Non-Competes And IVF KPI’s: Listening In On Griffin Jones And Brian Levine
I’ve become a regular listener of Griffin Jones’ podcast “Inside Reproductive Health,” and his episode this week is particularly enlightening. He had on Brian Levine, a founding RE at CCRM in New York.
I initially met Brian a couple of years ago, and found him to be an admirably entrepreneurial minded doctor. A couple of things came up on the podcast that I found notable. First, a bit of nomenclature. Griffin threw out the term “KPI.” This stands for “key performance indicator.”
There’s an excellent business text, “Measure What Matters” by John Doerr, that defines the term; his point is that you have to be able to measure and track certain data points to figure out whether your assumptions are correct and whether your plan is working. I’m a big believer in KPI’s. I just wanted to make sure everybody knew what they were talking about.
Personally, when I evaluate IVF businesses, I focus on of two KPI’s: 1) time to baby, and 2) dollars to baby. During 15 years of seeing IVF patients, these were the two metrics the patients used, either implicitly or explicitly; if they were important to the patients then they had to be important to me.
Dr. Levine’s take on entrepreneurship and reproductive medicine is a good one, and from his vantage point working both as a practice founder and as a member of CCRN, he is in a good position to make insightful judgments. Which is not to say that I agree with everything he said. I did take issue with his dismissal of new doctors’ concerns about noncompete clauses. He emphasizes that new doctors, assessing new opportunities, should focus on the upside: how to expand the practice, how to make the practice better, and not focus on exits and break ups. It would be disingenuous, however, to imply that every junior doctor will be treated fairly, or will be dealing in a position of strength should things not work out at some point in the future. Personally, I recommend adding a clause to the initial employment contract that spells out specific parameters under which the noncompete will be dropped. In other words, if there are agreed-upon expectations as to what a potential partner needs to do to it to achieve partnership, and he or she achieves those metrics, then in the event that the program decides not to make that person a partner, the restrictions of the noncompete should be loosened. Better yet, the restrictions should be loosened at interim points if the junior associate meets agreed-upon metrics at time points before the partnership decision. Finally, there should be buy-out provisions for non-compete clauses.
Of course the power dynamics of these contract negotiation at this point don’t really give the graduating fellow the power to make these kind of demands. It is, of course, a good idea to have a lawyer work with you.
The best part of the interview was when Griffin and Brian talked about the need to build an IVF program, or any business for that matter, with the goals of providing a great service and growing because of it, and not with the explicit intention to sell the business. As someone on the “buy side” who buys and sells pieces or whole companies in industries like biotech, medical devices, as well as reproductive medicine, it’s really obvious to me when the founder or management team “stages the house” to make it look great in the short term, in order to facilitate a transaction, with an eye on the exit door as soon as their own noncompete clauses expire.
The best way to sell the business is to build the business as if you never want to sell it. Dr. Levine thinks so too, and his patients (and partners) will benefit from that.
Anyway, no conflicts of interest here other than to give a nod to a resource in the reproductive medicine field that nobody else provides. If you’re not listening to Griffin Jones’ Inside Reproductive Health, it’s a good time to start.