are running into. So, ok, if that really is the case, if I’m opening up my own practice, I should be able to do whatever the heck I want. In this case, I’m not opening up my own practice, I’m presumably taking over someone else’s over a period of time. I think over that period of time, there’s at least a perceived worst of both worlds, where I’ve got the risk of being a partner, or will be a partner, but I don’t have the ability to affect the change-- and not only do I not even have the authority, but sometimes it will be undermined by this other person.
HH— Very critical point, and something that needs to be discussed before any ink has been put on any kind of documents, that there is a clear exit path for the soon-to-be-retired or retiring doctor. There’s got to be a kind of a mentoring standard to be set up. You want them there long enough so you don’t get yourself into trouble, but you don’t want them there eternally. And then the baton gets passed, and in my perfect world, we’d bring in somebody who’s younger, exciting, basically the bloom is not of the rose and they’re excited to be part of it. We let them take over the reins of the entire operation, but you’ve still got the safety net of somebody who’s been through it and weathered some storms to come help out. But there’s a clear path of ascension for the younger person. And it’s the responsibility of that person to bring on somebody else to help them in a similar kind of way. So it’s a real challenge to allow somebody else to come into your practice, but also for them to be able to do what they need to do in their lives. I think it’s important that everybody gets that kind of “lay it out on the table” before they even come.
GJ— How do those milestones get passed with the KPIs-- as in, when this happens then you get this control, or when this happens, you get this much equity or this much bonus. How do you relate KPIs to milestones?
HH— It can be set up any way that people want it. It depends on what the goals are of the individuals who are involved in it. One of the things that we recognize is a lot of the fellows getting out of school may have a lot of debt. Is that something they want to address first-- should we get you out of debt before you’re starting into the ownership of the practice? But yet the ascension to the head of the company is there, so we’re gonna… let’s look at helping you get out from under the debt, let’s make a plan for the business model of when you are going to take over. Do you want the building, or do you not? Do you want to change equipment? There are so many factors in it, that have to be sat down and discussed, but I think they all need to be on the table prior to signing any papers that everybody has discussed and talked about, as opposed to, “Oh, you’re a really great person, I really like you, I think it’s gonna work out just fine.” No. Let’s get it in writing, let’s get a complete plan of how long it’s gonna take and when it’s gonna happen. The key performance indicators for the medical side of it can be easily met by, Ok, we watch you for a year, your statistics are… at the end of that time, you’re free to do embryo transfers on your own without us thinking about it. [Inaudible] On the other side of it, where I come from, I want to know where is your debt, what kind of salary are you looking for, here’s what you’re gonna have to do to get that. You can’t… let’s face it, some of these guys come out and are like, well, I can get paid [inaudible]... they can come out and maybe get $300,000 a year as a starting salary, but at the same time, they’re going to be working a lot, and they’re going to be living in a very large city where if you’re carrying a lot of debt, you’re not going to own a house, your kids aren’t going to the best schools, there’s going to be a long time before you may meet your life goals in a working situation like that. And they can let you go at any time, because you don’t own anything, right? So you move to a smaller market in a smaller place with a nice little center, and let’s say you want to be there to get your kid on the bus every morning, which was the case of my brother. He got his kids on the bus every morning, he was there most afternoons to pick them up from the bus. If they were sick, they came to our office. We had a really nice lifestyle set up that was– our number one goal was lifestyle.
GJ— Let’s talk about kids on the bus- I think this is actually where a lot of these relationships are breaking up. Docs coming in, it’s not all the time, but we with all the talk about gender and society, I think it is also, it’s really involved in this conversation. Where the principle physicians expect a certain volume, and the incoming physician is, “I wanna spend time with my family, I want to see my kids, I want to take some vacation,” I think the “kids on the bus” principle is a huge factor.
HH– This is why we went into our own practice, quite frankly. My brother was in Baltimore, his wife’s an OB-GYN, they were working at Johns Hopkins, he was division director of REI at that point. Their life was— and Hopkins is an absolutely wonderful place— but their life was miserable. They had two teeny kids, they lived in a crappy townhouse, they had to seal up the windows with paper towels and aluminum foil in the winter because it was so cold. Their life was horrible. That was one of our big things, like, “Come back to sunny Arizona, where for what you’re paying for this really crappy townhouse, you can live in a really nice neighborhood where your kids can get on their bikes and the schools are super good,” and then we arranged our entire practice around the principle of being there for our kids in the morning and being home in the afternoon for doing homework. It worked out really well for us, we’re not super wealthy, but we’re doing great! We’re doing fine! We’ve had a really good quality of life along with kids who actually like us.
GJ— I wasn’t even planning on talking about this, Holly, but I’m so glad you brought up lifestyle. It’s as much of an importance to discuss during negotiations as salary and everything else-- even more so. For us, it’s one of our company values. It wouldn’t be if you’re going to be a consultant at Bain and Mckenzie on Wall Street, and that’s fine. I just talked to someone today that we’re making a full-time offer to, and we talking about travel. For this particular person’s position, there may be a lot of travel, and she says, “Would this be, when I go on travel days, would I be able to take off a half day or day after to spend with my family?” Those conversations have to happen up front.
HH— Absolutely. Our number one driving principle in our office is that. What is important in your life, and let’s make sure that gets taken care of first. Family and your, y’know, satisfaction with your job from day-to-day are the top two things in our practice. And that’s something that we would look for in a partner as well. Somebody who knows and has a clear understanding of what they want. That could mean that somebody coming in says, “My wife’s at home, or my husband’s at home, and I’m gonna just bust it here for ten years. I’m gonna do as many cycles as I can, grow this practice as big as I can get it, because I’m hounding for the money.” That’s also viable, too. But if someone coming in is coming from a couple that are both professionals and they want to have a good standard of living and a good quality of life, you can’t really do that in the big corporate practices-- that’s harder. Not to say you can’t, but it’s harder to carve that out.
GJ– I think this is true for every employee, down to the receptionist, but more so for doctors because this is a really big price tag. It’s also really hard to recruit someone, it takes a long time, and if we’re talking about partnership track, we’re talking about a real [inaudible] for the business. So when these don’t go well, when someone that should have been on partnership track or expected to be on partnership track leaves after two or three years, who loses out more in your opinion, the practice or the leaving physician?
HH— Well, I think unfortunately both lose out. They really.. There’s not a win/win for either of them. The person leaving has to go into direct competition with the person that they just were with, for one thing. So now you get this, almost like a third party running for president, somebody loses, whether it’s the republicans or the democrats, that the third party takes votes away from them. You don’t always end up with a real equitable split there. The new person has to go out and rent a place-- just the business side of starting a business to go into competition is huge. The person who was left now may, you know, is now at a deficit because they were probably getting to a point where they were so busy, now they don’t have the help and they lost half the patient base. Dividing isn’t conquering in that particular situation. It’s really rough and I’ve seen it in some other markets, where almost there’s a number of them, and there are some very good reasons why the younger person left. But it hasn’t benefited either of the parties.
GJ– I was saying to John Storment on an earlier episode that I think one of the reasons why private equity has had the success it has in acquiring practices is because, for some of the groups or practices, not the big ones that are clearly really great investments, but some you think, “somebody bought that?” It’s because for the doctor selling, they don’t have another option, with finding somebody to help.
HH— That’s a very viable thing. There are also doctors who have just had it, they’re gonna sell and get out of here. They’re gonna bring somebody else in, they’re gonna take it over, our market demands it… and I think on the other side of it, too, the people coming out of fellowship… I didn’t know anything about starting a business. I knew absolutely nothing. I got lucky, being persistent and I won’t take no for an answer a lot of times. I think a lot of physicians coming in, all they look at is, “Oh my god, I talked at so-and-so at this meeting, a venture capital firm lent them $3 million dollars to get started up. And I’m already bringing $170,000 worth of debt from medical school… how in the world can you ever… you’re gonna be chained to your desk or your patients for the rest of your life to pay that back!” And there’s something to be said for that, but it doesn’t have to be done that way. They’re not trained in school, ever, on how to start a business.
GJ— I think of the key performance indicators we were talking about that incoming docs need to see is at least [inaudible] into the areas of improvement that clinics need to pursue to stay relevant for millenial and Gen Z patient base. At a very baseline level for marking that might be active in social media as a means of connecting with patients, but it also means taking all of these processes and systems in our companies that are still in paper or are really analog, that there is software for almost all of them-- at least just one by one starting to adopt that to make things easier and going through this change, so that the incoming doc can see, it’s the $600,000 and I can do whatever I want with it, but they’re not leaving me with shattered windows, busted foundation, we’re working on that together. If you are the retiring physician in this position, I think of it as it’s just your earnout. Look at it the same way as if you sold it-- it’s your earnout. These capital improvements you’re making to be fair to the person that’s taking over.
HH— Right. In the building industry, we call it leaving them with good bones. You’ve gotta have good bones or there’s nothing there. That’s where I think also having a younger partner puts… breathes lifeblood back into the practice. You mention the social medial part, and a lot of the older doctors don’t get it. Seriously, my brother still goes, “Oh my god, somebody says they sent me an email, what do I do?” It’s like, augghh. We can really use that influx of new information and new technology. Somebody who’s comfortable with that technology… that’s where you’ve clearly proven that to me. If you have good bones and you bring in new life, that’s absolutely gonna make that structure so much better.
GJ— Which is why I’m gonna allow you to do a little bit of a plug for what you’d offer somebody. I won’t offer that to a lot of people. The reason I offer that to you, and it costs me nothing to say this, is that you and your brother Scott have been so much better than many who would be in similar positions on paper in not being committed to resistance. There’s a real humility in your practice, and you can tell when you meet your team as well. It’s ok that we might be starting from here, and we’re gonna change, we’re gonna learn a little bit, and for that reason, if I were recommending...if I were at PCRS this year or MRS or ASRM, and I was talking to a fellow, and they thought, “Yeah, I wanna be in a small market or I wanna be in the southwest,” they have to talk to you, in my opinion. They at least have to have a conversation. I… given that you are not nearly as guilty of resistance as so many people out there, you’re so open, I think it’s worth it. I want to give you a minute to talk about how you would envision that model going if a new doctor is listening to this at some point in the future.
HH— Yeah. Well, ok, so our plug… we are. We are not resistant to change. We have been doing this for, like, 24 or 25 years. My brother and I have managed to work together for that long without really having major fights, so that’s been pretty cool. For us, we’re looking… we have been in this community and we really value the field that we’re in. So we really want to bring somebody else in who would have that same kind of place, that same kind of value in being… we’re not a huge market. It’s a really wonderful market. The sun shines most of the time, we have a really beautiful downtown, we’ve got a lot going for us. We’re closely located to major airports and big cities and all of the amenities, we have. We are part of the university system ourselves, and my brother trains other resident physicians and OB-GYNs. We have a great marriage between clinical practices on the outside and being able to have that relationship with a large university center. We have all that going for us. But more importantly, we aren’t looking to make a killing on this. We want what we’ve established to go forward. We have a beautiful building, whether the partner wants to take that on or not would not matter. And we’re really open to change. We want to bring somebody in who has some new ideas, who wants to do things in a different way. We would look forward to that, because it would be exciting to watch them take it over and make it into what they want it to be themselves. They have the advantage-- we learned a lot the hard way over time. We are not highly leveraged-- we have no debt, with the exception of very small amount on our building, so we are looking for somebody who we can help them get the business to where they wanted it and they would have the advantage of having somebody who’s really good at what he’s doing be with them for probably the next five or six years. If there’s anybody who’s listening to this who really wants a really great quality of life, not be burdened and be able to leave the office and get on your bike and go bicycle anywhere, go hike wherever you want to with your kids after you pick them up from school on the bus, give us a call! We’d be happy to talk to you!
GJ— At the very least it’s worth a conversation, and worth mentioning that Tucson is a cute little place. Nice weather, good quality of life…
HH— It’s not cute! Come on, Griffin… it’s not cute…
GJ— You don’t think so? I think it’s cute.
HH— I think it’s very beautiful.
GJ— You got that right. The scenery is very beautiful.
HH— The sunsets are great.
GJ— the drive up to Phoenix with the sunset is worth it…
HH— We’re an hour and a half from Phoenix, we have a really great airport, you can get anywhere. Our metropolitan area is over a million and a half people. We’re not that…
GJ— I could probably have another episode that’s just about quality of life. I’m trying to give a TED talk about something similar. Being from Buffalo, I’m really biased toward small markets. If you’re a top 20% wage earner in a small market, you’re freakin’ royalty. It’s a good life. Tucson just happens to have that plus the gorgeous scenery and weather. Holly, I’m gonna let you conclude. Is there anything about key performance indicators for partnership tracks or even salaried physicians… just when these relationships are forming that you’d like to conclude with?
HH— I think going into it, just everybody put their cards on the table and really have some frank discussions about what’s expected and what isn’t. What everybody wants and what they want out of it in the end. I think as long as everybody’s up front ahead of time, and you pay attention, get an attorney involved if you really don’t understand contracting- it needs to be drawn up so it’s as watertight as it can possibly be for people. Pay attention and really think about how… I think especially for people coming into it, new people coming out of fellowship, think about what you want out of life, how you want your life to be, and look for that kind of practice, look for that kind of opportunity along the way. This practice isn’t for everybody, but I think there are a lot of people who would find it attractive.
GJ— Amen. Holly Hutchison, thank you so much for coming on Inside Reproductive Health.
HH— Thank you, Griffin, I appreciate it!