Venture capital in mental health with Dr. Elizabeth Carr

Dan King: [0:00] Hello, everyone. It's Dan King here with another episode of Your Group Practice, Dan King: [0:04] although this one is going to be different than any one that we've done so far. It's a little bit of an experiment, so please bear with us. I am joined by repeat guest, Dr. Elizabeth Carr, clinical psychologist and founder of Kentland's Psychotherapy. She is awesome. This one is going to be a discussion of an excellent, really, really compelling post she made recently on her website called Why Mental Health Stales So Poorly for Venture Capitalists. I think we both come from slightly different perspectives on it. We'll have a discussion that hopefully people can learn from in the field because so many clinicians are thinking about this question right now. And it comes up a lot in social media mental health conversations. Elizabeth, any other just sort of initial thoughts you want to throw into the mix? Dr. Elizabeth Carr: [0:47] You know, I'm excited to find where we are in alignment and where we can have Dr. Elizabeth Carr: [0:51] a hearty debate. I think it'll be fun and exciting for people. Dan King: [0:54] So what I'm going to do for people watching on video is start out by showing a segment of the post here. Would you like to read just this section that we can see on the screen share, Elizabeth? Absolutely. Dr. Elizabeth Carr: [1:05] Okay. So I've been watching a pattern repeat itself in mental health startups, and I think we need to talk about it. Private equity and venture capital-backed mental health companies promise clinicians the moon, better rates from insurers, admin support for clinicians, flexible hours, more access to clients, scalable growth for investors, and more benefits. But here's what I've actually seen happen. Investors want passive income with high returns, and the juice is just not worth the squeeze, or at least not sufficient when negotiating with insurance companies. Clinicians do all of the actual work, but are treated like widgets, and the math doesn't matter. Dan King: [1:44] So I'm curious, Schwatt, what led you to put these thoughts together? Dr. Elizabeth Carr: [1:48] Yeah, yeah. So there are a number of Facebook groups, you know, for group practice owners, even some that are really skeptical of the influence of venture capitalists in the marketplace. And so there's a lot of discussions about these things. And one of the patterns that I see over and over again that people talk about is that, the concept generally oftentimes in these models is we are going to pay the clinicians as much or a little bit more than they're used to. And the way we're going to do that is that we're going to use our size and heft to negotiate better rates and that that margin is going to not only pay a little bit more for the clinicians, but also satisfy our investors. Right. But what seems to happen is that that margin is not enough, right? And this is the interesting thing you see with people who invest is they expect the highest possible return on their investment, and they have a fiduciary responsibility to try to get those returns for their investors, and they're not enough. And so what happens is they can't charge the patients more because it's an insurance model. And so the only thing they can do is try to work on the margins at the expense of the clinician so often. That's what I see. And so promised benefits get restricted, productivity expectations are increased, things like that. And there's a lot of discussion. Dr. Elizabeth Carr: [3:09] It seems like it's happened on several different platforms. Dan King: [3:12] Could this work differently in a self-pay model? Your practice is self-pay. Lots of practices around the country, especially in wealthier areas are self-pay practices. Sometimes 100%. Could the model work a little better there? Dr. Elizabeth Carr: [3:25] Well, that's an interesting question, because then you could increase, you'd have more flexibility for increasing rates on the client side. And if you have a product that's worthy of a higher premium rate, then you have some flexibility to do that, right? And so I think that's, you know, we just had a conversation with our staff on our most recent staff meeting about Now, my projections based on what they think inflation rates are going to be this coming 2026, we should raise our rates by about $7 a session, just to break even with inflation. But last year, and typically, we only raise our rates by maybe $5 a session. So we have this whole conversation about, should we do five? Should we do seven? Should we even do less? Because people are really struggling right now. But we have the option to do that. I know people that are taking insurance. They said their rates haven't changed in 10 years. And so we do have that flexibility. There is that option in a sense that people don't have. Dan King: [4:19] Right. So, okay. So from your vantage point, maybe with a self-pay practice with a little bit more flexibility, we could satisfy all the different stakeholders we need to satisfy in a model like this, in a, let's say, a venture capital model where we've got investors, we have clinicians, we also have ownership of practices. In the self-pay model, maybe there's more flexibility. Dr. Elizabeth Carr: [4:38] Possibly. But then here's two more challenges. It's hard to scale a self-pay model. in many cases, because first of all, I think it's harder to have self-pay that's entirely virtual. Part of the premium for self-pay is that people want to go back to a beautiful office and see people and feel like they're in a neighborhood setting. And so how are you going to scale it? And if it's small scale, then the other challenge is that the other self-pay practices that don't have investors are already doing a model that they might be paying their clinicians 60, 65, 70 percent of what those clinicians bill. And so again, the remainder of it is a modest salary for the owner and overhead and expenses. How would you have a competing model where you're trying to also now have a portion that goes to investors? You'd have to say, what is that owner doing that's not very efficient? Where can we tighten up the ship? If there's a lot of that, then maybe you can do it. But what if there's not a lot of that? Then then you're back to the same problem Dr. Elizabeth Carr: [5:39] again, which is you got to get it out of the clinicians. Dan King: [5:41] It may somewhat come down to the distinction between private equity and venture capital too. So, you know, full disclosure, I run a private equity company in outpatient mental health, and I would define us very much as private equity, not venture capital. I would define us as social impact private equity, which is even a bit different than normal private equity. But in the venture capital world, generally speaking, and I know less about how VC operates in mental health. But generally speaking, the expectation of a venture capital investor is not for cash flow. The idea is we need to generate as much ultimate value in the company when we sell it, right, or IPO after, let's say, five to seven years. So while there isn't cash flow pressure, there is pressure to grow the value of the asset that's been invested in as quickly as possible. Dr. Elizabeth Carr: [6:30] You know, if you're in a large city and you have a fee-for-service practice that specializes in autism or PTSD or anxiety or something, right? You can grow a fairly large in-person brick-and-mortar fee-for-service practice that is quite scalable. So I think that's the question, right? Which is how scalable is it? And it very much depends on what the model is that you're working from. Dan King: [6:56] If I were to play devil's advocate about the post, I mean, I think there's a couple of ways I would do it. One of the ways is that I would distinguish between PE and VC. So one of the things about VC, well, PE can potentially ask more from a cash flow perspective of the businesses it invests in. It is very possible to set up a model that is less about aggressively scaling than is the case with VC. So the way a typical venture capital fund is structured, they may invest for the sake of ease. Let's say they're investing in 10 companies. They're going to need one or two of them to explode, to grow so quickly it's almost mind-blowing. And the other ones fail. They don't really care about that. In the PE world, there's a much wider range of possibilities. And you will see a lot of the capital providers, you know, it's been interesting raising capital recently. I've seen a lot of capital providers actually place social impact in their calculus. I haven't seen that as much in the VC world. And when you combine also the fact in the VC world that the growth expectation is so extreme, right? And there are going to be casualties. And so the social impact of those casualties, right? I hate to use that term, but I use it purposefully to be a bit triggering, maybe a bit more problematic. So I think there's less room for social impact in VC is my hunch. And I think the growth expectations are more extreme. Dr. Elizabeth Carr: [8:17] So tell me a little bit about when you're in that position that you are looking Dr. Elizabeth Carr: [8:21] for a practice like ours, or maybe not exactly like ours, but say midsize practice, right? And the idea is, how can we help it grow, be more robust, be more successful, so it's more appealing to a buyer, not necessarily an investor group, but just a buyer? It feels to me like that's... Easier lift in a sense. Dan King: [8:46] Making a practice a better fit for a general buyer as opposed to what alternative? Dr. Elizabeth Carr: [8:51] As opposed to so successful in terms of the profit margin that it can satisfy a number of investors, passive investors. Dan King: [9:01] You know, it's funny. Some investors might actually prefer there be less profit margin, depending on how the numbers play out when they're buying it. Because investors are used to conversations with sellers where they are placing a multiple on the profitability. That's how they're determining the value. So many investors would actually prefer a less profitable business at the time of purchase that they feel they can make into a more profitable business down the line. Dr. Elizabeth Carr: [9:26] You and I both were looking at that Hemingway report showing the volatility of some of these larger corporate mental health platforms. Some and some were virtual. I was curious what you thought of that data and the volatility of it. And I, out of curiosity, I mapped out the last, I think, three or four years of mine, and it was just a very slow and steady race kind of trajectory, not this up and down. Dan King: [9:52] I personally love the slow and steady and practices generally that are maybe a little less virtual oriented. They might be self-pay or they might deal with very high quality commercial insurers. I know we prefer that, right? I can't certainly speak for every kind of investor out there. But I think I certainly notice, speaking to other investors in mental health, both ones that I would consider values aligned with us and others. Some people are a bit short-termist in their orientation. There's no question. And folks that are short-termist are going to value an asset that has hockey stick growth more than they will something that has a community presence, that treats its clinicians well. The first questions I always ask is, what are your clinician retention numbers? I want to know how many folks, what percentage of clinicians have left for the past three years? Very often the first question I ask. I want to know that because I want to know that this is a living, breathing thing rooted in a community that cares about that community and is cared for by the community. Dr. Elizabeth Carr: [10:50] And, you know, I had the impression when we talked, last time we met in person at the conference, that insurance-based practices that were the practice credentials, all the clinicians, is a safer investment because the day after you buy it, they can't all just easily leak, which is an interesting concept. But I would argue that's not necessarily always true because I hear lots of people who own practices that take insurance that still really struggle with attorney. And I think, for example, in a practice like mine, I am extremely intentional about wanting people that want to stay very long-term. And part of that means that when I'm recruiting people, I'm looking for people who want the benefits of being in a group practice, that they're not aspiring that this is just a platform until they have their own practice. They want community. Most importantly, they don't want all the things that come with ownership. They don't want to deal with the air conditioning when it goes out, or why is the internet not working, or dealing with the city and permits. They don't want to deal with any of that stuff. And so when you are very intentional about recruiting folks like that, our turnover is extraordinarily low. And if I were ever to sell to a value-based buyer who was going to run it in a similar way, I anticipate that there would not be, as long as the person wasn't a tyrant, I expect that there would not be turnover. over because those people are very happy where they are. Dr. Elizabeth Carr: [12:15] And as long as things stay basically the same, I think they will stay. Dan King: [12:18] On the one hand, it's true that historically, a self-paid practice, you would think as an investor that you would lose more clinicians, right? That would be your first instinct because getting credentialed with insurance companies and setting up relationships with insurers is kind of a barrier to entry. That is diminished to an extent because of the rise of companies like Headway and Alma. So they are creating, in theory— Dan King: [12:43] Beneficial context. I have my challenges with their models, but in theory, they're creating contexts where it's more natural for people who want to start their own practice to get credentialed with insurers to get up and running. And even after the fact, they claim that they'll manage those relationships with insurers, negotiate higher rates, et cetera, right? That's the claim. So I think it is true that the retention risk delta between commercial insurance and self-pay practices is diminished, right? A lot also depends on the market. But I think either way, a smart practice owner is going to do what you do and really screen heavily for, are you an entrepreneur who's using this to get started, build a client base, develop your clinical skills, right? Or do you truly want and value community? And here's where I'm going to connect this to one other thought, and then please jump in. The same is the case for investors. As a seller, you want to screen for the very wide variety, Just like there's many types of clinicians with many different types of intentions, I would argue that there's many different types of investors out there, many of which are long-term minded, can actually reconcile the profit motive with creating better culture that retains clinicians even more. So just as there are many different types of clinicians with different missions and intentions, the same is the case for investors too, in my opinion. Dr. Elizabeth Carr: [14:02] Yeah. And, you know, I was thinking people can have different models. I was just talking yesterday with a fee-for-service practice owner whose model was quite different, very embracing of people who wanted to come into a practice temporarily, knowing that they at some point might want to leave and start their own practice and had more of a model of come in, let me help you learn. And I know that you're going to leave in a few years but that's okay because you're going to learn a lot and I'm going to benefit from you being here for the time and so, In her model, the turnover was higher and yet the practice was still very successful, because she was able to recruit a lot of people who might have those aspirations and that wasn't a barrier to entry into her practice. Dan King: [14:46] Is this person in a bigger market where there are just more clinicians that want jobs? Dr. Elizabeth Carr: [14:51] Well, yes, and I think it probably works better if you're in a, I don't know how well that would work in a small town. You know, it seems to me that if you're in a big enough model, big enough city and you have a model like that, if you're basically an incubator for a lot of aspiring group practice or even solo practice owners you might unintentionally be just growing a lot of competition for yourself over time yes right and to me that would be kind of the downside and potentially the danger and also just that it's expensive i think to have turnover there's something really really helpful and valuable about having long-term people who are very good if i have someone who's very good and the google reviews say nicole is excellent if nicole's not with us anymore it doesn't really help right right, And I'm still glad for the five-star review, but when they call and ask for her, I'd like her to still be here with us, right? Dan King: [15:37] Yeah, and there's the psychic and emotional as well as the financial cost of onboarding and then losing someone. Dr. Elizabeth Carr: [15:42] The emotional part maybe is not as hard if you as the owner and the community that you've created understands that that's part of the model. If you truly in your heart are just happy for people and their success and you see it as sort of like professional developmental stage, I think that's fine. It's like a lot of the insurance models bring on people who are working on their full licensure. And then when they're fully licensed, again, that they leave. And so they can recruit all these people to have an easier time. Because I think how do they recruit all these people when their rates are so much lower than fee-for-service? But that's part of it. And that they're giving stability and continuity and supervision and things Dr. Elizabeth Carr: [16:19] like that that people want at that phase in their career. Dan King: [16:21] There's something beautiful about the transparency of everyone putting their cards on the table right away at the beginning of the business relationship, too. Dr. Elizabeth Carr: [16:29] Exactly. I think the thing that creates a lot of burnout for practice owners is when they're not really clear about which of these models they're doing. And they're trying to, you know, like in Buddhism, they say that misery comes from trying to make something possible that's not really possible. Right. And so if you have a model that is going to attract people that want to leave soon, but then you're really hurt and upset when people leave soon, that's just a creation for burnout and heartburn for the owner. But I think if you can become really intentional about what am I all about and what kind of people am I recruiting and how can I create something that's a win-win for everyone? Dan King: [17:02] I agree. And I think those expectations, both for clinicians as well as for investors, there's a clarity that the people you want to work with, whether clinicians or investors as a practice owner, they have to have clarity Dan King: [17:13] about their intentions and their mission. And so this is where I think, you know, a further response I would have to your post is... Dan King: [17:22] So I've been speaking a little bit to the variety of different types of investors out there, right? And I'm distinguishing between, let's call it old school private equity and venture capital, where old school private equity are buying businesses that by their nature are a little less scalable. And VC is more, you know, venture capital is really investing in tech companies that have the potential for exponential growth, as well as higher risk associated with that. One of the things about a VC-based model is part of the reason there's less room for social innovation is the general mission of most VC companies is probably going to be to go nationwide. And the reality is, as our mental health industry grows, you see more and more distinctions between states. There's different insurance regimes. There's a different market for labor, right? And it's very hard to try to reconcile all of that under one model. Dan King: [18:15] Your model is more likely to break so i'm going to be a little self-serving and say part of the reason we designed our model to really be focused on three or four states that's it is we know what we're doing in those states it makes our lives much simpler it also increases i would think the likely return on less capital so we require less capital because we're not trying to go across the country that you could say arguably that that limits the potential in absolute dollar investor returns. But on the other hand, on a percentage basis, it likely increases it. And it enables us to pick only we only need one or two capital partners. That's it. Right. And we can be super aligned. The risk of a misalignment with capital and social impact goals is now diminished. Does that make sense? Dr. Elizabeth Carr: [19:05] Absolutely. Two things come to mind. One is this restaurant. It was a vegan restaurant called Native Foods, and it was just fabulous. And they grew so quickly. And then they kind of crashed. And I think sometimes when you grow so quickly, it's hard to get enough quality people into all of those positions to competently do what they need to do, whether it's low-level staff or managers. And absolutely, I think the same thing is true. When you talk to people who own a group practice, one of the things that they say is one of the hardest things is finding high quality clinicians to hire and recruit. And so I do think one of the challenges for having something scalable is how do you get high quality people at scale into a new venture? And the other thing is, I think that now, because so many people are burnt out for this kind of virtual technology, there is a return. We're seeing it absolutely to people calling and requesting in-person services. And it's very hard. Again, we go back to that table, that Hemingway table. It's much harder to have a scalable brick-and-mortar model than a scalable virtual model. Dan King: [20:10] Yeah, because you need to open new physical locations, right? On the other hand, isn't there a beautiful discipline there, though, where opening that new location requires connection to a community? That location won't succeed unless you're intentional about many things, whereas you can get a little luckier with the BC model. But opening a new brick-and-mortar physical location, there's earth, there's ground involved. It's a bit more visceral, right? Dr. Elizabeth Carr: [20:37] Some of the most competitive schools in Montgomery County, Maryland, are called the W schools. Walter Johnson, Walt Whitman, etc. And they're known as the W schools. If somebody sees one of our clinicians and says, well, my kid's really struggling, you know, they're at one of the W schools, our clinicians know exactly what they're talking about. And if they had a therapist that they found online that's virtual who lives in Alabama, they don't know what they're talking about. Dan King: [21:02] Yes, that patient therapist relationship is just so much stronger. Dr. Elizabeth Carr: [21:06] Yeah, to be able to have clinicians that, you know, we have clinicians that attended some of these local high schools, and now they're treating those high school kids. And they say, oh, I know what QO is like. I went to QO. And that is really, really helpful and valuable. And so from a business perspective, I realize that value. I'm trying to lean into that and how I think about marketing and how I write blogs, really taking advantage of that local knowledge. Dan King: [21:31] And so you should. You have an incentive as like a participant, active participant in a community to go a little bit deeper, right? Whereas some organization that's trying to scale nationally is going to not have the same incentive you do to go so deep in one zone of relationship that you do. Dr. Elizabeth Carr: [21:50] And I think this is one of the reasons it's so smart what you're doing. I have found in my own business model, if I just make a tiny step to the left or a tiny step to the right in our offerings, I see just adults, so then we start seeing teenagers. We see just adults and teenagers, then we start seeing younger kids. And then maybe we do testing or maybe we add medication management, but they're all very adjacent to the core service line. When I try to take a large step to the left or right, add something different, different enough, like, say, nutritionists, it's much, much harder to get that person busy, right? Because it's not what people know. It's much easier just to grow and hire one more child therapist than to start adding a different service line. And I think that's really what you're seeing too, probably, is that you could grow for a very long time just in a few states. And it's a lot less work to do one more project in the same state than to do a new project in a different state. Dan King: [22:41] So much less work. I wonder, I'll see, I do see a lot of practice owners who will And I love where this is coming from. Try to integrate sleep counseling or nutrition advice into an outpatient group practice. And I so see where that's coming from. Because sleep and nutrition, unquestionably, have a massive impact on behavioral health. But you need a community that wants it, that is receptive to it. Otherwise, just offering it is not going to have any impact. Dr. Elizabeth Carr: [23:07] And also, you know, you can still offer that, but maybe it's more grounded in having relationships with those experts in the community. I mean, certainly we can have somebody that does CBTI for insomnia. Absolutely. But if we need them to do a sleep study, do we really need to do the sleep study ourselves? Or can we have a good relationship with a vendor that we trust that does outstanding sleep studies? And maybe that's more efficient. And not only is it more efficient, then they're going to send people to us for the aligned CBTI work, right? Dan King: [23:37] I see clinicians and business people, and I so sympathize with where this is coming from, who want to build one big tent where everything, feeling, and wellness happens. Dan King: [23:49] I've rarely seen that work. I don't know if I ever. Dr. Elizabeth Carr: [23:52] Yeah, I agree. It's just, it's too wide of a net most times. And again, if you're lucky enough to live in a large enough area, you can find people that do that really, really well and partner with them without having it in-house. And in my experience, that's the way to go. Dan King: [24:09] Yeah, I think there's, you need to know what you're good at. You know, you can, there's very creative ways that you can expand the scope of what you're doing to create a more comprehensive offering for patients. So primary care is, integration is a really interesting concept that I don't see a ton of, where you have a clinician who's in a primary care setting, who is working with that primary care doctor, and we're providing probably a better offering that in a competitive marketplace is going to be attractive to the right patients. But that doctor doesn't work in your mental health practice, right? Dr. Elizabeth Carr: [24:41] Right, right. You know, I did health care. I did primary care integration when I was in the Navy. And there's a real value to it, absolutely. Of course, you're also sometimes doing therapy with somebody and next door there's a baby crying because they're getting their wellness check. So it wasn't my favorite work environment. But I see a real value in it for the community for sure. Dan King: [24:59] Yeah. One other aspect of this that I'm going to sort of throw into the mix. So I did a podcast recently. I think this one may be out with Dr. Arpan Parikh, who is the chief medical officer at Seoul Mental Health. And the theme of that podcast was clinicians and non-clinicians working together. So, you know, one of the things, I love clinicians, you know, I work with them every day, love practice owners, you know, 99% of whom are clinicians. And... Dan King: [25:28] You know, I can appreciate their view that investors sometimes have a profit motive that it's going to diminish patient and clinician care. But I think many practice owners, if they're honest with themselves, lack certain business skills and not just business skills, they lack certain culture skills, right? And so to me, the most impactful mental health organizations feature true collaboration between clinicians and non-clinicians. So, you know, the best business partnerships have complementarity. They have people who bring very different visions to the table, but that can be reconciled. And I would certainly agree with your article that not every non-clinician who is in this space cares. Not all of them are going to take the time to really deeply understand who they're working with. But that doesn't mean that we should remove all non-clinicians and all profit-motivated people from mental health, because I think there's a way in which partnerships that are well-intentioned and that have those complementary skill sets can build something richer. How do you feel about that? Dr. Elizabeth Carr: [26:29] You know, it's interesting because one of the things that I grapple with is this idea of legacy planning, right? Because I know I'm not going to be around here forever. I'm nearly 60 now, and I've built something that I want to be able to last. But because I was so intentional about trying to hire people that didn't want to own a practice and didn't want to have those hassles, it's very hard to find people in-house that could be part of that succession plan. That's the dilemma, right? And so I do find myself thinking about this question of one route is to find another owner who wants to double in size, whose value aligned, but how many of those are there necessarily locally, or someone whose value aligned who's not necessarily a clinician but could be a great, compassionate leader, an effective leader that could steer the ship and keep things running smoothly and It reminds me of the ending of the original Willy Wonka and the Chocolate Factory where he says, well, I had to find a child so they would do it my way, right? And I think that's the question of every owner is, who's going to keep it going my way? And of course, no one's going to keep it going exactly your way. But you wanted to sort of have the same spirit that you had that you built that people really valued and appreciated because you think of your staff as like part of your people and you want to take care of them even if you're not going to be a person forever. And I do think that that's possible, absolutely, to find somebody who their Dr. Elizabeth Carr: [27:52] goal is to keep it running successfully. And keep it running successfully means don't break things. Dan King: [27:56] I have met so many different people from so many different backgrounds, both clinical and non-clinical in our world and in the world of outpatient practices. And it's interesting that each new type of training they've received, whether formally at a university or informally, shapes their identities. And so it's interesting, especially to meet people. I'm not a clinician, but our pun is one interesting example of someone who is a clinician who also has an MBA, right? So he has two different identities within himself. He understands two different worlds. And while I'm not a clinician, I always say I probably should have been a clinician, not a lawyer. If I could do it over again, I might have become a psychologist, not a lawyer. And I might still at some stage. I find myself translating between different worlds, doing my best even not being a clinician to embody some of the tendencies of clinicians in business conversations. Dan King: [28:49] And I think what we're attempting to do is solve some very complex problems. We're trying to solve for patient care, clinician retention, business growth, all of these things at the same time. And to do so at a decent level of scale, I'm not talking about nationally, but a decent level of scale where we can afford to pay clinicians well. I think it does require, if not requires, at least a diversity of thought. You know, Jonathan Haidt, we were talking about him at the beginning. And one of his big perspectives is the importance of the diversity of thought. And you just need that when you're dealing with complex questions. And so I see what it is like to partner with clinicians and non-clinicians. And you have to pick the right people. Don't get me wrong. You have to pick the right people. But the potential for building something that impacts patients and clinicians positively, I think, is greater within that mindset. Dr. Elizabeth Carr: [29:41] Yeah, you know, I really want to circle back to what you said before, which is that we're not great at everything. Clinicians who are pretty good at business still aren't good at all aspects of business. I know for myself, I think there's a lot of things that I'm good at, but I'm not an expert in marketing. I certainly think that people that came in to help could probably maximize the amount of demand that we have and that margin alone could be significant. Also, I think oftentimes that we have a monthly staff meeting and I think they're kind of boring and I'm not really great at running monthly staff meetings or somebody else could do a better job than I could. And so the problem, I think, or the challenge is that for practice owners that are solo practice owners, we are very used to doing everything ourselves and not have to negotiate with anyone else and doing everything our way for better or worse. And to shake up that stranglehold and to really be open to not only other people's opinions, because I think I try to welcome people's opinions within the staff, but ultimately I still get to decide everything. And when you partner with someone, that's not the case anymore. It really shifts that dynamic. And I know for me as an only child, I think that would be probably one of the hardest things in terms of an exit strategy where there's overlap for a while is getting used to that. When my husband retired from the Navy after 20 years as a psychiatrist with the Navy, he came on board to help. And there were a little bit of growing pains, and I was already used to being married to him. Dan King: [31:09] That's so insightful. So you're a fellow only child. That's interesting. We're a special breed, aren't we? Dr. Elizabeth Carr: [31:14] Well, and I married an only child. So we're the only child club in our family. Dan King: [31:20] So I think you're right. there is a tremendous amount of risk. And I've had partnerships that are far less successful than my current one. And I wouldn't wish that on anyone, right? That's really no fun. And so there is definitely an element of risk in opening up something that has been built the way you've built it. I totally acknowledge that. And not all change is good change. Dr. Elizabeth Carr: [31:41] Yeah. You know, I'm intrigued. I talked to this person the other day, and one of the things it It sounds like in her model, there was a sale and then staying on as an advisor as opposed to being more of an employee. And I think that feels more palatable to me, I think, in terms of a model that I could imagine embracing someday in the future. Dan King: [32:03] Different owners have different desires. We're working on one transaction now where that will be the case. Although the owner has trained another clinician to kind of run the day-to-day and that clinician will stay, but the owner will transition to a full advisor role with much more distance from the day-to-day. And so I think it's also hard. A clinician entrepreneur that builds a business to the extent that a professional buyer is interested in it, they're skillful. I really, really admire what they have done to get to that point. And so as entrepreneurs, they're not going to want to have a boss. And I think that's one of the other tensions that exists in these clinician-non-clinician relationships. Sometimes it feels like the people that bring all the money feel like they should have all the authority sometimes. You really want partners that don't think that way. And not every partner is going to think that way. Dr. Elizabeth Carr: [32:57] Coming back to we're not trained in business, the majority of practice owners have never really thought much about their exit strategy. And most importantly, that they need a long takeoff strip on getting everything in place to get them out of their day-to-day roles before they're thinking about the transition. As you know, no one wants to buy a business they have to work in 60 hours a week. I think most practice owners are quite willing to work day and night for their little baby that they love, and they don't realize that's not a really valuable thing to sell. One of the things that I think we need to get the word out about to practice owners is how When you think you're 10 or 15 years out from trying to retire, that's the time to be very intentionally, slowly, and methodically taking this off your plate and this off your plate and this off your plate. And also embracing that every time you take something off your plate, you have to pay someone else to do it, and that's okay. Dan King: [33:54] Yeah, there's an intentionality, both in preparing your business for sale, in thinking through who the right partner should be, if anyone, and ultimately just making sure that you're as the founder aligned with whatever the end outcome is. But I think you're right, there is definitely some work to do to introduce people to the wide variety of options that are out there. And so I see even folks that are not us, I see folks, other investors that are concerned with social impact, other investors that deliberately designed the model. And so this is where I guess I come back to this conviction that, yeah, the wrong kind of investor will diminish what you've built, but just like the wrong business partnership will mess up what you've built too. And so that doesn't mean that you should never have an investor, never have a business partner. It just means you should be intentional about picking the right ones. Dr. Elizabeth Carr: [34:49] Right. It's sort of like saying, I never want to get divorced, so I just won't get married. Dan King: [34:53] We can't throw out the possibility of marriage because it exists and it matters. Similarly, we can't throw out the profit motive because it matters and it's the way we're structured. So what I always say is we need to create the right incentives and concede to certain realities which just are here, right? Dan King: [35:11] And are, you know, the nature of how our economy works. Dr. Elizabeth Carr: [35:14] Yeah. Dan King: [35:15] But any other words of wisdom we should throw in? Dr. Elizabeth Carr: [35:17] You know, honestly, I think the most important thing, if you're a group practice owner and you're thinking about these things, is just start to educate yourself about what you want for the future of your practice and how to be transparent with your team about that and how to position yourself for the outcome that you eventually want. And to give yourself a long time to get there because it can take much longer than you think to really have the kind of outcome that you ultimately want. Dan King: [35:49] Could not agree more. Years into doing this, I could not agree more. Yeah. Thank you, Elizabeth, so much for your insights, for your interesting post, which is a jumping off point for a rich discussion and excited to continue to have these conversations and transparently help people understand the variety of options that are out there and help them understand what is for them and what is not. Dr. Elizabeth Carr: [36:11] Thanks for having me. This was a lot of fun.