How To Exit with Robert Singer, MD (Ep.146) - a podcast by Catherine Maley, MBA

from 2022-03-30T02:47:57

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Hello and welcome to Beauty and the Biz, where we talk about the business and marketing side of plastic surgery to get practices more patients and more profits. Today's topic is, entitled, "How to exit"; presented by Robert Singer, MD.

How To Exit with Robert Singer, MD

Few surgeons are as respected by their peers and as esteemed by their patients as Dr. Robert Singer. He's the former president of The Aesthetic Society, the California Society of Plastic Surgeons, the Aesthetic Surgery Education and Research Foundation, the American Association for Accreditation of Ambulatory Surgery Facilities, the San Diego International Society of Plastic Surgeons, and the San Diego Plastic Surgery Society. He also currently serves as the current president of the American Association for Accreditation of Ambulatory Surgery Facilities Educational Foundation.

Dr. Singer has had a long and distinguished medical career since going into private practice all the way back in 1976! He lives and works in the health, beauty and wellness mecca of La Jolla, California.

Robert Singer, MD is an internationally renowned lecturer, author, and plastic surgeon. He's the former chief of plastic surgery at multiple hospitals, as well as holding other titles and honors.

Listen in as Dr. Singer shares with you what you need to know, so that you have an exit game plan for your practice. Don't wait until it's too late! You need to start considering and preparing for this eventuality now!

Learn more about Dr. Singer at: https://www.primeplasticsurgery.com/

 

📲 P.S. If you’re thinking about making a change and could use a different perspective, let’s talk. Schedule a Free 30-Minute strategy call with me at: https://www.catherinemaley.com/free-strategy-session/

📖 Get a Copy of Catherine’s FREE Book: https://bit.ly/3GuAJqc

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Enjoy and I look forward to your feedback –

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How To Exit with Robert Singer, MD

Transcription:

How To Exit with Robert Singer, MD

Catherine Maley, MBA: Hello, and welcome to Beauty and the Biz where we talk about the business and marketing side of plastic surgery. I am your host Catherine Maley, author of Your Aesthetic Practice - What your patients are saying and consultant to plastic surgeons to get them more patients and more profits. Now, this is a very exciting episode because it's Dr. Robert singer of La Jolla, California.

 He's a plastic surgeon and this is actually his second appearance on Beauty and the Biz. And he's the first one I've had on twice because he has such darn good Intel. So, Dr. Singer has been in practice since 1976. And for those of you who are tough with the math, that's 46 years in practice, and he's an internationally recognized plastic surgeon and respected by peers and patients.

Now he's held positions on the board of several distinguished plastic surgery organizations, most notably The Aesthetic Society for Plastic Surgeons. Now, since a lot of surgeons, I close to we talk and lately at the last couple of years, we've been talking, we used to talk about how to get more patients, how to grow your practice.

And lately the conversation seems to be turning to how do I walk away from this profitably? Or how do I exit, or what are my options. So, I asked Dr. Singer about his exit strategies because he knows everything about everything, and he agreed to come on Beauty and the Biz and share the various options available to you as well as how he personally is handling it.

So, Dr. Singer, thank you so much for being on Beauty and the Biz. A pleasure to have you back again.

Robert Singer, MD: Thanks, Catherine. And it's a pleasure to work with you working in the past with you. It's been very productive. I would say. All plastic surgeons or anybody in practice really to avail themselves of the expertise of, of patient and practice consultants because most of us don't know what we don't know.

And I think that the consultants bring a lot to the table. So, without further ado and thank you for that introduction I'm going to share my screen and bring up.

Catherine Maley, MBA: So, if you're listening to this on the podcast, I, after the podcast, I have a video session on a, on a Saturday. So, if you're listening to the podcast and you want to see the screens, look for my next email, where I'll be talking about our video, and then you can see this Dr. Singer slides.

 Dr singer take it away.

Robert Singer, MD: For those Who are unaware of who I am, it's kind of irrelevant, but these are the things that I've done. So, I've had a lot of experience in plastic surgery and also fortunately in business. And we're going to talk about what's my exit strategy. So, no matter. Where you are in your practice, whether you're starting and you're building a practice, you need to think about the exit too many people wait too long to try to figure that out.

And then their options are limited. So, before you go riding off into the sunset, You need to think about what are your future plans? What are your goals? If you're going to go to something you want to make sure that you're going to go to the right things and you've identified that, so decide what your objectives are.

Do you want to stay involved in the practice or in plastic surgery in some way? Do you want to just extend your exit ramp until you gracefully decide you want to stop? You have other business ventures that you think we, that you want to do either in conjunction with practice or alone

and do things you always wanted to do remember, think about that bucket list that you haven't been able to do. Do you want to teach, do you want to volunteer locally, nationally, internationally? And we, we, my family and I have been able to do some of that. Do you want to try? To learn for or to teach you just want to enjoy life.

But think about that and that'll help you make your decisions. Don't wait to start planning. You want to start now? It's not too early to start planning, no matter what level you are in your practice. So, you have your vision. But you need an, a strategy need to prepare, have a process, execute, evolve in the result.

And then you have the transition dust doesn't happen overnight. You need to create a timeline for your goals, and you'll be a huge step closer to achieving them. But you have to think, do you have enough to retire? Is that, I mean, you may want to retire. Can you retire and live the life that you want to live?

You don't want to be in this situation. I've just done the math. And based on my calculations, I can retire about five years after I die. I've seen too many people in different businesses and that situation, remember that a goal without a plan is just a wish you need a plan. So, you've got a facility. You may have an Orr.

He may have a building. You're thinking, okay, am I going to put it up for sale? What am I going to do? You need consultants? You can't do this by yourself. You need someone as an exit strategy consultant. Somebody can evaluate the practice. Give you an idea of what it's worth and what reality is. You need an attorney to go over all the forums and whatever arrangement you make.

They need to finalize it because you'd be surprised what are in some of these exit clauses. And you need a financial consultant, essentially, a tax consultant to tell you, okay, here's how you can maximize the benefit. Here's what you're in for here are the loopholes here in the problem. So, an extra consultant, should you need to define the scope of his or her services?

Are they going to provide a promotional package to get it out, to sell it? Are they going to vet and interview individuals coming in to negotiate with potential interested parties, whether you bring in someone, whether you sell it, whether you close the door, what are you going to do? You need a non-disclosure and non-compete agreements.

If you're bringing in additional people, you need a letter of intent, a buy sell agreement, a consulting. Physician employment agreement. You may not need all of these depending on which options you take, but these are the scope of services that they can and should provide. Remember that the person as an exit strategy. In some ways may have a little conflict of interest because they're interested in sewing and getting their fees.

So, you may want to have an independent person do the valuation of the practice. On the other hand, if you find an ethical, solid person for an exit strategy, they can do both. Patient notification letter, if you're CCing practice or you're transitioning and staff termination and transition letter, if they're going to be involved in a new entity, whether you're involved in it or not.

So, these are the things that they can provide. Now. Consultant fees depend on the scope of services evaluation. The plan. Are they going to handle the tramp total transition? Are they just going to consult for you and they're going to promote it? There are variations. They may do an hourly, maybe retainer up front and maybe one time all-inclusive or a commission percentage on the total sale. If it's a sale or the transition.

Catherine Maley, MBA: Is there one that's more popular than another with the surgeons that you've noticed?

Robert Singer, MD: I think it depends on the surgeon. Every, every surgeon has a little different approach and what they're comfortable with. I, I arranged it. So, there was a retainer fee. They produced a video of the office talked about it, put it out there.

We had a fair number of individuals who responded. They were very good. And then they took a percentage of the final amount and that worked fine. Hmm. So, you need a business event, a valuation, what is it worth? If you wait until the end, you may be shortchanging yourself. But that encompasses a lot of different things because what you think it may be worth, may change and it changes with different economies.

So, the fair market value, there's the price you want. And then there's the, really the reality of the value. And there's no absolute fair sales price. You have to look at tangible asset valuation, you know, what, what, what are the instruments you use? What are the machines you have? Do you own the facility?

Do you own the old, or do you own the equipment in there? Or are you just leasing it do you have, are you just renting the facility? Those are the solid asset valuations, and then the intangible assets like Goodwill. And let me tell you, that's very intangible Goodwill. Changes a lot. It means different things.

Goodwill doesn't carry the same weight that it used to. And a lot of your patients, if you're not staying on, they came to you because it was your name. They may not stay. So that, that has to be figured in, in anybody looking at the value of this also, how much of this is upfront cosmic. Versus insurance billing, how much is collectible of that?

So, there are a lot of things that go into evaluation of the value of your practice. And there are a lot of different formulas to derive at value. I think those are the things you talk about with the consultants. All formulas may not work, what people used to get in the past for a practice. They may not get any loader.

So, your tangible ad sets. If you have a surgery center, this isn't mine, but you had a surgery center. If this is your office. This is another surgeon's office, beautiful office in in Utah. Your equipment, your, your, your lasers, some of it may be outmoded. Some of it may need maintenance.

Some of it may or may not use anymore. So, it's not only what you paid for it, but it's after depreciation, what it's worth and what would it cost to replace that? Do you have it all? Those are your tangible assets and the intangible or Goodwill when selling your business your charts, how many will stay with them or you that's another question.

And there's a difference in the Goodwill. If you are going to stay on, or if you're not going to stay on and you're leaving and you're just turning over the keys to someone else. The thing you need to do before you start doing it, this, you need to get your own house in order. You need to make sure your fine art, financial records are appropriate.

That they're clean, that you have them. Somebody can look at them, breakdown of income and a breakdown of expenditures annual procedure volume, and comparison with others in your region. And maybe nationally, your management reports, your KPIs your billing processes, who does that? What's your collection rate.

All of those things are important to look at and you know, if this is your office, what do you need to do? Is it a fixer-upper? Do you need to do a lot of things before you put it up for either sale or transition? So, you get maximum value. Is it worth repairing to add value before marketing the practice or is it not, and there's no right or wrong answer to these?

You'd have to answer these things for yourself. So, what are your options? And this is the dilemma you're scratching your head. What should I do? You can merge practices with another practice in your community. You can close the door and sell a physical asset.

You can sell it to an. Practicing and your community. You can sell it to a nearby practice. You can sell it to a group. You can join the group. You can bring on partners who can buy you out an option. You can sell it to a hospital. Most of the people I've talked to, who've sold it to hospitals. Regret that decision because.

You're captured. You can't go back to practice. You have nothing to go back to. They suddenly changed what your reimbursement is and you're not in control of anything.

You can sell it to a private equity group and still practice. That's one of the things I did and they bought other practices. We brought in other surgeons and not only in this area, but across the country, that's very different from selling to. A VC group, I won't say venture capital side vulture capital, because essentially that's what most of that is.

And although that may have worked in other specialties, it historically has not worked in plastic surgery to different time. And I think private equity is interested as long as physicians are running. I think that the models and orthopedics and ophthalmology and term don't necessarily work for plastic surgery, but it's an option.

So financial consultant, you need that. You're going to sell this. Okay. If you get a certain amount of money, what are the tax implications? How do you want that structured? How much do you want structured for Goodwill? How much do you want structured future payout? How much do you want private equity going forward?

So, all of those things, you really need a consultant because I doubt any plastic surgeon, I'm talking to out there can give good solid answers of the best way to do that. How do you fit into that puzzle? If you bring in someone or you're going to sell it or you're going to stay on, does that really work?

Is it a good match? And if you're going to do business with someone else, you have to look their ability, their talent, their attitude, their skills. No how their potential, remember everything in life, whether it's personal or business it's about relationships. Is this really going to work? Are you a big comfortable in it or are you going to resent it, do that homework and check that out ahead of time?

And what's the brand image that's going to be there. Are you going to be comfortable? Is it very different from the brand that you have? Is it something you may be different, but you're going to be happy with, if not, that's not the best option for you? So, adding associates and many do this, sometimes it works out.

You need a structured plan. Are they going to be on salary? Is it going to be revenue sharing? What's going to happen before a partnership, if there is a partnership and what's the buy-in to a partnership, what period of time? Is there a buyout, if you want to exit, what are they faced with? Can they afford it?

Those are all things you need to look at. When you add associates, it's like getting married. You're going to spend a lot of time with those associates. You better make sure you're going to be happy with that. And then what if, what if it doesn't work out? So, you need to be flexible. What you think your plan is.

It may change as time goes on, or that association didn't work out or that partner went off on their own. So, you need to have several options to be flexible and realize that your ideal may not work out. And remember the value of money today is different from what it was before. And it was good. It's going to continue to change as the economy changes before you turn over your keys to somebody, make sure that it's what you want and it's what you're going to be comfortable with.

So, you're not going to have seller's remorse and then you can change your... To retire as someone else. No business, no deadlines, no phone, no email, not my problem. Now that's not for everybody. A lot of people want to stay involved. I personally wanted to continue to stay in the practice. I wanted to continue cause I'm still involved in a lot of task forces in state nationally, internationally.

And That's important to me. So just walking out into the sunset and just playing tennis or just surfing wasn't the answer. But it's different for everyone. So, find what you want to do, but do it early enough that as things change, you can adapt and modify but have a plan.

Catherine Maley, MBA: That's great Dr. Singer.

Several times. A surgeon has brought in an associate and I've heard that like, cause I've been at these 22 years, so I've heard quite a bit of what goes on. And the surgeon said he was going to retire and then D and the associate any, he texts on another five years, another five years. Like he just, I think mentally you have to know yourself.

Are you going to be able to walk away? When it's time.

Robert Singer, MD: Yeah, I think everybody's different that way. You know, my, my exit strategy has changed through the years. My, I keep moving the goalposts but I know that for me, just totally walking away without some interest continued in plastic surgery was not the answer for me.

And I have a lot of other aspects in my life that are important, but there are also things. Develop like the health of your family that may change things. You know, I'm blessed with a better two thirds, Judith, my wife but she's developed some illness and that changes your plans. The community changes international situation changes your, your health may change where you think, you know, I'd like to do these things.

My, my wife's advice was great. Judas says I never want to look back and say, I wish I had done that. So don't put off doing the things you want. Getting back to associates the, you know, I, I would say by and large, some of those relationships work. That had been well-structured ahead of time.

And everybody knows what they're getting. I would say more than 50% don't work out because the expectations were unrealistic. And I think it's like handling patients for surgery. It's managing expectations on both sides. Got to be honest with the person that who's coming in and you have to be honest with yourself and that should all be laid out ahead of time.

Otherwise, it won't work.

Catherine Maley, MBA: I think it's actually higher than the divorce rate, because I don't think you have the mental mindset to hang around with an associate and you don't want to be with, you know, like, I think you have a less tolerance for it. I just haven't seen many that have worked out super well.

The ones I think have worked out well are when they had serious bounds. Like one does neck up the other does neck down, you know, it's really clear who's going to do what. But I wondered that I just wonder what is the easiest way to exit profitably? Because I have interviewed a few doctors to find out how they did it.

And surprisingly, the plastic surgery, part of their practice was not as valuable as their nonsurgical predictable revenues. And if you start looking at that, that actually makes a lot of sense because there's a lot more certainty. In like the nonsurgical med spa services, because the patients weren't really hanging around with you anyway.

It's more predictable and that's actually quite frankly why I came up with the kiss love because loyalty club, because I don't think gain weight if, if you're, if the value is not in the plastic surgery, where is it? And it's right. Like, it really kind of made sense. So, a couple of doctors said I didn't buy the surgical side.

I bought the non-surgical side. Isn't that interesting?

Robert Singer, MD: It is. And the other aspect of that, where it may be valuable is if they they've owned the building or they've owned the office property, and that may be more valuable for practice itself, but nobody's in that situation, that's fine.

Catherine Maley, MBA: But would you recommend like somebody getting started or just newer at this to buy some real estate?

Robert Singer, MD: I'm not going to be in a position of telling people how to invest their money, right. At this moment. Real estate seems like a reasonably good option. It always isn't. The other thing one has to look at, especially if they're starting. You know, how much debt do I have? Can I afford more debt? Do I want to compromise my future lifestyle by building a facility?

And I'm then locked into paying for that? My own surgical facility almost since I started practicing, although I'm on the campus of, of Scripps Memorial hospital, I'm involved in the hospital. I can't conceive what it would be like not having the facility. We didn't have to shut down when the lack of things at the hospital were shut down and I'm still on surgery, supervisory at the hospital.

So, I respect what the hospital has to do. But it gives you a lot of freedom to have your own, but it's also very expensive to run you. The more personnel you have. I always say, as you increase your staff arithmetically, you re increase your aggravation geometrically, and that's getting harder and harder in today's world.

I, if I was starting to do. When I build my old facility, probably not, not until I had an active, good practice going that was going to pay that overhead. And I would tell you also, if I was just coming out of a residency or fellowship, I wouldn't want to learn on my own dime. I've learned on somebody else's time.

I'd learned about business by joining somebody at least initially to learn the business.

Catherine Maley, MBA: That's a good point. Another thing that has come up, and again, you have to know who you are and what your tolerance level is. So, some of the surgeons have sold to a hospital and I said, how long are you staying?

And they said, well, I'm in for three years now, all of a sudden over. They went from running the whole show to being an employee and they don't run anything. And that sounds fantastic initially, like, oh, thank God. I just have to do surgery. I don't have to do the marketing deal with the staff, but then some of them had had trouble with that and saying, wow, I'm just watching.

You know, crucifying my practice. Any thoughts on that?

Robert Singer, MD: Yeah, I think most of the physicians I've seen have that situation resent that they made that decision. They can't control the marketing; they can't control the service. They can't control who takes care of the patients. And then the hospital may make a whole different decision.

Cutting you out of it. You have, you've been the captain of your own. Right. We're used to doing that and you give that up and that's okay. Some people can do that. And there are a number of people, significant percentage of plastic surgeons who find that emotionally disquieting.

Catherine Maley, MBA: The whole control issue, for sure.

So how, how, what is your situation because didn't you sell? Who did you sell to?

Robert Singer, MD: I sold to a, an MSO, a medical service organization that had a couple spas and one other office bought a practice of very busy plastic surgeon in the community. I brought in another surgeon who was very busy, didn't have his own or never using our joint or here and another surgeon.

So, they're four people now who use the two hours and we have two others in practice, two other individuals in the practice who have just signed a letter of agreement to join prime. And as I say, we have. Black practices and other communities, including on the east coast and others in Northern California.

So, it's a different arrangement because although there is a primary financial individual who has been very successful in other ventures and critic real estate his main associate who was involved in the venture was a plastic surgeon. So, the decisions are, and I'm. Theoretically the chief strategy officer.

So, there are a lot of the things that we bring to the table having run practices for a long time, that somebody as a venture capital group would know cause they would do it not from the point of view of service of the patient and what's best in a practice. So, I think it requires the combination of both.

That's why most practices. That have just sold to a venture capital have not worked out because they have a totally different model. It's only about the bottom line. It's not about taking care of the patient. So, I think you need to look at that. There are some people that are happy with that. I'm not saying what's right or wrong.

You have to look inside yourself and say, okay, what am I going to be comfortable with? What am I not going to be comfortable with?

Catherine Maley, MBA: And now are you still practicing within this new agreement? Arrangement.

Robert Singer, MD: Yeah. I'm not doing another facelift till tomorrow morning. Yeah. I'm practicing that. And you know, as I say, I'm still very involved in, in the organizations and lecturing and also in training staff as they come through.

As we've needed more staff of what we expect, what is the brand? What's the image because you want, you're only as good as. I'll say it again. You're only as good as your staff and they have to reflect what your image of the branding is. Whether you join a group and you're going to have multiple offices, you need to have some consistency of that brand.

If that brand isn't comfortable for you.

Catherine Maley, MBA: Talking about staff. What does happen when you decide to exit it? Is it typical to agree or in your negotiations? Keep the staff there or just let everyone go and give them a severance.

Any thoughts on that?

Robert Singer, MD: I think there are multiple different ways to do that in attorney is best for that.

If you have a for example, a C Corp and you want to shut that down to something, to an S-corp or something else, you may want to terminate employment with the idea that they will be hired by the new entity because you know, they're, they're, they're. Buying your liabilities, they're buying your assets.

And so, they're always destructure that, but you need to look carefully and you have to have a full understanding if you're going to sell it, you know, what are they buying? What they're not buying? What are the arrangements for the staff? Are they going to keep them all? Are they going to let some of them go?

But those are all the types of things you need to negotiate ahead of time.

Catherine Maley, MBA: Well, just overall, just the years of experience I've had anecdotally in your practice is never worth as much as you think it's, it is, you know, they're, they're just two very different numbers. The, the number you think it is, and then the number the other party thinks they should be, you know?

Robert Singer, MD: I think that's very true.

And what Goodwill and what practices used to sell for. Right. It's different today. It's a different world, different economy. I, and I, as you know, I lecture a lot about practice management and I, one of the things I talk about is, you know, you're, you're doing. Piecework is a plastic surgeon, you know, and you're a glorified tailored some ways.

So don't get carried away. You're not a rockstar. And once you start believing your own PR, you're going to be in trouble. So don't believe that because you're not going to be worth what you think you are.

Catherine Maley, MBA:

That's A really good point. Yeah. All right. Well, I, if somebody was to have a question for you, I'm afraid to ask, to give them your information.

Cause I don't want you to get bombarded, but if they did have a question for you, I want to talk to you. How would they reach out to you?

Robert Singer, MD: They, they can, they can contact me through the office and they, they call the La Jolla Prime office and that's 8 5 8 4 5 5 5 2 1 4. And I can tell them, here are the people that I used that worked well and uh, here are some other options for you.

But you know, as I say, don't wait until your last six months when you want to walk away or your last year, or even your last two years, no matter what level you were at, start thinking about it. Now you may want to alter it as you go along. You may not do that, but at least you thought about what am I going to do down the road?

Catherine Maley, MBA: Please think about it 10 years before you're even considering exiting, because it takes a minute to figure all this out and to build up your assets and get your money straight, get your accounting straight, get your legal straight, get your processes and systems in order. It's a much bigger deal than you realize.

So, if anything, I would, even, if you were thinking about retiring. 10 years, I would at least have a consultant come in and just take a look and see like right now, like, or study it, go online, Google it, you know, how much is the practice worth and find out what is valuable to somebody else, because it might not be, you know, as valuable to them as it was to you.

Okay. I think that's it. I really appreciate your time, Dr. Singer. Thank you so much. And everybody, if you got a lot out of this, please head over to Apple Podcasts and give us a good review so we can share this with other surgeons and get a better reach. And if you've got any questions for me, you can certainly leave my website at www.CatherineMaley.com or you can DM me at Instagram @CatherineMaleyMBA.

Of course, please call or text me if you need clarity or want to learn more about how to exit your cosmetic surgery practice.

Catherine Maley, MBA • Author, Your Aesthetic Practice • Cosmetic Patient Attraction AND Conversion Specialist

Catherine@CosmeticImageMarketing.com

Cell/Text:  (415) 377-8700

http://www.CosmeticImageMarketing.com

 

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