Buying and Selling Online Schools: The Unusual Career of Michael Clifford (Part 4)

SM: Is it fair to say that you focus your time primarily on the strategic planning and long-term outlook of not only your schools but the industry?

MC: I spend a lot of time thinking about what degrees are going to be valuable two to three years from now and it just made common sense to me that health care was going to be bigger and bigger because of baby boomers. All the doctors I knew were complaining about not getting enough billers, receptionists, and radiologists in their office.

There was nobody doing healthcare training online. We went out and looked at 40 schools. We made offers on nine schools and got serious with three. We ended up buying a very small school in Los Angeles that had about 100 students. We bought it because it had the right regulatory platform and a 20-year relationship with the Department of Education and the ACICS. I changed the name to LA College.

It took us $10 million and two years, but now LA College is growing rapidly with courses such as medical billing and various jobs you would find in the health care profession.

SM: You are championing the vocational training education structure, which a number of Eurpean countries have done well, especially Germany.

MC: Nobody is doing it online in the United States. It is a good market and LA College is doing well with it.

SM: Grand Canyon is doing nursing and education as well, correct?

MC: Correct, but that is very different because they are regionally accredited degrees. Those degrees have different job profiles and take a lot longer to earn. To be a medical billing clerk you do not go to Grand Canyon, you go to LA College. You get a 900-hour diploma and very quickly you can be making $45,000 a year because there are lots of jobs.

SM: What stage is LA College at now?

MC: We are expecting LA College to be profitable in December of this year.

SM: Are you still involved?

MC: I am very actively involved with the company. After I get them going I just like to help the CEOs. I am a secret weapon for the CEOs. I have several million invested in the school and I want to make sure the family does not lose its money.

SM: Are you doing anything else right now?

MC: Over time I have built a great number of contacts with regulators. They know before anybody when a school is going to crash. I got a call from a regulator about a little school in San Diego called InterAmerican College. It was a school started bya c ouple in their 70s eleven years ago. Their dream was to create a Hispanic serving college that teaches bi-lingual nurses and educators. In California that is a huge market because 65% of patients in California hospitals speak Spanish as their first language.

The school was running out of money and had $8 million invested in the form of donations and grants over 11 years. I made an arrangement with the board to take them over and build a foundation, which is what we did. We have now purchased the school, the former board of directors now has a foundation, and we are funding the foundation so they can fulfill the mission that they signed up for without having to run the school.

SM: Is this a non-profit?

MC: I have converted it into a for-profit.

SM: How can foundations fund for-profits?

MC: It can be done, but it takes a long time to explain. I have perfected that process. That is what I did at Grand Canyon and that is what the guys at Bridgepoint did without me. LA College has always been for-profit.

What I look for are niches. I don’t think I am going to be interested in building another Grand Canyon or University of Phoenix; these schools that have hundreds of thousands of students. I am looking for targeted niches such as bi-lingual nursing. I am looking for extremely profitable schools with 10,000 to 15,000 students. I will either keep them, as our investors are the kinds of investors who are happy receiving dividends, or we become acquisition targets for the 10 public companies that have an enormous amount of cash and are looking to purchase schools in specific market spaces.

This segment is part 4 in the series : Buying and Selling Online Schools: The Unusual Career of Michael Clifford
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