Think you have labor pains? Consider healthcare
Modern Acupuncture franchises employ only certified acupuncturists like this one, shown placing needles in a client’s legs, and strived to “embrace the profession early on,” said CEO Matt Hale.
In the struggle for labor, medical and healthcare franchises may have the biggest challenge of all. Douglas Bertram, CEO and founder of Structural Elements, puts it succinctly: “It’s a nightmare.”
Let us count the ways: Some practitioners graduate with massive debt loads and demand high salaries, straining payroll budgets at the unit level. Certain states bar the corporate practice of medicine to avoid conflicts of interest, meaning a non-licensed person cannot employ a licensed one. Acupuncturists, chiropractors, optometrists and the like are newly minted in restricted numbers by a set number of schools.
Then there’s the outright and hostile resistance to franchised healthcare providers in some instances, most notably when The Joint Chiropractic began disrupting the comfortable chiropractic world in earnest in 2010.
Nonetheless, healthcare franchises persevere, no doubt attracted by growth rates in some cases nearing 30 percent, according to the Franchise Times Top 200+. Here’s how some are cracking the labor nut.
Relying on research
Jennifer Tucker, COO of Homewatch CareGivers, doesn’t like to wing it when it comes to attracting and retaining caregivers. “We don’t like to just take guesses about what’s working. Without caregivers we have absolutely nothing to offer,” she says.
So she relies on research, including a new project that was “a really intense online focus group of caregivers that both worked for us and caregivers that worked for other homecare providers.”
She’s not ready to share results of that survey just yet, but she did reveal lessons from research completed a couple of years ago. What do caregivers want? “The ability to earn a full paycheck, and it’s defined differently for different people,” she said. Some want 20 hours a week but never fewer. Others want overtime. Most if not all want consistent clients and almost always so do the clients. “That’s a really big one that we have found really retains our caregivers, is that we can give them the hours that they really want and be consistent about it.”
Elevating the optometrist
Dr. Carl Spear was tapped about a year ago as senior vice president of eye care for Luxottica, the retail eyewear and eyecare giant and the umbrella company of Pearle Vision. The appointment “absolutely was a commitment” from the company’s owners “to put a renewed emphasis on the doctor and the eye exam component, partly because of the competition that we see in the space. It ultimately starts with the patient,” he said.
Alex Wilkes, general manager for Pearle Vision, says the system attracts about 50/50 non-medical and medical investors. “However, our pipeline is skewing much more heavily non-doctor.” That means the services of Spear’s team, which includes recruiting doctors and navigating state-by-state rules, is even more in demand.
Spear counts about 45,000 optometrists in the United States, and 24 schools of optometry. Those students typically graduate with $150,000 to $200,000 in debt. Wilkes said Pearle Vision tries to support such people with a program started about 18 months ago.
“We’ve partnered with a few lenders to develop special financing programs for freshly minted optometrists, where they can buy up to 100 percent of the cost of Pearle Vision through a loan,” he said.
Creating a career path
At ComForCare, a home heathcare provider, CEO Steve Greenbaum formalized a number of initiatives into a program called Caregiver First that seeks to recruit and retain caregivers. He notes it’s common for companies to “purport to have a caregiver focus and mentality,” but “it’s one thing to have concepts and another to get out and do something about it.”
A learning management platform that includes proprietary modules with specific state-by-state training is one element of the program. Another is a focus on helping people develop a career path, with nurses, social workers, certified nursing assistants and the like moving into greater responsibilities over time.
That helps with a chronic problem in homecare: low wages. “Caregivers would like to earn more. That’s not a ComForCare issue, it’s an industry issue,” he said. “That is why we’re promoting the career path.”
The acquisition of ComForCare by The Riverside Co. in 2017 boosted the tools available, from an applicant tracking system to a reward and recognition program to a mentor program for newer employees at franchisees’ units. “This is all Riverside investment,” Greenbaum said.
Living and learning
Modern Acupuncture was launched by some of the same execs that franchised The Joint Chiropractic, and they learned a lot about do’s and don’ts in the healthcare space.
“We learned from that if we embrace the profession early on—here’s what we stand for, here’s what we do—this tide is going to lift all boats,” said CEO Matt Hale. “We’re going to increase awareness and education of acupuncture, and that’s going to benefit the profession as a whole.”
A key advocate for the brand is Marilyn Allen, a small equity partner who is the only U.S. delegate for the World Health Organization for acupuncture. “She’s the one that connected us to the schools, the boards … the regulatory national body,” Hale said. “They love what we’re doing because we’re growing the profession.” By contrast, when The Joint started, chiropractors and regulatory bodies actively resisted the franchise.
To work around the corporate ban on the practice of medicine in some states, Modern Acupuncture’s model has licensed acupuncturists performing the clinical services, with a management fee paid to the franchisee. Salaries for acupuncturists range from $50,000 to $70,000 a year, with many franchisees giving incentives as well.
Pioneer in retail healthcare, The Joint learned hard lessons
“First of all you’re absolutely correct,” says CEO Peter Holt. “The Joint did and in some respects does have a reputation issue” with governing boards of chiropractic, in part because of its own early missteps, in part because of “ignorance of our business model,” and in part because it was a pioneer in providing chiropractic care to the masses through franchising.
Founded in 1999 with franchising beginning in 2008, The Joint had 242 units operating in 2014 when it went public and today has 450 clinics in operation, with a bit over 1,200 doctors of chiropractic under its umbrella.
“It’s typical of any company coming in as a disrupter,” he said. It didn’t help that the initial price was $19 for an adjustment, an amount that has risen in its corporate clinics, he said. “If you’re charging insurance-based services” for $79, “this feels a little scary.”
Also, “in the early years the idea was to pay $35,000 a year,” for chiropractors, “and that’s where the reputation” problems came in. “It evolved over time,” with The Joint’s 51 corporate clinics averaging $50,000 to $65,000 in salary.
“We also have been working incredibly hard to improve our relationships with schools,” through donations and participation in career fairs, for example. “We are slowly educating them on what we do here,” Holt said.
He says same-store sales in 2018 were up 25 percent; in 2017 up 21 percent; and in 2016 up 28 percent. “Tell me who in retail has those kinds of comps,” he said.
At least one analyst, Seeking Alpha, is not impressed with The Joint though. “To run a Joint successfully and to actually generate lots of money doing so, the clinic owner needs to find a way to generate extremely high foot traffic and generate operating leverage from its chiropractors—not an easy task,” said a May 23 report by The Friendly Bear, predicting a “minus 65 percent downside on busted unit economics.”
In other words, this healthcare pioneer still has work to do to attract caregivers.
For one new wellness brand, 180 pages of research
Douglas Bertram, an acupuncturist, started Structural Elements in 2013 with a simple and noble idea: help clients re-balance their bodies to keep them healthy and active longer. He’ll go to great lengths to help his clients, like the time he followed a client attempting the fastest time on the Appalachian Trail. “He needed a tune-up from time to time,” Bertram said. “I drove many long nights in my truck to track him down.”
But the work was nothing compared to starting a franchise: “We got spanked hard by the medical model,” he said, launching a franchise program in 2015, then taking two more years to open the first franchise unit with another following in 2018.
The process then screeched to a halt. “We started bumping into the corporate practice issue, and it took about eight months to solve the riddle,” he said. “I’m a brand builder and a marketer. It has been a very steep learning curve to figure out the mechanics of franchising and the corporate practice of medicine.”
In Virginia, for example, a non-licensed person can employ a licensed person. In Maryland that’s forbidden, he explains, and each state differs. “Even a licensed professional depending on the state is going to have the ability to hire their same profession but not other professions. A chiropractor may be able to hire a chiropractor, but not a massage therapist or an acupuncturist.
“It is an absolute matrix. We did 180 pages of research with Gray Plant Mooty,” the law firm, “to map out the corporate practice of medicine. It’s dense.”
The result is a revamped business model that will mirror the salon suites business, currently seen in the hair care industry. “It’s like Sola Salon Studios, but for wellness,” he says. “Now we have a real estate play, we have a managed service, where the investor is leasing those turnkey clinics” to individual healthcare professionals that become micro franchises.
He believes he’s finally got it right. “I’ll be completely honest. We didn’t sit down and mastermind this. We built this rocket ship in the air, while we’re responding to our learnings.”