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Buying a lucrative practice ?

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

    Leave a comment:


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

    Leave a comment:


  • ZZZ
    replied
    " 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.

    Leave a comment:


  • Zaphod
    replied
    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.

    Leave a comment:


  • mmrizwan1
    replied




    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

     

     

     

    Leave a comment:


  • childay
    replied




    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

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  • q-school
    replied
    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?

     

    Leave a comment:


  • ZZZ
    replied
    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.

    Leave a comment:


  • mmrizwan1
    replied
    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

    Leave a comment:


  • EntrepreneurMD
    replied
    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.

    Leave a comment:


  • Kamban
    replied


    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.

    Leave a comment:


  • mjohnson
    replied
    I would take a step back while looking at this potential offer.  They are scared due to the cancer diagnosis and likely the physician is trying to protect his family financially so they can keep making money when he is gone.  Family is most important in this situation, you will be an outsider and expendable if an employed type agreement.  Unless you buy the practice and become the sole owner I wouldn't be interested.

    Leave a comment:


  • q-school
    replied
    what features attracted you to your current employed position?  do you want to be an owner because something changed?  it sounds like they dangled another employment offer to you.  at least to yourself, articulate the reasons you would take the position.

    unfortunately, it sounds like the other person is in a tough spot.  you can either buy the practice from them (and i would suggest pouring over their books carefully) or open your own practice.  it sounds like there is plenty of room in the market for another practice, and the existing practice will either be sold to someone or close.   you can stay in your current position as well.

    running a practice takes time and energy.  instead of going home at quitting time and enjoying life, you have cash to reconcile, business plans to develop, meetings with insurers,  meetings with suppliers, leases to negotiate, phones to buy, payments to make.  be sure that if people think you are inattentive, people are going to steal from you, or at least take advantage of you.

    i personally don't think it's that easy for a non dermatology single physician clinic based practice paying fair market rates to be profitable over a million dollars per year paying market rates and without skirting the edge of ethical behavior.   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.

    i don't think your options are limited to a or b.

    tl;dr

    doubt the numbers are as represented.

    if you want to be an owner, investigate all options.  by the questions you ask, strongly advise professional guidance.

    if you want to be employed, this may still represent a better opportunity than current, but just be clear about what your personal goals are.

    Leave a comment:


  • jfoxcpacfp
    replied
    Wow, so many intangibles here. This is not an “X times Y value” situation, impo, too many active factors. If you are REALLY interested, you might suggest the practice pay for a professional appraisal (and yes, it is possible to get a good one for a medical practice) and take the chance that the appraisal will be higher than they are pricing (not likely). OR pay for your own appraisal (prob not ready for that at this point) OR get your CPA to help you come up with a value/offer.

    Hiring an appraiser will likely cost $5k - $10k+. Your CPA, if very experienced with medical practices, may be able to offer some very valuable direction without preparing a formal appraisal. If the family believes the practice without the physician is worth 7 digits, they better really have their crap together and be prepared to justify it. Sounds cold, I know, but it is a business decision and your $$.

    I don’t see you doing this and making a good deal w/o good outside professional assistance - unless you happen to get lucky and they happen to land opposite. Possible to spend $10k+ and save $100k+. Iow, don’t isolate fee, consider context.

    Finally, do not be in a hurry. If you think this is a “once in a lifetime” opportunity, you are assuming you will never come across another. Think about it.

    Leave a comment:


  • jacoavlu
    replied
    is “infusion heavy” medicine what you want to do?

    could reimbursement suddenly change for the worse? I would assume much of the million dollar profit is markup on drugs?

    Seems risky, without a deep understanding of these factors.

    Leave a comment:

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