By: Amy Feldman
Ten years ago, when Dr. Anastasia Gentles worked at Texas Children’s Hospital’s emergency room, she spent many hours seeing children with fevers and ear infections who wound up in the ER for lack of other options. The pediatrician, now 49, came up with the idea of an urgent-care center just for kids, and asked a friend from church, Zawadi Bryant, 43, who had business experience, what she thought. The women – along with a third partner, Connie Cazares, 41 – founded NightLight Pediatric Urgent Care with a single location in Sugarland, Tex. Today, the chainlet of pediatric urgent-care centers spans five Texas locations (with two more in the works) and expects to produce $8.5 million in revenue this year. In a conversation that has been edited and condensed, Bryant, the company’s CEO, spoke about their hopes for going national.
Amy Feldman: Tell us about starting NightLight Pediatric.
Zawadi Bryant: Dr. Gentles had this great idea: What if we had an urgent-care center just for kids? That way we could see these fevers, coughs and ear infections that are not so urgent, but cannot wait for the next day to be seen at the doctor’s office. She and I went to church together, and she knew I had a business background. She floated the idea past me. I have an MBA but knew nothing about medicine. Urgent care was really young then, and no one was doing pediatric urgent care. We started with a first location in Sugarland. We didn’t want to start too big because we didn’t know if people would accept the concept. Within a year, we were outgrowing the space.
Feldman: Are there other pediatric urgent-care centers now?
Bryant: Very few people do it.
Feldman: What was it like at the beginning?
Bryant: A lot of pediatricians thought we would take their patients. Our motto is very simple: We are not a replacement to primary care. We don’t do well checks, we don’t do inoculations, we don’t do follow-up. It took them a while to trust us. Once they believed we weren’t going to steal their patients, they started referring to us.
Feldman: How do you manage the growth?
Bryant: This is where it is nice to have an engineering background. I am very methodical and systems-oriented. I worked for large companies, like BP and Hewlett-Packard. That helps us with standardization. Whether you go to our Sugarland location or our Webster location, the same procedures will be followed. I want to be the McDonald’s of urgent care in our systems and processes.
Feldman: Is that part of the reason you took over as CEO in January?
Bryant: Yes, that was a major part of it. My partner was like, “This is really a business.” This year we are focused on the numbers and on getting more efficient. She and I had shared the co-CEO role. Dr. Gentles will be the chief medical officer.
Feldman: Where are your clinics?
Bryant: All are in the Houston area. We are now evaluating other cities in Texas, and we have our eyes set to be in other states. We want to get our footing in Texas first because the laws are so different state-to-state. We’re looking at Colorado, California, Arizona. Pediatric urgent care really plays well in urban areas. You need a dense population for it to work.
Feldman: What are the numbers you need to open a new center?
Bryant: For urgent care to do well, you need at least 200,000 people in a five-mile radius. Kids are normally a third of that. You need an area where you could put in multiple centers.
Feldman: How profitable a business is it?
Bryant: We’ve been doing 20% to 25% profit margin.
Feldman: How has the business changed with the Affordable Care Act?
Bryant: The ACA has not really affected us.
Feldman: Why is that?
Bryant: The ACA really was to address the uninsured adult population. I couldn’t articulate why it didn’t impact us until I went to a workshop on Friday, and saw a graph showing children covered by Medicaid. Fifty-percent of children in Texas are covered by Medicaid or CHIP.
Feldman: You hear a lot of talk about doctors not being able to make enough money on Medicaid patients. How does that work for you?
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Bryant: In the state of Texas, Medicaid is pretty much privatized, so the plan administrators for Medicaid are very savvy. The largest Medicaid plan in Houston approached us and said, “How can I make sure my kids are seen at NightLight because I’d rather pay you than pay five times that for the ER.” They are smart enough to know that their members are going to go somewhere and it’s better for them to come to us than go to the ER.
Feldman: What do you expect to happen with insurance going forward?
Bryant: It’s so out of control—the whole situation. That is why we are looking into a membership program where we can offer people a discount to participate. You pay a monthly subscription fee, and have a reduced fee when you visit. Even now, people have commercial plans, but the deductibles are so high that they pay the full visit themselves, which can be very expensive. Our parents will sometimes pay out of pocket because it can be cheaper.
Feldman: How would a membership program work?
Bryant: We’re still trying to work out details. It’s very popular in urgent care. It could be $50 a month, and a $50 copay so there is risk-sharing with the family.
Feldman: How does that compare to the regular cost?
Bryant: Our self-pay rate is $150 for a visit, including all shots and X-rays.
Feldman: What’s been your experience offering health insurance to your own employees?
Bryant: We pay 100% of our full-time employees’ health insurance. It’s a challenge, but being in healthcare we took a stance when we started that was something we were going to do. Also, employees’ children can be seen at the clinic for free up to a certain amount of visits.
Feldman: Have you taken on any outside investors?
Bryant: No. We have good strong banking relationships. That is the cheapest form of money. We’re talking to investors now, we’re talking to private equity. Right now we are happy with the pace that we are growing, but at some point we would want to grow faster.
Feldman: What’s your benchmark for needing an outside investor?
Bryant: Beyond 10 clinics, we would need a partner. Pediatric urgent care is growing. We probably have three to four years until the bigger players start to consolidate. We want to be one of those players.
Feldman: How many years down the road would you need an investor?
Bryant: Definitely within the next couple of years. We have two clinics under construction now, and we’re looking for three or four new sites in Houston.
Feldman: Is your ultimate goal to be a national business?
Bryant: We think so. PM Pediatrics is a big pediatric urgent care center with 20 clinics in New York, New Jersey and D.C. There’s another Night Lite Pediatric in Florida that is not related to us that has 10 clinics. Outside of that and the ones affiliated with hospitals, there are no players of size. There is definitely an opportunity for a major national player.
Feldman: Could general urgent-care players move into pediatrics?
Bryant: I don’t think so. It’s such a different model. They do primary urgent care. We see kids, so we don’t do workmen’s comp, we don’t do occupational medicine, and we don’t do regular care that competes with our physicians. They’re generally open 9 a.m. to 9 p.m. We’re open Monday to Friday 3 p.m. to 11 p.m. and weekends 11 a.m. to 9 p.m.
Feldman: How has it been for you personally to start a company after working for some of the biggest ones?
Bryant: When it was just the three of us, we all had day jobs. I worked at BP during the day, and at the clinic at night. I worked the front desk for a year. Early on Saturdays, we would put on our headphones and wash the windows.
Feldman: How did you get to the point where you quit BP and focused on this full-time?
Bryant: After a year, I was able to. There was a situation where my boss was like, “We need you in London for a couple of weeks.” Of course, he didn’t know I was running a business. I just freaked out. I’m like, “How am I going to go to London for two weeks?” Dr. Gentles knew this great lady who did the front desk at one of the places she worked. She trained her and was good to go. I was like, “I probably can’t do that for much longer.”
Feldman: Did you tell your boss you had launched a business?
Bryant: I never did. I quit when it got to be too much. He probably knew because all my coworkers knew.
Feldman: Are there things that happened that you didn’t expect?
Bryant: When you are running a health care organization, one of the big things is billing. I was like, “I do not want to learn billing.” So we outsourced it. But, of course, I’m a numbers person, and I required them to give me monthly reports. And we were losing money. We lost about $100,000 the first year because they weren’t billing correctly. So I had to go to billing school and teach myself to bill.
Feldman: What did you learn?
Bryant: There were books of these codes that I had to understand. We figured out what codes we use, which were appropriate for each procedure, and came up with a spreadsheet. Then I was able to teach other people based on a protocol. It was like learning a whole new language.
Feldman: Other surprises?
Bryant: The H.R. thing. Our first employees were people we knew, family and friends, and when we started hiring people from resumes we made a lot of mistakes. We didn’t appreciate the culture we were building. One big aha moment was when we went from one clinic to two clinics. It nearly killed us.
Feldman: What went wrong?
Bryant: We were trying to run clinics clear across town from each other. It was just the three of us, and we didn’t have a management structure in place to run the older clinic. So when we took ourselves out of the first one, it started to decline. In order for us to duplicate, we couldn’t be so heavily involved in the success of any of the clinics. I think that’s a turning point for any entrepreneur. You want to feel necessary, but that’s to your detriment if you want to grow. We go on a partners’ retreat every year. We went to Sedona this year. It was the first time that we were really at peace. No one called us, and no one emailed us, and we didn’t have a desire to check in. It was like, “Wow, we’ve finally hit our stride, we can be gone for 10 days, and not worry.” We went to the Grand Canyon, and could look at how big the earth is and just take appreciation for God’s creation. We spent two years grooming the management team, and if they can’t run the clinics for 10 days then that two years has been in vain.