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Thoughts on Selling Private Practice

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  • Avatar unsweet 
    Participant
    Status: Physician
    Posts: 1
    Joined: 07/28/2019
    Earnest refinancing bonus

    Newbie here with several private practice related questions. Any insight/advice would be well appreciated.

    Live in NJ and am 3 years post grad. As is the trend everywhere else in the country, private practices are being bought up left and right in our area. Work in a 3 -4 provider (2 full time 2 part time) IM/Cardio private practice owned by family for the past 30 years but have been less profitable over the past 3+ years as overhead increases and payrates have become stagnant/decreased. We have also joined an ACO and have focused very heavily on quality measures and decreased hospital LOS across the board and as such have seen a drastic decline in hospitalizations, and subsequently, income. (Previously had on average 25 to 30 patients in the hospital between 3 hospitals, now down to 10 to 15). Got some direct feedback from a couple physicians who have sold their practices and have seen an increase in their income after selling and are overall happier. From my understanding, along with the benefits of these corporations being able to consolidate billing, EMRs, etc they also have much greater reimbursement rates – 3x a private practice??

    So my questions are:

    1.) Is it true that these corporations have much higher reimbursements and if so, how is this beneficial to the insurance companies?

    2.) If you are in private practice, are you in an ACO? Pros/cons?

    3.) If you have sold:

    A) are you absorbed as an employee and if so, have you seen an increase in your compensation? decrease in burden/workload?
    B) any regrets on selling? pros/cons?
    C) general structure of compensation and benefits if you continue to work in the practice (eg: salary, salary + RVUs, flat rate per patient seen? and any bonuses, benefits)

    4.) Any idea if there is a general guide on how much a practice should sell for? (eg: gross income over x amount of years)

    5.) If you are in an outpatient office based private practice, approximately what percentage of your gross income is spent on overhead (salaries of employees that are non providers, rent, insurance, etc)

    Any any general feedback, advices, warnings etc would be greatly appreciated.

    Thank you so much of your time.

     

    #237513 Reply
    Avatar ZZZ 
    Participant
    Status: Spouse
    Posts: 668
    Joined: 06/18/2018

     

    1.) Is it true that these corporations have much higher reimbursements and if so, how is this beneficial to the insurance companies?

    – Someone told you they get 3x reimbursement rates? Go ahead and discount anything else that person told you. That’s absurd. If your practice is well run and has good contract rates currently, they’re not going to get 3x what you’re getting, and likely won’t do any better at all. If your current rates are horrible, maybe.

    2.) If you are in private practice, are you in an ACO? Pros/cons?

    – Yeah, that was a bad idea. Probably cost you a lot of money. Don’t you know your own numbers to know if that was a good or bad decision?

    3.) If you have sold:

    A) are you absorbed as an employee and if so, have you seen an increase in your compensation? decrease in burden/workload?

    – They’re going to structure it such that you make less for the work you do than you currently do. They’re not going to be a doing you a favor.
    B) any regrets on selling? pros/cons?

    – You’re only a couple years out of training. If you plan on continuing to work that practice, you’ll regret selling.

    C) general structure of compensation and benefits if you continue to work in the practice (eg: salary, salary + RVUs, flat rate per patient seen? and any bonuses, benefits)

    – Any of the above. Plan on them gaming it year after year to pay you less for doing more.

    4.) Any idea if there is a general guide on how much a practice should sell for? (eg: gross income over x amount of years)

    Depends. A quick internet search will give you ballpark EBITDA multiples based on your situation.

     

    #237747 Reply
    Avatar SValleyMD 
    Participant
    Status: Physician
    Posts: 453
    Joined: 05/12/2016

    Sorry, a little confused..

    Are you a general cardiologist (that also does some primary care)?

    If you’re a cardiologist, share what u take home at the end of the year and I can give u a ballpark of what u likely would pull in employed..

    #237792 Reply

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