- May 7, 2010
Company. Nuviva Medical Weight Loss
Industry. Health care
Key. Successful health-care businesses can learn from the Ritz-Carlton's legendary customer service.
In the medical profession, even doctors will acknowledge that running a business isn't one of their strengths.
In the case of Nuviva Medical Weight Loss clinics, maybe the best things going for it are its founders: a pair of young entrepreneurs who cut their teeth selling real estate.
Alex Joseph, 32, the president and CEO of Nuviva, is blunt: “I approach this as a business, not a medical practice.”
Walk into the Nuviva clinic in Fort Myers, and it feels more like a well-appointed real estate office than a doctor's waiting room. For one thing, there's no sliding glass window or sign-in sheet at the front counter. Clients are whisked in immediately for their appointment.
For $150 for an initial consultation and then $100 a week, clients receive one-on-one guidance with the clinic's physician and follow-up help with nutritionists and nurses.
The business stands on its own merits because most people pay for care out of their own pockets as insurance doesn't usually cover weight-loss programs. Besides, Joseph says: “I'm not a big fan of reimbursements.”
Patients who rely on insurance to pay for their medical care “don't have skin in the game” and are less likely to work the program and succeed, Joseph explains. “People don't value you anymore” when they don't have to pay for care directly, he says.
Joseph's elevator pitch is persuasive: “Lose weight today, keep it off, and send me friends.”
Nuviva's Ritz-Carlton-like approach to weight loss is paying off. The company attracted new investors and has embarked on a plan to sell franchises. Already, it has sold four franchises and Joseph and partner Jeffrey Delaney, 29, the company's vice president, are working on selling another 13. Their goal is to sell 100 franchises in the next five years.
Starting a new life
Joseph and Delaney sold real estate to speculators during the boom, but their true passions were fitness and nutrition. Delaney, in particular, had developed a reputation as the go-to guy for bodybuilder nutrition advice.
The business partners teamed up with Fort Myers cardiologist Brian Arcemont to establish a small, 900-square-foot clinic in town providing hormone therapy for healthy individuals. “It wasn't a financial play for me initially,” Joseph says. “We found a niche that worked. Before you knew it, we had a real business.”
What they christened the Human Performance Longevity Center was a hit when they opened in 2006. They found that people were eager for pricey hormone therapy and Botox injections, even in the face of the recession. “People still reached into the bottom of their pockets,” Joseph says. “A lot of people held onto the dream that it would get better.”
But the recession began to eat into their business as people began to cut back on pricey hormone therapy that cost as much as $500 a session. “What can we do that everyone can afford?” Joseph and Delaney remembered thinking in late 2007.
By then, the real estate business was slowing and the two partners decided to shift their business focus to weight loss. “We knew how to make a diet that was superior,” says Joseph. By combining nutrition with off-label medications and education, Joseph and Delaney believed they had a better program than competitors.
Joseph and Delaney had a core following of about 40 clients they had cultivated. With $30,000 they had saved from their real estate ventures, the duo opened two centers under the banner of New Life Medical Weight Loss, one in Fort Myers and another in Naples, in January 2008.
Each office has a medical director, a physician who works part-time and conducts the initial evaluations to make sure patients don't have life-threatening health issues. These physicians, some of whom own a share of the business, have their own separate practices and counsel weight-loss patients for extra income. Nurses and nutritionists manage patients' weekly follow-up visits. Each office grosses about $90,000 a month.
Despite the recession, New Life was successful because its customers saw weight-loss results. Joseph and Delaney used free online social media to market their clinics and rewarded current customers who referred new patients with a $100 visit.
Some clients wanted to invest in the business, but Joseph and Delaney turned them down. “I didn't want a business partner,” Joseph says. “This was our baby.”
But in 2009, Megan and Travis Spears, a young Fort Myers couple, offered to back the young entrepreneurs' expansion via franchising. Megan Spears is the daughter of Bonita Springs-based residential developer David Lucas, who has financed numerous business ventures in the region.
“After we had gone through the program, my husband approached Alex and said you've got a special thing here,” says Megan Spears.
Meanwhile, Joseph and Delaney were debating how to build the company. They sold a 25% stake in the business to the Spears, and hired Naples consulting firm Third Eye Management to help them set up the business for franchising. Joseph and Delaney retained 65% of the company, with 10% owned by Arcemont, the medical director.
“I had no idea what it would take,” says Joseph. For starters, they had to find a new name because New Life wasn't protected and came up with the Latin derivation, Nuviva. “We had to rebuild ourselves from the ground up,” Joseph recalls.
But franchising appealed to the company founders because they wouldn't have to micromanage the expansion as they would if they were to open more clinics themselves. “We need people who have ownership in the business,” Joseph says.
It took a full year and “several hundred thousand dollars” to set the company up for franchising. Franchise documents had to be drafted, audits had to be conducted and procedures had to be established. Finding and evaluating the company's new name cost $15,000 alone.
“It became very clear, very quickly that these guys had a phenomenally successful business model,” says Karl Gibbons, president and CEO of Third Eye. It was such a great business that Gibbons wondered: “We must be missing something here.”
So Gibbons went through the weight-loss program himself to test it out. He lost 35 pounds in six weeks and has kept it off.
The success behind Nuviva, Gibbons says, is Joseph and Delaney's approach to customer service. “They care about people and that was so evident,” Gibbons says. “The weight-loss industry is littered with people that really just want to take your money.”
The white-glove treatment stands out, Gibbons says. “Alex and Jeff won't take shortcuts,” Gibbons says. “They won't buy cheap anything.”
Another plus is that neither Joseph nor Delaney is a physician, though Delaney has experience as a hospital critical-care respiratory therapist and a nutrition counselor to bodybuilders.
“It's our experience that most people in the medical profession are challenged to running a business,” Gibbons says. “None of our owners is a physician,” says Joseph.
The company sold four franchises within months of filing the necessary paperwork, including to some former patients. It costs between $160,000 to $230,000 to open a clinic, including the $75,000 franchise fee. Nuviva is working on selling another 13 franchises this year, already exceeding expectations. “The tsunami caught up with the boys,” Gibbons chuckles.