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Should I (PA) take over the practice?

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  • Should I (PA) take over the practice?

    I hope to get a little guidance.

    I have been with the doc for 4.5 years. He works about 24 hrs/week. I knew he'd retire--or partially retire--in a few years and would consider giving the practice to whoever was still working there. Well, today he got word that if we don't adopt EHR by February we lose Medicaid funding/contract (we're a rural health clinic). He doesn't want to do the transition and essentially is feeling forced into retirement.

    Again, he just found this out today and today at lunch met with the other PA and myself. We discussed getting another doc into the practice to perhaps take over; handing the clinic over to the closest medical school; selling to the hospital (his last resort probably) or allowing the other PA and myself to take it over if we wanted. He would just hand it over, not sell. We would pay no rent but I think maintenance. Revenue last year was 900k.

    The other PA and I talked. She has been with us for just under 3 months and really doesn't have an interest in taking it over, especially the business side of it. Right now she's waiting to hear how his meeting with the med school goes this Friday, but I think she's going to look for another job.

    I have had an interest for a long while in taking it over one day, but I thought this would be years down the road. I don't know if I can learn the ins and outs of it so fast. I would need to select and EHR system and transition over. I would also need to find a doc to bring on board, at least as a medical director but hopefully for 2-5 days a week.

    Is this a bad idea? Under what conditions would it be great?

  • #2
    Just handing it over sounds pretty great. Yes, you have a lot of things to consider and figure out, but quite a potential deal. Lots of stuff to consider but it could potentially be a great deal. It obviously could be a bad deal but being there 4 years you should be able to get it pretty quick.

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    • #3
      Yeah, that's just nuts that he would hand that over to anyone (if it's making any money), but could be good for you.  I would get an independent valuation of the business, with a doc on board of course, minus the EMR investment.  Have you looked at the financials?  Is the practice making money?  If it's not making much profit then it might not be worth it to take on.  If it is, perhaps you could make an arrangement with a local hospital or medical school to pay for the EMR for a % equity stake while retaining a majority ownership.  Hard to say outright if it's a good or bad thing without knowing the hairy details.

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      • #4
        He as always said and continues to say that he never went into medicine for the money.

         

        I have not seen the financials yet and I know that is an important piece of this. We found all this out yesterday. Basically he's very anti-EMR and our Medicaid contract will be pulled in February if we don't switch. We're rural health so we need that contract, and our patients need us to have that contract. I really don't want him to retire over this but I think he has a lot of fear and anxiety over a whole new system. I'm going to talk to him about it today, about ways he can work around the EMR system (scribe, can dictate his notes and someone else enter them, etc).

        I like the idea of the medical school being involved. He's talking to them on Friday to get an idea of how that would work. I would not want our county hospital/group involved (and he doesn't either) unless absolutely necessary, but we would consider the group from the neighboring county's hospital (we're at the border and I know they've been trying to get their foot in this county).

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        • #5
          Would he consider working for you? If he's feeling forced into retirement, he could keep up his part-time schedule and you'd have the benefit of his wisdom in running the business. Plus it would be great for continuing patient relationships. You could take over the stress, he could do what he likes, at least for a transition period.
          Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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          • #6
            If I could get him over the EHR hump. That's the biggest issue here. We HAVE to move to EMR and he just doesn't want to. I talked to him a bit more today about have a scribe, continuing to dictate and have someone else enter it, continuing to use the paper charts for him instead of scanning them in and destroying, etc. I hope maybe I can wear him down.

            We're also taking the suggestion of somebody above and approaching the closest medical school (1.5 hrs away) as well as two big medical schools 3 hours away.

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            • #7
              It's a shame that things like this happen.  While I don't think anyone should go into medicine for the money, what we're talking about here is the viability of and potentially selling of a practice, which mandates caring about money.  Any physician coming to work for that practice as a replacement is going to want to see the financials (don't get on a sinking ship).  If all efforts fail regarding getting him to stay and you are interested in taking it over, you'll have to be ready for some financial statement analysis, efficiency improvements, hiring another PA and physician, an EMR upgrade, legal document preparation - all while seeing patients.  Big undertaking.  But potentially profitable if it's legally yours and you want to bow out and sell it down the road.  But in order to have a buyer (prepare for this possibility because you may find out that you hate or aren't cut out for running a practice) you need to make the business profitable.

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              • #8
                I worked for a practice right out of residency where a Pediatrician and a Nurse Practitioner were equal partners. The NP took care of most of the business side.  It worked well. They were able to attract younger docs like me back then as employees. They then sold out to a Children's Hospital System for a good profit.  I left because I didn't like working in a more corporate medical setting. Years later they bought the practice back for much less than they were paid for it. Now they are repeating the process over again.

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                • #9


                  But in order to have a buyer (prepare for this possibility because you may find out that you hate or aren’t cut out for running a practice) you need to make the business profitable.
                  Click to expand...


                  Mostly true. The local/regional medical center, hospital, etc may be quite happy to relieve you of the practice (read: add their patients to their referral network / ACO / etc). They might not trade for anything though, if the business isn't profitable.

                   

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                  • #10
                    I think if the business isn't being well-managed and they think they can do better it will have value (to the hospital).  But when it comes to negotiations, they may see a high intrinsic value but based on the financials of the current performance they would value it in much more modest terms if not laugh at any suggestion that they would have to pay money to lose money.

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                    • #11
                      Just curious about the outcome of your situation. Did you take over the practice?

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