So, You Want To Sell Your Clinic?

We talk with Mike Guelcher of Prism Consulting Partners about what really drives an ophthalmology or optometry practice sale and why “value” is not the same thing as the final price. We dig into the human side of transitions, the metrics that keep you ready, and how to approach exit planning so you choose your exit instead of the market choosing it for you.
• why practice valuation and sale price diverge
• the buyer ecosystem and why timing changes outcomes
• the three-part lens buyers use: financials, people, operations and systems
• what staff experience looks like after closing and why patient-facing roles matter
• how communication and integration touch-points shape team trust
• why seller mindset drives post-deal satisfaction
• treating exit prep as a 90-day habit and avoiding analysis paralysis
• how employee engagement and turnover can move profitability and valuation
• market demand tailwinds in eye care and investor interest
• direct primary care as an alternative model and when it fits
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Transcript

Welcome And Personal Leadership Habits

SPEAKER_01 0:00

Welcome to the show, Mike Guelcher.

SPEAKER_00 0:03

Thank you. Appreciate you having me on.

SPEAKER_01 0:05

Yeah. So for those that you don't know, Mike, he is a co-founder for Prism Consulting Partners. And he's graciously agreed to be my guest here today on iCare Leadership Live. So yeah, you know, I've started the show in different ways. Uh lately, I'd like to ask something that's not even business related. Yeah. So I guess I'll I'm going to just kind of improvise here. Like, what's something you're into lately, Mike? Like, what is something you're passionate about that's not business related? So we can get to know you.

SPEAKER_00 0:40

Sure. So when I'm not doing this, I'm very active in uh a leadership group in my community that's kind of disguised as a workout. You can look it up on online. It's called f3nation.com. They have workouts all over the country and they've they've spawned all kinds of different sites and places for people to go, become a better version of themselves is really what it comes down to. Leadership's a big thing for me. So when I'm not doing that, uh I serve on a board of directors for Let Me Run, uh, which is the basic equivalent of girls on the run for boys. And it really teaches them values like self-empowerment, you know, self-uh self-awareness, growing in your agency, teaching them a lot of skills that I think things like resiliency, just lots of things that are good to have in your tool belt, especially when you're navigating a world that's not always very kind. So to give those, to give those gifts to to boys at an early age and help be a vessel of providing that or enhancing that for them, hopefully beyond what they're getting in their homes, those are two things that occupy some of my time that I thoroughly enjoy. Uh, have been a coach in the program for almost a decade, um, runner myself from time to time. So casual, not as competitive as I used to be, but all those things contribute to uh to my pursuits when I'm not doing that or being a husband or father at home.

SPEAKER_01 1:59

So awesome. Yeah, that's that's great. Thanks for sharing that. I think it helps so much to get to know people on a personal level and uh kind of helps us know who the person is, you know, behind the behind the business.

From Allergan To Practice Acquisitions

SPEAKER_01 2:12

Right. But yeah, we're gonna talk about about practice selling here. And uh, you know, the the people that listen to this show are are in the ophthalmology community generally, and and um you've you've done quite a bit in the eye care business in your career, from what I understand.

SPEAKER_00 2:30

Yeah, yeah. So I I I was very fortunate. Um, and I guess if I'm taking the clock all the way back, this would be 2003. Um I think a lot of us get our start in our career, uh and we all do uh ultimately by somebody believing in us um and giving us an opportunity. Um, and so at the time, uh there was a company uh called Allargan, they're now a division of Abvi, um, 20-some years later, but uh they were a small eye care division and a big Botox company at the time. Uh and somebody decided and thought that eye care division could be something a lot more. And so when I joined that organization, we were launching a product um into the space called Restasis or a cyclosporin. And optometry was just drawn to that, to that product for a lot of reasons that in hindsight now make a heck of a lot of sense given how big and prevalent ocular surface disease is. So I spent over a decade in in that organization and increasing roles and responsibility, um, and just had the good fortune to meet a lot of really good people uh who invested in me, developed me, uh, sharpened me to get to a point where uh in 2014 found um, you know, after Allergan reorganized, uh, unfortunately, I was not in the future plan, but closed one door and it opened another. Uh, and so that door that opened uh was joining one of the largest uh private equity backed groups um in the country. Um when I joined the organization, was a part of a team that had about 70 locations. And through our collective effort, we grew it to about 850 by the time we departed in 2022 and learned a ton along the way. Uh, worked with some really great people, some really smart people um who taught me things that I didn't even think I was gonna learn. If you'd told me when I got in the industry in 03 that that was gonna be what I learned, I'd have said you were crazy. What is this stuff? Um, but I think it also speaks, Mike, to the rate of change that this industry has seen in the last couple of decades. Um, and and so hindsight tends to be a pretty good teacher when you reflect back on those things. So um since then, we've we've founded Prism in 2023 uh and believe that we could be a really valuable asset to uh doctors from an advisory perspective, having been through over 800 transitions ourselves. Um so that was the premise behind it was to help people get ready for that moment because we know how meaningful of an event it is.

SPEAKER_01 5:00

Okay.

unknown 5:01

Yeah.

SPEAKER_01 5:02

So yeah, there's no doubt you've you've had a lot of uh experience in that um acquisition and transaction uh process in the eye care in the eye care

Valuation Versus Sale Price Explained

SPEAKER_01 5:12

world. Um, you know, so yeah, let's start thinking about like some of the questions that that providers, doctors have, you know, when they think about, you know, the potential to sell their practice one day. And and probably the biggest one is how much money can I get for this? How much am I gonna get? And um, I don't know, you know, that that sounds like a really difficult question. I know nothing about this topic. And so, you know, if someone comes to you and says, hey, I don't even know what this is worth, I'm a doctor, I I see patients, and and you know, I know what what our AR is and stuff, and I know what we take in, but like I don't know how to value this business. So, like, how do you do you help do you help your clients with that? And what are how do they figure that number out?

SPEAKER_00 5:56

You know, you've if you've ever heard that the adage that the simplest questions usually have the most complicated answers, what you just posed is a great example of that. Um, we try to make that more simple, of course. Um, but as you can imagine, every business is unique, and and you've worked with practices over the years. If you've seen one, you've seen one. They they do not act, behave, think, have the same strands of DNA. They live and breathe in different communities. Um, and so to kind of overlay um, you know, another chessboard, so to speak, as we're helping clients get ready for that event, one of the things that's evolving at the same time that they're preparing for that exit is the ecosystem of buyers. And that's a constantly changing board. So it's our job to stay up to date on that. Now, the good news for us is that that used to be how we made a living for eight plus years. We had to know who was on that board, we had to know what was going on, and we had to understand them better than anybody because we were one of those people. So I think that's one of the things that when we survey our clients after they successfully make this transition and ask them, what'd you like about the process and things like that? That's what they tell us. They say, you know, you were one of them. So you understand. And yeah, and we do. Um, not everything, of course, but a lot of it. And I think that gives them a lot of peace of mind. So when we're trying to give them a sense for valuation, the first thing that we want to make sure that we're clear about is valuation doesn't necessarily equal sale price. That they're not the same. Um, because what we don't know until we get into the exercise and know what direction they want to go, frankly, um, is a couple things. Number one, who's interested? Number two, where are they in their evolution as an organization? Number three, how do they look at a particular area of the country? Maybe, you know, small town ABC is very appealing to a few, a few of those buyers and they really feel strongly about that market. Well, they may be willing to go above and beyond a typical valuation. To what extent, you don't know until you're into it. But those are some of the subjective factors that are constantly ebbing and flowing. And so it sort of backs up the adage that timing is everything. And sometimes you don't have, you can put it on paper and say the valuation is X, Y, Z, and that's totally fine. But they say, well, why did they put it at X? Some things that go on on those closed doors of investment committees, you know, until you've sat in them, you don't really know. And I think those are some of the subjective things that that factor into how they look at an overall picture. We've always tried to position it to our clients in three aspects. There's there's the financial part of the practice itself, there's the people aspect of the practice, and there's then there's the operations and the systems. And those three things are how a lot of this gets looked at from the inside because we've been there. Um, but those are the ways we try to provide our clients kind of a framework from which we operate and then go from there. Long-winded answer, but hopefully it makes sense.

SPEAKER_01 9:14

Yeah, no, it makes total sense, right? So the the value is really what someone's willing to pay, right? And um, and a lot a lot feeds into that, of course. Um so you know, you brought up you brought up the people aspect, and as an HR person, you know, I think about that. And I'm sure that a lot of practice owners maybe struggle with the idea of losing control over the people aspect of their of their clinic.

People And Culture After The Sale

SPEAKER_00 9:44

Yeah.

SPEAKER_01 9:44

Um, is there any way to to continue to exert that control, or is it kind of a given that you're just gonna lose a measure of control there? And is there are there reliable ways to know if the partner you're planning on working with is gonna share the same values as you when it comes to people?

SPEAKER_00 10:04

Yeah, I I think it's important as we're answering this one. Um, guide me in reverse order here. I want to start with your last question in terms of what does life look like for them after the sale? Right. I mean, that that's kind of in essence what it is. So yeah, I the one of the things that's pretty common to most um to most buyers is that they're gonna want to have anybody who's in patient-facing activity be around after the sale. So if they're in those those roles, whether it's technician, whether it's optical, um, if there's a front desk person there, um, you know, if they're involved in that patient experience face to face, they're gonna want those people there. Um, the other thing it can do for the employees and for the associates is can also give them career options that they wouldn't otherwise have, being just within the four walls of an individual practice. So there is some benefit on that side from a career development perspective. And it kind of ties into uh, I gave a lecture a couple of years ago on engagement and why it's so low in healthcare. Um, and one of the things, one of the top, two of the top reasons are people not seeing a future career path and not feeling motivated in the role that they're in or feeling like they have development in the role that they're in. So when you talk about joining a larger organization, it's kind of like moving from a neighborhood of 12 houses to a neighborhood of you know 300. And the the paths and the streets through which that neighborhood is built look a lot different than when you're just dealing with 12. So I do think there are more opportunities for people when they come into a larger organization. Um, so that's the the benefit side. Um the the change side I think is typical of anything. Change is always gonna bring about um the question, how does this affect me? The first place their brain's gonna go. And so having been through these conversations, I think one of the things that is important for people to understand is that it's a lot easier to continue on the path where you are than to try to find a new path altogether. And you're going through that with other people in in your practice. So you're not going about that alone. Um, the the leader doctor, or usually the owner of the steward of the practice, is staying on through that transition too. So there's that also is a big message that gets sent to the team as it relates to I'm a part of this. I've chosen to partner with so and so for these reasons. Um, and this is why you should be excited about it, because they can offer you a lot of things that I couldn't do myself. And I think that's one of the things that really does impact um many independent owners is when they get businesses to a particular threshold and their shoulders get heavy. Um, and it happens. It's and it's not for anything other than the best of intentions because you're trying to grow something and do something well, and they are, but none of us can carry the log by ourselves past a certain threshold. And I think that's one of the challenges that a lot of businesses face when they grow to certain to certain tranches.

SPEAKER_01 13:17

Yeah, that makes sense. You know, one of the things I found during a a transaction uh on the on the acquired practice side was communication was so important with the team.

SPEAKER_00 13:31

Yeah.

SPEAKER_01 13:31

And we really worked really hard to to communicate about every change, about the status of things, about where we think things were gonna go, and but not to over speculate and hold their hand through the transition.

SPEAKER_00 13:47

It is it is probably one of the things that we saw evolve the most in our a rough decade on the inside because there's the individual that purchases another practice and comes in individual to individual, and that's one conversation. You're getting to know that person, but it's that connection, no matter how big or small the acquiring organization is, that is essential to making people feel like they're a part of something bigger than themselves. And and so that whole process of prior to closing, integration, having continual touch points and knowing where to go, you know, a lot of the more you know mature, you know, acquirers have very good processes for that stuff. Um, but you don't get to that point until you work through some challenges. Unfortunately, a lot of times collision learning is what makes it better over time. You know, there's things you're not always going to get right. And I think when people are authentic and vulnerable about that, I think what it hopefully communicates to the people that are on the other side is they're not that much different than we are. They're just sitting in a different neighborhood, as we alluded to earlier. So I do think that that authenticity and vulnerability and starting with them and saying what's on your mind, let us answer your questions. That's usually the best place to start from because if you want, you know, it's the old the old Carnegie Addict, right? If you want somebody to take an interest in you, you sort of need to take an interest in them. So the the ones that do that typically have pretty good success.

SPEAKER_01 15:21

I love that.

SPEAKER_00 15:22

Yeah.

SPEAKER_01 15:23

You know, you've you've seen so many deals. You've seen so many deals, and I'm sure you have heard, you've heard many things from the acquired clinic after the fact as far as their satisfaction level and and all that.

Sponsor Message And HR Support

SPEAKER_01 15:40

This show is sponsored by Seasoned Advice HR Services, where I help eye care businesses to make more money and save more money by hiring better, retaining better, and reducing your HR risk. If you would like an HR assessment or ongoing HR support, please reach out to me at seasoned-advice.com. What do you think are the what are the main drivers of that satisfaction level? Like if there was one thing that typically was the the biggest frustration, you know, what what would that what would that be?

Satisfaction Drivers And Seller Mindset

SPEAKER_00 16:23

Mindset is probably one of the biggest driving factors from the selling owner's perspective. Because you walk into this process, and I sort of equate it to the analogy of an of an iceberg. You've probably gone to a few lectures, you've probably heard some maybe some conversations like this or podcasts, and you start to kind of process this information. And in the scheme of the universe, you've got the knowledge above the surface. But we all know that about 90% of an iceberg is below the surface. So this is part of why, when we were chatting just before we got on live, for anybody to navigate this process solo to me is makes no sense because of what we talked about. When you're gonna sell your house 95 plus plus percent of the time, it's not a for sale by owner. You're getting a dimensional perspective from an advisor or a realtor to make sure you're not leaving anything untouched. In this, the zeros are more, I'll just be frank. And the impact of that decision is greater. So to not walk through that process with an advisor, or frankly, a team of advisors, we take a team approach in our in our model, to me, just leaves you vulnerable to the buffeting of the winds. And if you've got some sailors, so to speak, that have navigated those skies before, that that helps. It's not perfect, nothing's perfect, but I think you're better off with it than without it. And when when our clients give us the feedback, I mean, that's what they tell us because there's things that we're looking for that they may not even know exist because they've only had to go through the process once. I mean, it's like asking me to go prepare for a rugby match. I've never been in one, I don't know what it's supposed to look like. I've only seen a scrum. I I don't know any of those things. That's a lot different than you know, I played basketball growing up. It's a lot different than preparing for a basketball game. So it's a may not be the best analogy, but I think you I think it makes the point.

SPEAKER_01 18:29

Yeah, I you know, I I would I've I bought a few houses, I would never not have a realtor on board. And as you said, you know, we're adding we're adding a couple zeros on a uh on a clinical transaction there.

SPEAKER_00 18:42

So usually so.

SPEAKER_01 18:43

If you know, if I'm a physician and I am thinking, you know, hey, I'm gonna, I'm gonna have to sell this someday. And I don't know why you wouldn't think that. At some point, you're gonna have to, you're gonna have to transition your business to somebody, right? What are some things that you should be thinking about? And when do you need to start thinking about it? Like, is are there things I need to be doing today for for 20 years from now? You know, what are things I need to be doing to maximize my satisfaction, not just value, but my satisfaction when that day eventually comes and I decide to to sell my my practice.

SPEAKER_00 19:22

Yeah. So

Exit Planning As A 90 Day Habit

SPEAKER_00 19:23

there's I think I we view exit preparation as continual. And I don't say that for any other reason, other than you know, every single one of us are one event away from our life changing meaningfully. You know, I I hate to say, you know, and not to be too more, but I at 51 years old, I've never had in the in the other in the last year more news of just people that are facing terminal diagnoses, things that just come at you, and sometimes they're out of nowhere. Fortunately, those things are the exception to the rule. I mean, most of us live long and and pretty much and do okay. But if you're not prepared for that moment, it's really hard when it hits you. So in our in the certifications that that we've earned, some of the things that we do in advising our clients around exit planning, we will we believe that every practice should be able to revisit their picture every 90 days and be able to make the decision I want to go. They should be able to make the decision. Doesn't mean they're going to, but they have the capacity and the agency and the freedom to do so. Because the other thing that doesn't get controlled is when the market gets more or less favorable, that's all relative. And you're contrasting that with their personal situations, their life goals. They may not want to own a practice forever. That's okay. And how they choose to make that exit, completely up to them. But to be in that position is to be in a position where you're free to choose your exit and it doesn't choose you. And I think that's the big difference between the two.

SPEAKER_01 21:08

So it sounds like it sounds like you advocate for maybe some metrics or some checkpoints that you look at on a quarterly basis so that you know, hey, this is what I this is where I stand if I needed to, if I wanted to to sell today, these are the key things that I need to be aware of.

SPEAKER_00 21:27

Yeah, and then those, you know, for for a lot of people, those metrics can be, you know, a lot of your very common ones. Many people talk about capture rate, many people talk about what's the trend of our revenues, trends of our AR. And I'm just using a couple. I mean, you can pull any of them from a suite of ways to measure a practice. The good news is there's a lot of ways to measure a practice. The bad news is there's a lot of ways to measure a practice. So you don't want to get into a you know analysis by paralysis. So you want to pick, I think, you know, three or four key ones and kind of be Consistent with those, whatever they are. From our perspective, it's more what are the trends of the business? How's the stability of the practice from a people perspective? And also, you know, like how are you positioning yourself to whatever's next? And those questions are broad, but they generally can generate some pretty in-depth discussion around what do you value? What matters to you in this? Do you want to sell to an individual? Do you prefer to go to a group? We we're our platform's outcome agnostic, Mike. I mean, whatever direction people want to go, it's their decision, not ours. It's just our job to help the desired point be as effectively as we can. So okay, awesome.

Engagement And Turnover Affect Valuation

SPEAKER_01 22:40

You know, I always think about the people aspect of things, and and you mentioned, you know, stability of people. You know, how important is the people aspect from from your providers on your team to your to your leadership to your frontline staff? What you know, what kind of influence can they have on the potential to sell or maybe your valuation?

SPEAKER_00 23:01

And the short answer is more than they may realize. I think anybody would agree that when you have the right people in the right seats, the bus goes a little more smoothly. When everybody's in the boat and knows how to row an oar, the boat can go faster than if one person's doing all the work. And the idea is if you believe the data the Gallup puts out, a highly engaged team is 20 is a is part of a practice that's 23% more profitable than one that's not, holding everything else equal. So if you believe those statistics a fair bit, if you translate that to real numbers, obviously the impact of that when you start talking about an estimate valuation uh is pretty significant. So yeah, you you everybody would agree that you don't want turnover. Uh, I think preventable turnover anyway. Sometimes turnover is necessary, as we know. But I think the engagement in your team says everything. You know, of all the metrics that are sitting on your plate that you're managing, those are important. But if you don't have engagement, that's the plate that uh that holds everything up. Boy, without engagement, it's hard. It's really hard.

Market Trends And Direct Primary Care

SPEAKER_01 24:11

You know, I have been uh, you know, obviously we're we're in healthcare, we watch the market and we see, you know, what the trends are. And you know, I'm curious what your take is is on the market. Is it is it heating up in terms of you know eye care transactions? Is it slowing down? What what trends are you seeing in the in the deal market?

SPEAKER_00 24:35

You know, overall, there's there's still a lot of interest there. When you think about the profession of healthcare from an investment perspective, if you just kind of step out of the seats that we that we sit in day to day and just look at it, if you're just gonna put your money into anything, this subspecialty and this space has always been described by people, and I think rightfully so, as kind of steady eddy. And the one thing that works to its benefit, like many of the subspecialties, we're all getting older. And you know, there's demand is not the problem of eye care. That's not the problem. How it gets served is a conversation for a separate time, but demand's not the problem. And so when I start to look at you know, kind of that as a macro trend that's ultimately driving the continual influx of patients and needs, if I'm an investor looking at that objectively, I feel pretty comfortable about putting my money there, frankly. You know, then obviously devils, of course, in the details, but I think that's a big part of why you continue to see interest and have seen interest for such a long period of time.

SPEAKER_01 25:58

Excellent. Yeah. Uh, well, that's good to know. Good to know the market's still strong out there. You, you know, we were we we were talking a little bit beforehand, and you mentioned direct primary care in this a little bit. Uh, and I know that's not eye care specifically, but I'm I'm I'm fairly interested in DPC. Have you seen any activity in that area or do you see trends coming up in that?

SPEAKER_00 26:22

It it's going to be interesting to see how much how prevalent that becomes in in some of these subspecialties. I I know offhand of a few people who are doing that already. And, you know, frankly, I think it makes for an excellent patient experience. I do think there are challenges in unwinding to something like that from having an established practice reliant on a particular ecosystem and a particular payer system and all the things that come with that, a much different process. Kind of like unwinding 25 years of history. You're not going to do that overnight. Conversely, if you're starting from the ground up, if you're cold starting, that's an intriguing way to go about doing it. And you're certainly at this point more a trailblazer than not, relative to the other practices that are out there in the marketplace. So it certainly is a way to provide an alternative in the community where I live. Somebody's been doing that with general medicine now for about five years, and it's it's been incredibly successful, taking them some time, as you would expect, but certainly worth the journey for them. So when you start to see the proof of concept start to play out, you say, okay, if it can work here, why couldn't it work you know somewhere else? And so the answer is it can absolutely be done. I think it really comes down to, again, you talked about, you know, ultimate goal of exiting. What is it that you're looking to build? Because if you believe Stephen Covey's beginning with the end in mind, the bricks you're laying today becomes the house you build tomorrow. So that's a big aspect of this whole thing from a you know, from a building a business to getting it to a point where it's marketable to being able to assess the question at what point do I want to make a divestiture from that? Which is, of course, the answer is different for everybody.

SPEAKER_01 28:11

Cool.

How To Connect And Final Takeaways

SPEAKER_01 28:13

Well, you know, I think this is a this is an incredibly important topic for for clinical business owners and those running those businesses to be thinking about. And I appreciate you coming on the show to chat with me about that stuff, Mike. Clearly, you know your stuff, and you'd be a great person to work with. How can someone get in touch with you if they're interested in learning more about you and Prism Consulting Partners?

SPEAKER_00 28:38

So we we have a website, so we got that. Uh, you can reach us on the website at Prism ConsultingPartners.com. So that's where you can find our website. Myself, uh, my my partner Dave and our uh our two uh colleagues that are a part of our organization now. We all have LinkedIn pages. You can find us on the website, reach out to us there, uh, connect there. Uh, we travel to a few meetings. Uh, I'll occasionally speak at some of them, depending on timing and things like that. So you can connect with me there. And then obviously uh through email, our emails are all our first initial last name at Prism ConsultingPartners.com. So mine's Amazon Mike, G-U-E-L-C-H-E-R, Gelcher at Prism ConsultingPartners.com. And then cell phones 803-412-1172. I still answer to that uh if I'm not on with one of my kids or my wife needs something from me. So yeah.

SPEAKER_01 29:30

Awesome. Well, I'll put all that information in the show notes. And yeah, Mike, thanks for coming on the show, and I truly appreciate the information.

SPEAKER_00 29:38

Likewise, Mike, I appreciate it.

SPEAKER_01 29:41

Well, that brings this episode of iCare Leadership Live to a conclusion. If you enjoyed this episode, please subscribe to the show on your podcast app and share it with someone who would value the content. I promise to bring you more guests and content to help make you a better eye care clinical leader. I also invite you to subscribe to my HR newsletter for iCare leaders. You can find information about that at seasoned advice.com. Now go out there and lead with confidence.