Being a doctor is a dream job — exceptional pay after years of study and hard work, revered in their community for saving lives. But behind the esteem and financial rewards, there is a business to run, with large outlays needed for staffing, office space, surgical suites, and insurance – all on top of the mountain of debt accrued to get through college and medical school.
Dr. James Chao, who leads San Diego-based Prime Aesthetics Group , saw a need to solve this problem for his company and especially for younger doctors coming up through the profession. How do you stay focused on patient care while finding the time and financial resources to build a practice and pay the personal and professional bills it takes to keep that practice going?
“The landscape of private practice has changed dramatically over the years,” Dr. Chao told California Business Journal. He goes on to describe a model that is broken. The current model looks something like this: a senior practitioner brings on a younger doctor and builds a succession plan. Sounds simple. The challenge these days is that with student loan debt in the hundreds of thousands, sometimes over half a million dollars, young doctors cannot afford to service debt and buy into practice at the same time.
Why not just go to a bank and take out a loan? Or work with a private equity firm? A standard bank loan would just add to the financial stress, and private equity is looking for a large stake and total control in the business in exchange for financial backing.
Three years ago, Dr. Chao and his Co-Founder George Scopetta found a better way and began to grow from one practice to a group of practices spread across the country from California to Washington, D.C. Through the various practices, Prime Aesthetics Group offers best-in-class surgical and non-surgical cosmetic and dermatological procedures.
What Dr. Chao and his business partners have built is nothing short of a new model for growing and passing on medical practice. “If we achieve that, and we have good business metrics behind it, we will be very, very successful,” says Dr. Chao. “And we will then be able to create a new way of transitioning our practices to the next generation.”
Dr. James Chao of San Diego-based Prime Aesthetics Group Instead of the traditional path of borrowing and business succession, a better route was found through White Oak Global Advisors. “We didn’t want to take a large equity investment from a private equity firm because we wanted doctors to retain control of their practice,” Dr. Chao says. “In contrast, we were able to begin our relationship with White Oak by aggregation of several practices through alternative debt rather than traditional private equity models.
Access to capital, along with access to experts across the country, enables Prime Aesthetics group to offer clients who are used to a high level of care in every aspect of their lives to exceed those high expectations. Through White Oak, Prime Aesthetics Group has acquired eight practices, including NassifMD Plastic Surgery and Med Spa, from the E! reality series, Botched , run by Dr. Paul Nassif.
“Since launching Prime Aesthetics Group three years ago, our vision was always to create a coast-to-coast operation, bringing unparalleled business acumen, innovation and obsession with patient care to the entire country,” Dr. Chao says. “We’re thrilled to be fortifying our partnership with this truly iconic practice, which fits perfectly into our overarching strategy.”
Why wouldn’t Dr. Nassif just take his personal fame and run with it? “I was looking at several opportunities for taking my practice to the next level,” he says. “But the others were from private equity, which meant giving up some control. The biggest thing that led me to Prime was being a partner, not an employee or an over-scrutinized subject of someone’s investment.”
Independent but interconnected practices mean collaboration is possible. “For example,” Dr. Nassif says, “if one practice has hyperbaric oxygen chambers, I can send a patient there. It’s a benefit to the patient and to Prime.”
In another example of how this collaboration works. just after our interview, Dr. Chao made his way from his San Diego office to the Beverly Hills office of Dr. Nassif. Together they were consulting with a patient who was looking for facial work – Nassif’s expertise – as well as bodywork.
Paul S. Nassif, M.D. While the relationship between NassifMD and Prime is new, the symbiosis is already building. Dr. Nassif has a line of cruelty-free skincare products known as NassifMD Dermaceuticals®, leveraging his knowledge of the skin layers to develop science-based skincare. “I see a lot of potential for co-branding and offering this line across the Prime Aesthetic Group practices,” he says.
Prime Aesthetics will be expanding where elective cosmetic surgery and dermatology services are most in demand. Letters of intent are signed for practices in Miami and New York City, along with others in California’s Bay Area.
The offer of independence, along with the financial backing and collaborative potential, is compelling. “Right now,” Dr. Chao concludes, “we have a line of $150 million to be able to deploy for purchasing practices, offering talented surgeons a combination of funding and freedom.”
Related Posts
