Like all relationships, that between an established cosmetic surgeon and the physician he or she hopes to someday take over the practice takes work. That work, according to Oklahoma City board-certified cosmetic surgeon Erik J. Nuveen, M.D., D.M.D., includes psychologically preparing for the partnership and ultimate transition out of practice.
Dr. Nuveen knows from the perspective of the physician coming in, as well as the surgeon taking on new partners. After finishing his AACS-accredited fellowship, he joined and ultimately bought out a solo cosmetic practice, partnered with a surgeon and quadrupled the previous practice revenue into a $4 million dollar business in less than three years. He talked about successful strategies for practice transitions in January 2016 at the annual Scientific Meeting of the American Academy of Cosmetic Surgery.
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It Takes More Than a Handshake
NEXT: The Right Frame of Mind
The Right Frame of Mind
“The first thing is a conceptual understanding of the mutual goal of success. How we define success of the relationship, and how the partnership and, in many cases the buyout, really is from each perspective,” Dr. Nuveen says.
Sounds logical but implementing the thought process can be challenging. Physician owners, according to Dr. Nuveen, often come from the viewpoint that they’ve worked their butts off for sometimes decades, and put in the sweat equity for a practice’s success. They’ve gone through the battles of developing hospital relationships, hospital privileging and all the thousands of patients that have come and gone.
“The understandable value and equity in that is astronomical. But that is the greatest challenge that I have encountered in dealing with these many developing relationships. It’s the ego,” Dr. Nuveen says.
That attitude might prevent a physician owner from the important perspective that bringing in a surgeon who might eventually take over the practice brings hope and lifeblood into the practice.
The benefits of a good partnership reach far beyond financial, according to Dr. Nuveen. A solid relationship helps to ensure that staff will remain employed, for example.
“Many of us feel very close to our staffs, and we feel a responsibility for their economic well-being. To find a person to carry that into the future in the evolution of the practice I think really is important,” Dr. Nuveen says.
Having the right frame of mind takes a certain level of maturity, according to Dr. Nuveen.
“When we just get out of residency, we want to conquer the world and take on the most challenging cases and prove ourselves to our patients and ourselves. Ultimately, there’s a point of maturation where we cross a line and realize, you know what, doing one more breast augmentation probably doesn’t make that much of a difference. And that’s the point [at which] we need to address the consideration for a transition plan. So, first we have to be in the right frame of mind to consider it,” he says.
Physicians who are long-time owners of established practices also have to be willing to give the new doctor opportunities for independence.
“Although it’s a mentorship relationship, initially, the new doctors have to feel the strength and independence that’s available to them. Otherwise they feel no autonomy or fail to develop the confidence to carry on after a doctor has retired,” Dr. Nuveen says.
NEXT: Mutual Benefits
Private practice was the way to go in the past, according to Dr. Nuveen. Physicians would finish their training, find a location (typically where their spouse wanted to live), and they’d meet with retirement-ready doctors in town.
“And they would decide which one of those elderly doctors that they would join or buy out. A transaction would be agreed upon. The old guy would typically phase out over a period of one to three years, and the younger partner would take over,” he says.
It’s different now. Today’s cosmetic surgeons have more options — from joining a hospital as an employee, to opening a practice, to joining a practice, with or without the option of purchasing it.
“If they join a hospital as an employee, they get income guarantees and can set up anywhere they want — right across the street from the busiest office in town. There’s essentially no risk,” Dr. Nuveen says. “What this comes down to is, why in the world would anyone buy a practice?”
They have to see the value, he says.
“In the current environment, we have to prove ourselves as valuable to these candidates, and we have to think about a lot of things,” Dr. Nuveen says.
The associate looking to join a practice, would find value in the security of being part of an established practice and be incentivized by salaries and a bonus structure that are usually higher than what a local hospital will offer, Dr. Nuveen says. It’s also enticing to many who are new in medicine that there’s a ready-made practice infrastructure, with an office manager, office and medical staff, equipment, facilities etc.
Cost of living is another important factor to many doctors interested in taking over established practices.
“Cost of living might be a factor for me in Oklahoma City. That’s an extremely desirable feature that we can speak strongly for… Versus Manhattan, which would have a tough time advantageously arguing about their financial cost of living,” Dr. Nuveen says.
On the other side of the coin, a potential new doctor might offer an established practice expanded techniques and services, as well as become an intellectual colleague.
“There’s a joy in the transfer of experience to a young person, as a mentor. They can elevate the bar of quality within the office,” Dr. Nuveen says. “If you’re isolated and insulated within the walls of your own practice, it can sometimes lead to stagnation and complacency. So, all of these things can be enhanced by the new doctor. New blood is not just a source of revenue, but also a source of transition toward the future.”
If the doctor wanting to join the practice is fellowship trained, all the better for the future of the practice, according to Dr. Nuveen. It adds a competitive advantage to the practice and in the transition of that practice, he says.
NEXT: It Takes More Than a Handshake
It Takes More Than a Handshake
Going into a partnership in practice is a business deal, and it needs to be treated like one, Dr. Nuveen says. Doctors who are transitioning out of practice need to have a plan, including a start and finish date for bringing on the partner and transitioning out of practice.
Methods of assessment are important.
“Statistical and professional goals need to be evaluated periodically and consistently. Monthly, quarterly and ever biannually and yearly evaluations are necessary to determine if we are on par with our mutual goals established prior to associating with the practice,” Dr. Nuveen says. “And those things have to be stated up front in a contract.”
Yes, a contract.
“A lot of physicians, especially the older group, are not used to the intricacies of contractual negotiations. They’re used to a handshake,” Dr. Nuveen says. “Unfortunately, that doesn’t butter the biscuit. So, when I’m talking to an audience of doctors typically considering this transition, I really want to hit them between the eyes with the idea that everything must be written down. You have to cover key elements of the relationship that are documented, so people know what the guidelines are. Without guidelines, people are lost.”
These plans and expectations include such things as establishing, participating in and integrating with residencies, medical schools, dental schools, nursing schools and more.
“If the senior doctor is doing that, he may expect it of his new partner. If it doesn’t happen, it can be a source of consternation and a source of eventual demise of the relationship,” he says. “Maintaining these established goals, I found, is the single most critical element of the successful transition.”
Using these strategies to build relationships has allowed Dr. Nuveen to evolve and better understand the nature of relationships among physicians, he says.
“The value of the relationship … is looking at a new doctor coming in and knowing that they’re going to carry the torch,” he says.