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I just want to get some other perspectives on this situation. I currently live in a very desirable metropolitan area and make $500k per year. I am a salaried employee with no options for partnership at this time. My contract does say that after next year, I have the option to buy shares in the surgery center that my practice owns. The surgery center has a lot of overhead, and I'm not sure how profitable it is at the moment. We average around 280-300 cases per month, all in network payors, approximately 50% Medicare. My income is not based on production, and I have a really good lifestyle here in terms of hours worked. The max I could make here is $550K, but I can be let go or leave for any reason as long as 60-day notice is provided by either party.
My friend just opened up a practice with a surgery center earlier this year in another state. His metro area would not be considered as "desirable" by most people compared to where I currently practice, but it is a much larger city and in the top ten in terms of MSA population in the U.S. His payor mix is a little better than mine in terms of Medicare, but his other payors are more diversified than my current practice (i.e. more work comp, personal injury, etc.) Also, his ASC is out of network, so his returns on some procedures are much higher. He is 6 months into his practice, and has made $592K net profit (combined with clinic + ASC). He wants me to come on board as a 40% equity partner in the surgery center and clinic at cost, which would be around $120K, so he can put up two more offices in the surrounding cities to drive volume into the ASC. I will be a 50% partner on all future investments including any new ASCs that might be built and other ancillary income streams. Before you ask, the total cost to build a surgery center and clinic is around $300K, and no, I am not making this up.
What would you do?
My friend just opened up a practice with a surgery center earlier this year in another state. His metro area would not be considered as "desirable" by most people compared to where I currently practice, but it is a much larger city and in the top ten in terms of MSA population in the U.S. His payor mix is a little better than mine in terms of Medicare, but his other payors are more diversified than my current practice (i.e. more work comp, personal injury, etc.) Also, his ASC is out of network, so his returns on some procedures are much higher. He is 6 months into his practice, and has made $592K net profit (combined with clinic + ASC). He wants me to come on board as a 40% equity partner in the surgery center and clinic at cost, which would be around $120K, so he can put up two more offices in the surrounding cities to drive volume into the ASC. I will be a 50% partner on all future investments including any new ASCs that might be built and other ancillary income streams. Before you ask, the total cost to build a surgery center and clinic is around $300K, and no, I am not making this up.
What would you do?
