Private Equity and Plastic Surgery — with David Kaufman, MD

Private Equity and Plastic Surgery — with David Kaufman, MD

Hello, and welcome to Beauty and the Biz where we talk about the business and marketing side of plastic surgery; and private equity and plastic surgery.

I’m your host, Catherine Maley, author of Your Aesthetic Practice – What your patients are saying, as well as consultant to plastic surgeons, to get them more patients and more profits. Now, today’s episode is called “Private Equity and Plastic Surgery — with David Kaufman, MD”.

The old model of a plastic surgeon selling their practice to another plastic surgeon is dying for many reasons.

A big one is that it’s cost prohibitive for a young surgeon to come up with the money to buy another surgeon’s practice at their asking price.  If they had access to that kind of money, they might as well start their own practice.

The older surgeon who is thinking about his exit strategy, but can’t get his asking price wonders what his future is going to be…is he going to end up closing the doors and walking away empty-handed?

There is another way…

⬇️ Click below to watch “Private Equity and Plastic Surgery — with David Kaufman, MD”

This week’s video is an interview I did with Dr. David Kaufman, a board-certified plastic surgeon in private practice in Folsom, CA who has practiced for 16 years and was contemplating his future.

He decided to partner with a private equity group who took over the parts of his practice he didn’t enjoy such as HR, payroll, benefits management and negotiating purchase contracts. This freed him and his staff up to concentrate on what he enjoys most, and that’s surgery.

We talked about the pros and cons of private equity, who controls what and the benefits of letting go of some control to get back equity you might otherwise miss out on.

Private Equity and Plastic Surgery & Outsourcing is Trending — with David Kaufman, MD

P.S. Private Equity firms only take you seriously when you have your house in order in terms of predictable revenues, clear processes and clean books. Check out The Cosmetic Practice Vault to help.


Private Equity and Plastic Surgery — with David Kaufman, MD

Catherine Maley, MBA: Hello everyone and welcome to Beauty and the Biz, where we talk about the business and marketing side of plastic surgery. I’m your host, Catherine Maley, author of “Your aesthetic practice, what your patients are saying”, as well as consultant to plastic surgeons to get them more patients and more profits.

Now I have a really special guest today. He was on here before, but he came back for a new topic. It’s Dr. David Kaufman. Now he’s a board-certified plastic surgeon in private practice in Folsom, California. And for those of you who know, it’s near Sacramento, California. So, he’s been on Beauty and the Biz before.

But this time we’re going to talk about a new trend that we’re calling private equity and plastic surgery, and how those two fit together. Dr. Kaufman, welcome to Beauty and the Biz.

David Kaufman, MD: Thanks for having me back, Catherine.

Catherine Maley, MBA: Sure. So, let’s just start with, just describe the, your practice that you have right now in Folsom. How has this affected your decision to go with private equity for your plastic surgery practice?

David Kaufman, MD: Sure. So, we have a, a primarily cosmetic practice. It’s basically full service, aesthetic surgery. So, we currently have three surgeons under roof. I’ve been here for 16 years. My associate, my senior associate’s been here for five. And then we just brought on a new surgeon a few months. So, like I said, now there’s three of us.

We have a med spa that does really pretty well. We’ve got two nurse injectors and an esthetician. And then we have two operating rooms. We have a 13,000 square foot building and you know, we’re just living the train here in California.

Catherine Maley, MBA: Yeah, me too. Yeah. So, I didn’t realize you brought on another surgeon.

Good for you. Wow.

David Kaufman, MD: She’s great and she’s a she, which is a differentiator. You know, I think for us that was a nice gap in our practice that we didn’t have before.

Catherine Maley, MBA: And are they associates, as in contractors, partners, what? How has this affected your decision to go with private equity for your plastic surgery practice?

David Kaufman, MD: They’re employ, they’re employed surgeons, so, they’re employees.

Catherine Maley, MBA: Gotcha. Okay, so, let’s talk about private equity.

This subject keeps coming up and I’m so, glad you are in the middle of it and you can help under help us understand it because I’m hearing different stories about it and what, what is private equity and how does that fit with plastic surgery?

David Kaufman, MD: That’s a great question and that’s hopefully what we’re here to talk about today.

So, certainly that’s a trend in plastic surgery. Our practice recently underwent a, what I call a strategic partnership, where we joined another group of practices. They have private equity backing, so, we’re not directly contracting with private equity, but there are certainly some practices out there now that are being acquired by private equity groups to roll up practices and then create some economies of scale.

And obviously the private equities plan is to then sell them again, hopefully for a profit. You know, if I look at my personal situation, I turn 57 this week. Oh, by the way, ha. Happy birthday, Catherine. You too. And then, you know, if you look at historically the exit strategy for plastic surgeon is not great.

Typically, you know, plastic surgeons who to close down their practice or sell their practice to a junior associate for what might be, you know, one EBITDA or even less. You know, if you look at what private equity brings to the table, they’re certainly bringing in. To take some equity off the table, but they also have a much better sense of how to run a business.

At this point, we have 35 employees and, you know, we’re now a big business. We’re not just a little mom and pop shop anymore. And our hope, at least in our perspective, is to be able to draw on the experience of these larger firms to consolidate HR, consolidate payroll, improved purchasing, create some economies of scale, and really take a small company and.

Run like a, a big, more efficient company. So, what turned me onto this was actually when I listened to your podcast, I heard Dr. Singer and he’s actually the group that I ultimately ended up joining. Okay. But certainly, in medicine, these rollups I’ve worked across dermatology, across GI, across cardiology and, and others.

So, this is a thing. It’s happening and even with a pretty tight debt markets transactions are still, still happen.

Catherine Maley, MBA: Let me just ask a stupid question. Is this a roll up business? Are you selling your practice in, in essence, are you selling your practice to private equity? So, then they build it up for you so, then everybody can roll up all of these practices and then sell it again like, and then you all leave with money, right? How has this affected your decision to go with private equity for your plastic surgery practice?

David Kaufman, MD: So, there’s different strategies, of course, but at a very basic level, if a private equity firm comes. They will acquire part of your practice, there’s going to be an expectation that you will stay on and re retain some equity. The goal then, though, is to aggregate profitability because let’s say your practice has a profit of $1, it’s really not worth that much on the open market.

Mm-hmm. If your practice has a profit of $10, that becomes more interesting to bigger private equity firms and your multiple of EBIT, it becomes. So, you know, the goal is to aggregate practices, to create greater EBITDA, to create efficiencies across the different practices and then create a much more interesting platform to purchase for another group.

Or in theory you could go public, but you know, I think the second private equity play for bigger firms is probably the most likely play.

Catherine Maley, MBA: Gotcha. By the way, he’s saying EBITDA, just in case you don’t know what that is. It’s earnings before interest taxes and amortization. Yes. And that becomes really important, that word, when you’re trying to create value for somebody else. How has this affected your decision to go with private equity for your plastic surgery practice?

Yes. To buy. So, is this your practice buying into here? Here’s why I say this. I do real estate syndication. And the way you do those is a bunch of people who have extra money, they get together and they put in like how much they want, a hundred thousand, 200,000 for, and somebody has found the property.

There’s going to, it’s apartment rentals. So, somebody has found this property with two or 300, 400 units, and they can’t buy it on their own. So, they get a bunch of investors together. We all put in ours. And then they buy it and they manage it and we’re passive income, so, we’re not involved. They make all the decisions, but when it’s comes time to sell it, then we all get our money back, hopefully, and then a whole lot more with it, or it’s affinity.

We try to hang onto that forever as a cash producing asset and then we never leave, you know? Right. Because well, we get our money back. Is it like that or is it something?

David Kaufman, MD: I wouldn’t say it’s like that. Okay. So, in this instance, and in most instances of, at least my friends that have done this, they sell some interest in their practice and they retain some interest.

Ah, the goal, of course, is to continue producing and creating value to the overall company. And then when the company sells, I eat that proverbial second bite of the apple. What’s called rollover equity would be even more valuable than it’s at the time of the original transaction. Most of these transactions are structured in that you roll over 20 to 40% of your purchase price.

And the reason why they do that is, you know, in plastic surgery you are the value. It’s not like a management company where a manage management or a manager could be. I can’t be replaced very easily and I’m not irreplaceable, but there would be a lot of value out loss if I left. So, the goal is to take some equity off the table with a cash and close, but then, you know, build a company so, that the role of equity becomes also a very valuable consideration down the road.

Catherine Maley, MBA: Gotcha. So, why would a surgeon want to do this? Let’s do the pros and the cons. Why would you want to? How has this affected your decision to go with private equity for your plastic surgery practice?

David Kaufman, MD: So, the pros are, you know, there’s a lot of pros and granted, I’m fairly new into this, you know, we’ve only been acquired two months ago. But if you look at the things that you know specifically, we don’t like doing as most plastic surgeons or office managers or practice managers, HR, payroll, buying you know, all the things that really are not sexy or interesting, those can all be aggregated into a central.

Office or essentially, you know, the backend could be shared through practices. There’re also economies of scale. You know, if I buy one implant, I might get it for $800. If I buy a hundred implants, I might get it for $400. So, there’s certainly an economic consideration to increasing purchase power.

Catherine Maley, MBA: Would that go also with the injectables? With all the Absolutely. Pharma companies? How has this affected your decision to go with private equity for your plastic surgery practice?

David Kaufman, MD: Yeah.

Catherine Maley, MBA: So, we would consider you one big client of theirs then, because you’d be under the umbrella of a bigger…?

David Kaufman, MD: Right. So, we become a corporate account as opposed to individual account and the buying power is meaningful.

Gotcha. And you know, even if you reduce your costs 10 or 15%, you know, over the course, Many dollars, it becomes meaningful. So, you know, if you could take a, a company and increase its profitability by 10 or 15%, just that in itself I think is a win. What else? You know, the, the world of plastic surgery is always uncertain.

You know, we are a luxury item and to some degree there will be some economic headwinds that we face occasionally. And I think doing a transaction like this for someone like me who is. More senior in their career, takes some equity off the table and gives me some financial security. So, that should things go, you know, very downhill.

Mm-hmm. Some of the equities off the table, so, there’s some value there. And then, you know, ultimately my goal, and I think most surgeons’ goals are that when we aggregate our efforts together, we improve our own practices and, and those of others, so, that when a second bite happens, if that happens, It becomes a, you know, a very valuable transaction.

So, you know, it’s nice to have a little bit of security up at the upfront, and then hopefully there’s some meaningful upside on the, on the back end.

Catherine Maley, MBA: Well, I’m also thinking is does that. When they take over some of this HR and the inventory and all of that, does that mean you cannot hire two or three more people to do it yourself?

So, you’re not managing it, you’re not hiring for it, and you’re, you’re not spending money on that kind of labor cost. Is that a benefit or is that part of what you’re trying to do here? How has this affected your decision to go with private equity for your plastic surgery practice?

David Kaufman, MD: Certainly, that’s the, the hope we haven’t gotten there yet because at this point, you know, our integration into the parent company is requiring a fair amount of.

You know, the goal, of course, is to centralize a lot of the stuff that we currently have employees to do. Mm-hmm. And frankly, even if I can offload Kate, who’s my wife’s and office manager’s plate that would be a win too. And I think that’s going to happen because, you know, these, these functions are definitely being taken offsite.

Catherine Maley, MBA: Okay. Now, who is managing or who, who does the employee work for?

David Kaufman, MD: So, The employees, in my case, work for the parent company and my parent company is Prime Plastic Surgery. Mm-hmm. So, my former employees are now employees of Prime Plastic Surgery, as are the other surgeon’s practices who have been acquired.

Catherine Maley, MBA: Do you see that as an, I’m just going to be devil’s advocate here. I’ve talked to some of the doctors at Stanford, let’s say, and Stanford, they’re not employ, you know, they work for Stanford, they don’t work for that doctor. And then you have to hope that that staff is okay with that. You know, you don’t need to hear them saying, you know, I don’t work for you.

Like, can you imagine that happening? How has this affected your decision to go with private equity for your plastic surgery practice?

David Kaufman, MD: Well, you know, I think that then becomes an issue of leader. You know, I’m still the leader of this practice. I still make, you know, most of the decisions. Obviously, if there’s something critical, I would ask for input from the parent company, but for the most part, our day-to-day existence is very similar as it was previously.

You know, we still have the same surgeons, we still have the same teammates. They didn’t install someone in here as like the new practice manager? They did or did not? They did not. Okay. You know, we have historically been a successful practice, at least by, I, I don’t know, however you want to find success. And I think we’ve been reasonably successful.

We want to maintain that. So, you know, we don’t want a cultural shift. And that was something that I carefully investigated before we made this transaction is. You know, we have a successful practice with a very wonderful staff. And I was assured that I would still be able to make decisions about compensation bonuses and things like that to make sure that people still have, you know, the right focus and incentive to provide great care for our patients here.

Catherine Maley, MBA: Did you have any resistance to the staff or anybody thinking, oh, what just happened? Did you, how, how did you handle that? How has this affected your decision to go with private equity for your plastic surgery practice?

David Kaufman, MD: Well, we had basically a, a screw up. We announced that we were going to do this transaction almost six weeks before it happened. We thought it was going to happen sooner than it did, and for, you know, some number of reasons it didn’t happen as quickly as we thought it did.

So, at first there was a lot of anxiety because change brings anxiety. Yeah. But I think as time passed people realize that, you know, they still come to work, they still take care of patients, they still work with the same people that. Benefits were very, very similar to what they were previously, and that their work really isn’t that different.

It just, you know, the, the person who signs the check now is different. So, we’ve lost no employees. I think we have very good buy-in from them in terms of still focusing on great patient care. And so far, so good. Okay.

Catherine Maley, MBA: So, why wouldn’t you want to do this? Yeah. Like, gimme the, the, what’s the negative? How has this affected your decision to go with private equity for your plastic surgery practice?

David Kaufman, MD: Yeah. It’s risk. You know, you’re, you’re doing a deal and you’re getting into bed with people. You hopefully, you know, but you never know until probably years down the road. So, you’re going to give up some autonomy and that’s not always easy. Ultimately, you’ll have to play in a sandbox with other people.

You know, the parent company may have ideas of how to do things and you may have ideas of how to do things and somehow another, you need to reconcile those and that everybody is happy enough.

Catherine Maley, MBA: Like do they stay out of the surgical side and then you stay out of the HR side? Is it like, can it be that like line in the sand?

Can it be like that? How has this affected your decision to go with private equity for your plastic surgery practice?

David Kaufman, MD: I’m sure any agreement is possible. I don’t imagine that some bean counter’s going to come in and show me how to do surgery. But you know, I think they probably have ways that they want to do inventory or HR sort of thing. But again, you know, we’re only two months into integration and we’re trying to figure some of this stuff out.

Catherine Maley, MBA: Hmm. You know, you, I know this was your second go around. You had tr you had actually almost closed with a different group. Can you just talk about that for a second? Because I really want the audience to hear what, to watch for sure. What, what are the yellow flags or what could go wrong? How has this affected your decision to go with private equity for your plastic surgery practice?

David Kaufman, MD: So, the first go round, we went out to market, had some suitors.

We went through management meetings and ultimately, we chose to enter into a letter of intent with a private equity group out of Chicago. And we lawyered up. We got all our documents ready to go. We had gotten to essentially within 10 days of close, it was going to be a very different structure. It was more the traditional private equity purchases, some portion of our practice.

In that case, it was going to actually be a minority interest they were going to buy and we were going to be the platform on which to go out and acquire other practices. Mm-hmm. It’s unclear to me exactly what happened, but in the. When we got very close to sort of consummating the deal, they didn’t follow through on what they were supposed to do and the deal blew up and we were done.

It was incredibly disappointing. There was four to six months of efforts negotiating management meetings, onsite meetings you know, in excess of a hundred thousand dollars of legal costs, not to mention the time. And in the end, you know, I was smarter. But, you know, I had nothing to show other than, you know, a couple of bumps and bruises and a little bit of a, a little bit of an experiential learning.

Catherine Maley, MBA: Yeah. D was this like, so, with the lesson B, don’t be the first, like, join a group, like join private equity that’s already been in the game. Is that this, the, the point to that. How has this affected your decision to go with private equity for your plastic surgery practice?

David Kaufman, MD: I think it would’ve worked had we gotten across the finish line. I think it depends on what you want. I think if you, in that case, we are going to be the platform on which to build other practices.

Right. And I think that is an enormous amount, amount of work as opposed to being an add-on, which we are now. Because being an add-on, you know, the, it’s already working right, and we’re just integrating ourselves into that as opposed to sort of creating the. But it sort of depends on where you are in life, what your ambitions are, how much time you want to dedicate to it, because, you know, being the platform and building out the infrastructure is enormous and that should not be underestimated.

So, you know, that’s sort of what the private equity firms are there to help with. But ultimately, if you’re the first, you’re going to be doing a, a lot of work.

Catherine Maley, MBA: Right. So, what’s the private equity? How are they looking at this and why? Why plastic surgery? Because they never went there before. They went with derms. How has this affected your decision to go with private equity for your plastic surgery practice?

Like derms were just obvious to them. They had a lot of volume. They could com commoditize it. Like why? Why does plastic surgery look interesting to them now?

David Kaufman, MD: Well, I think the other markets have proven to be successful and now I think they’re moving into this space. I think they’ve been very successful in dermatology, certainly in dentistry.

Gi. And I think that, you know, the world is now accepting that plastic surgery is just a normal part of life. Mm-hmm. And, you know, look at plastic surgeons. Not many of them run their businesses exceptionally well. And here’s a chance for an equity group to get in there, inject a little capital and operations, and improve, improve profitability.

It’s a little bit of a beta test now because there haven’t been too many plastic surgery groups that. Hit it big, but like, look at Air Sculpt, they’re a, you know, I think there’s 17 or 20 lipo center sites and they’re valued in the 700 million. It’s absurd. So, you know, I think it’s, it’s a real thing and the firms are interested.

I think it, as more and more practices are acquired and aggregated and hopefully exited will prove a successful model and even create more.

Catherine Maley, MBA: So, I, I like to follow the money. That’s kind of my thing. Sure. So, a plastic surgeon who’s doing really well, but is so, tired of the running of the practice, they would buy in or the other way around, the PE would buy into them.

Who’s buying into whom? How has this affected your decision to go with private equity for your plastic surgery practice?

David Kaufman, MD: So, the, the, the cash flow was from the PE firm to a strategic partner to a practice or directly from the PE firm to. Plastic surgery practice, but understand, you’re, you’re basically selling some of your EBITDA to the private equity firm.

Catherine Maley, MBA: Gotcha. So, it’s not like, you know, there is transaction, there’s, there’s value being traded for cash, who decided what the value is? How has this affected your decision to go with private equity for your plastic surgery practice?

David Kaufman, MD: So, that’s a good question. And if you look at how practices are valued mm-hmm. You look at what your EBITDA is, and as you mentioned, earnings before interest, taxes, and amortization. That’s essentially what your annual profit is. Okay. You then take away from that what your ongoing salary is going to be.

So, let’s say I’m making $10 a year and I’m going to make $2 a year. The EBITDA that I’m selling is $8. Okay. So, then that EBITDA is multiplied by some multiplier, and that in the plastic surgery world could be probably as low as three or four to as high as maybe 10 if you’ve got a super robust practice.

Mm-hmm. And that’s called your. Total enterprise value. So, let’s just say for ease of numbers, you’ve got eight of saleable EBITDA and your multiple is 10. Mm-hmm. Your total enterprise value is now $80. That’s the value of your practice. Mm-hmm. Then that value is sort of parsed up into three parts.

Those parts are the cash should close, the rollover equity, equity that we talked about before, and then there’s sort of a middle grounds, which is. Earns. Mm-hmm. So, those are monies that are paid as long as your practice continues to perform and those levers can be moved up and down. Like the more rollover equity, you would be willing to put in, you might be able to squeak your multiple a little bit higher.

Mm-hmm. You know, if you want a lot of cash on clothes, they’re going to crank down in the multiple because, you know, there’s more flight risk of you just leaving and leaving them high and dry with a practice that doesn’t produce. But that’s, you know, that’s sort of a nutshell of how practices are. I think in general it’s a very good idea to go out and get an outside quality of earnings evaluation so, they can actually look at your practice an expert can, and run the numbers so, that when you go to market, you know you’re not going to market with some inflated or completely ridiculous estimation of your own.

Catherine Maley, MBA: Do the private equity people, do they understand our industry or is it, one of my issues is although everyone says my business is different, we all say that my practice is different. But business is business for sure. But how much creativity do you still have on your own, like for marketing or branding?

Like who are you now? Are you brand, are you still branded? Is. PE company branded. How’s that working? How has this affected your decision to go with private equity for your plastic surgery practice?

David Kaufman, MD: Yeah, so, that’s a great question and I think it, again, it depends on who you work with. So, there’s a company out there called a Phoenix, which I’m sure you’re probably all, at least on the West coast familiar with.

Mm-hmm. They brand their practices as the athe group of plastic surgeons. Mm-hmm. The one I’m with is different. We maintain our own branding, so, just like hotels, like you might stay at a, a Kimpton by Marriott. Mm-hmm. Well, my practice is my practice name. Part of the practice network or something like that.

So, we allow, or we’re allowed to maintain our own branding because I think we have a lot of brand equity in our area. We don’t want to scrap that. Mm-hmm. But there is some co-branding with the parent company, so, that way, you know, someone takes a look, they, they understand that we are part of a bigger group.

Catherine Maley, MBA: And then are they paying for the marketing efforts of everybody? How is that going? How has this affected your decision to go with private equity for your plastic surgery practice?

David Kaufman, MD: Well, ultimately, since they’re the owners of the company and all the money is theirs, both in terms of income and outflow. Mm-hmm. In theory they are, yes. But we still largely control what we’re doing from a marketing standpoint.

That’s one of the things that we’re working on collectively in terms of how to optimize our marketing. So, we now have a central VP of marketing trying to coordinate some of our efforts, look at be best practices, track the data, and see what’s successful and hopeful. You know, disseminate best practices and try and minimize the ones that have historically not worked.

Catherine Maley, MBA: Okay. So, they bring the, the value that they’re bringing to you is like business people. They’re bringing you the, the market, the VP of marketing, the VP of inventory, the v, like they’re, they understand the, the numbers part of a practice. I just find this so, interesting. It’s a lot of players involved. Like is it, is there like a board of directors?

Yes. Or…? How has this affected your decision to go with private equity for your plastic surgery practice?

David Kaufman, MD: Yeah, there is. And you know, most of us who have put our practices into this group have a seat on the board so, that we have some say in how things are done. Yeah. But you know, the goal. Taking a bunch of small practices and turning them into a big practice with economies of scale efficiencies and best practices across the platform with the goal of when it’s time for you to exit.

Catherine Maley, MBA: Because they don’t need you there for a year. They need you to stay put.

David Kaufman, MD: Right, right. So, in my particular deal, I have a few years of turnout. So, it’s not like I got a big pot of cash and walk, I could walk away. Mm-hmm. Like, I’m, I’m tied to this both because I have financial ties, but also, I really want to see this through.

Like, this is something that I think could be transformational within plastic surgery. Right. And may change the landscape. And I think if we do it well, it could be the model for, you know, many years to. You know, if you screw it up, then you know, it’s just crash and burn and that’s no good, but it’s going to take some effort.

And, you know, I’m, I’m committed as I believe the other people who have joined this group are committed.

Catherine Maley, MBA: Well, you joined a good group with you know, I mean, Robert Singer is solid, you know, he’s, but now like, like let’s say he’s getting older, you know, how, how do you step out of this if you need to or want to? How has this affected your decision to go with private equity for your plastic surgery practice?

David Kaufman, MD: Yeah. So, in theory, after. Earnouts. Mm-hmm. I would still have equity in the overall company and if I wanted to work less, I could, because I would just earn less because I still have a salary based on production. But I would just write off into the sunset and, you know, hopefully our group will start a fellowship because we have these multiple locations for fellows to learn through multiple different surgeons and locations, how things are.

Our hope then is to take those fellows and backfill the people that leave. We’ll see how that works. Cause this is all very new and mostly conceptual. Mm-hmm. But it, I think there’s something to be said for a, a fellowship that has five or six different practices to draw from, from in multiple different geographic locations.

And then of course, you know, we’ll be looking at them and hopefully they’ll be looking at us. And if we find a match, if it’s time for someone to leave or another practice is ready to bring on another associate, that will be a perfect person to quit in.

Catherine Maley, MBA: Well, you know, with the trends, the way they’re going, you can’t be a fellow with a million or two extra to invest in some practice you know, to buy somebody else’s practice.

So, that actually makes a lot of sense because those days it’s not going to happen. Usually if they had one or 2 million, they’ll just open their own place, typically. But if you let them get into a, something like this, I assume, They’re walking in without an investment, maybe being, making an investment.

However, that also holds them back from equity. They probably don’t get equity for a while. So, is that also one of the points? How has this affected your decision to go with private equity for your plastic surgery practice?

David Kaufman, MD: So, certainly there’s zero risk to onboarding and for a young surgeon who is right out of training. It’s a great opportunity to both learn aesthetic surgery, because historically residency practice, the residencies have not been great at training in that regard.

Mm-hmm. You know, at that time in your life, typical, typically people don’t have a whole lot of money to buy a practice or buy a building or build an OR. Right. And then the goal is, you know, if a, a younger surgeon joins and over the course of the first few years shows promise or commitment, you know, Trying to craft some ways to create equity or at least phantom interests for you know, younger surgeons to keep them committed to the long-term success of the practice.

Catherine Maley, MBA: Okay. And then would you want more and more practices joining? Is that helpful to have that big economy, scales of economy, however, or economies to scale? However, is there a point of getting too big and getting lost in all of this and imploding? How has this affected your decision to go with private equity for your plastic surgery practice?

David Kaufman, MD: Sure. Well, I think that the answer to that, Growth is always well usually desired.

Mm-hmm. Certainly, we need to work out the kinks of onboarding so, that as PR new practices are integrated in, they’re done in such a way that it’s not disruptive to the practice, so, that they don’t take a hit on the way in. I don’t know what the exact right number is for a target to either, you know, sort of go up for a second offering or consider public.

My sense is in the, you know, the 30 to 50 million of EBITDA, so, once you aggregate to that level, that big, that puts you on the radar of big PE firms or maybe even considering, you know, public offerings. Mm-hmm. But you know, we’re not anywhere near that, but we’re working in that drip general direct.

Catherine Maley, MBA: I just thought of something for you to make this work, somebody like the centralizing has to know the numbers.

Yes. And they have to consolidate and know they, they need data. Yes. Is everybody going to need to be under the same EMRs? Yes. Phone systems payment plan, all of that is, will all of that be consolidated essentially? How has this affected your decision to go with private equity for your plastic surgery practice?

David Kaufman, MD: Well, we, we are already on the same EMR. Okay. Some of the practices have use of the MR than others.

And that’s one of the things that certainly the IT department will work on is bring everybody up to speed. So, there’s similarity across platforms. I believe we’re all running on the same accounting system. Oh, the same bill pay system. So, that’s truly a centralized company with essentially, regional offices as opposed to just a bunch of people strung together on quick.

Catherine Maley, MBA: Right. That would be confusing.

David Kaufman, MD: Yeah. Well, they, they have a, in my opinion, at least from the feedback I’ve gotten from Kate, an exceptional chief financial officer and, you know, there’s a, there’s a lot to keep track of. There’s a lot to keep track of for sure.

Catherine Maley, MBA: Is, has this been like a part-time job for you?

A full-time job? What kind of time goes into it? How has this affected your decision to go with private equity for your plastic surgery practice?

David Kaufman, MD: Well, I would say that my lovely wife, Kate, it’s been all consuming because she runs our practice and she’s always made it. So, you know, I just have to operate and, you know, see patients and she takes care of making the machinery work around us. Mm. So, it’s been an enormous undertaking on her part, for which I am deeply, deeply in depth.

But no, it’s, it’s a you know, it’s been a lot of. But I think we, I hope that we see the light at the ender of the tunnel, which is efficiencies that take a lot of the crap that she doesn’t like to do off her plate.

Catherine Maley, MBA: Yeah. And make them. Not everyone married as well as you. You know, others are really stuck in the middle of all of this drama that goes on in the office.

And if you, I mean, most surgeons I talk to would like nothing more than to do surgery and nothing else, you know? Yeah. And not deal with this. So, this is a new option for those who are really looking for a way to not exit so, much as to just. Shift things. So, you’re just a lot happier doing what you like to do, and I’m not bogged down with what you don’t like to do. How has this affected your decision to go with private equity for your plastic surgery practice?

David Kaufman, MD: You know, there’s a lot of merit in what you just said and you know, I think there’s, there’s something, something there.

Catherine Maley, MBA: Well, Dr. Kaufman, it is always a pleasure talking to you. If anybody wants to reach out to you, how would they do so?

David Kaufman, MD: Sure. My cell phone is (650) 387-6066.

Email works, [email protected], or certainly you can find me on the internet.

Catherine Maley, MBA: All right, and his website is the natural or is it one result?

David Kaufman, MD: Singular. Singular.

Catherine Maley, MBA: You only get one result. Yes. Yes. All right. Thank you so, much. I really appreciate it. And let’s see what happens.

I mean, this really makes logical sense. It’s the matter of, I just my 2 cents. Know your business partners. Intimately because you are going to be in a relationship with them for a very long time. Things can go sideways. Make sure you’re with somebody who can negotiate and debate nicely without going to war.

You know? I mean, what, what, what do you think, what, what, what, what would you be, what would be your advice to others who go into these kinds of partnerships?

David Kaufman, MD: Well, I would say work with people that you generally like, because there will be difficult decisions that need to be make at some point in concessions that have to be made for both sides.

And having someone that is a reasonable and has the big prize in mind, I think that’s critical. So, we’re at the, the, you know, the early stages of this and I’m very excited the way, see it, how it turns out. And I’ll certainly keep you posted as, as things progress.

Catherine Maley, MBA: Everybody that’s going to wrap it up for us today, a Beauty and the Biz and this episode on private equity and plastic surgery.

If you’ve got any questions or feedback for Dr. Kaufman, you can reach out to his website at,

A big thanks to Dr. Kaufman for sharing his experience and advice on private equity and plastic surgery.

And if you have any questions or feedback for me, you can go ahead and leave them at my website at, or you can certainly DM me on Instagram @CatherineMaleyMBA.

If you’ve enjoyed this episode on Beauty and the Biz, please head over to Apple Podcasts and give me a review and subscribe to Beauty and the Biz so you don’t miss any episodes. And of course, please share this with your staff and colleagues.

And we will talk to you again soon. Take care.

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-End transcript for “Private Equity and Plastic Surgery — with David Kaufman, MD”.

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