Buying a lucrative practice ?

[Kamban]

q-school wrote:

what happens if infusion reimbursement rates change … because they definitely will someday. you don’t want to be caught buying high and stuck with a mortgage while rates plummet. especially when you can start your own practice for no good will.

Click to expand...

Medicare has already changed infusion model 10 years ago. Pricing of drugs went from Average wholesale price (AWP) to average selling price (ASP), which is the selling price plus 4%. In many cases it does not even cover the cost to buy and store the drugs.

Payments for IV tubing, IV catheter, gauze, fluids etc are going up but medicare states that it is already included in the price of the drugs and infusion rates. The latter is so bad that it does not even cover the cost of infusion center nurses salaries and maintenance. Hospital owned infusion centers make money off commercial insurance with their clout of market share, charging facility fee of $250 or more per infusion which patients have to pay out of pocket and sometimes getting drugs on the cheaper side with 340b pricing but still charging patients the same high rates. All these avenues are not available for a solo physician.

Something does not add up if he is making a million per year via the infusion center.

[EntrepreneurMD]

This practice is nearly identical to the one I've built (except for the infusions), identical number of providers and spouse also manages the practice, probably near identical profits. I also know a few doctors that have built nearly similar practices and who have passed on, ultimately it often does not end well for the family/spouse that tries to hold on for the best offer and then once the physician is no longer in the picture the practice value plummets and then the regrets come.

I have a lot to say, including arrangements that may work out well for both parties, but not all physicians on this site care to be employers/business owners. Private message me if you wish.

It's certainly sound to say that you will likely need outside professional help if you want to seriously pursue. The opportunity can be great or it can also be a nightmare. The physician and spouse are most certainly already reaching out to multiple entities for an arrangement if they reached out to you.

[mmrizwan1]

So just got my first written offer - about the same salary that I make + 10 % ownership of practice after 6 months

No mention of any what's gonna happen afterwards + have not seen any books yet - just word of mouth that it's a "great practice"

P.S - My CPA said he can help review the books for me but does not have much experience with medical practice

[ZZZ]

How long does the guy have to live/work?

Tell the practice manager spouse to give you a call when she's willing to consider an equitable arrangement that details a timeline for majority ownership transfer.

[q-school]

i'm not sure what you are supposed to do with 10% of practice.  they are giving it to you as part of your salary, or there is a buy in that will essentially value the practice for you?

 

[childay]

q-school wrote:

i’m not sure what you are supposed to do with 10% of practice.  they are giving it to you as part of your salary, or there is a buy in that will essentially value the practice for you?

 

Click to expand...

10% of the practice, 100% of the work hmmm

[mmrizwan1]

ZZZ wrote:

How long does the guy have to live/work?

Tell the practice manager spouse to give you a call when she’s willing to consider an equitable arrangement that details a timeline for majority ownership transfer.

Click to expand...

My understanding is that he is still working daily (except when he is getting chemo) - and I hope he recovers fully. I can sense he / they want to slow down rightfully

 

 

 

[Zaphod]

Sounds like a bad gig. Have them call you when they are more willing to be equitable and reasonable, or pick it up at the fire sale.

[ZZZ]

" I hope he recovers fully"

So, he doesn't have a terminal disease like you said initially? Changes up the practice purchase calculus a wee bit.

[Tim]

10% after a 6 month wait is simply his insurance policy.
No way !

[EntrepreneurMD]

Only thing you are being promised is employment at a lucrative practice. Tread carefully.