Starting a Pain Practice

[dahlilama]

Perhaps some of you can weigh in on this. I am considering joining a neurologist who wants to add a interventional pain physician to his office and after 1.5 years have me be set up as a separate corporation. He is willing to front the cost for the c-arm, table, RF machine etc, malpractice, health insurance,initial marketing and cover the overhead initially and I will pay into 50% ownership of the equipment over this 1.5 year period until we are co-owners of the equipment. I am guaranteed a salary for 6 months, and by then the collections will be coming in and I will begin to pay into the overhead etc. He is very successful and began his neurology practice from scratch. He states that he is not wanting to take advantage of anyone like it was attempted with him (the reason for leaving a large neurology group and going out on his own), and is just looking to have someone share in his overhead, but not compete directly with him (hence not bringing in another neurologist). It seems reasonable, although I am a bit reticent in regards to the 6 months of salary support then praying that ARs are coming in to a sufficient amount that the lack of salary support is not an issue.
For those of you who have started out in such a fashion, is 6 months a reasonable time to get support and then be up and running? Also, in an outpatient setting (not an ASC) is it a legal statute to have a crash cart when doing interventional procedures. I certainly plan on having one, but as we are working the start up cost and equipment, I would like to be able verify this to him that a crash cart is a necessary item. Thanks.

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[PMR 4 MSK]

In 6 months, you may be doing well, but are equally likely to be just getting a good referral base going. 1 - 2 years is more common, especially from scratch like this.

In my state, crash cart is not legally required, but who would not advise having one? Just need to make sure everything is checked regularly in the cart.

 

[Tenesma]

by 6 months the checks should start rolling in --- interesting offer...

but c-arm (150k), table (10k), RF machine (25k) = 180-190k so you will have to pay him about 100k over 1.5 years to be part owner...

and if he is co-owner of the equipment then that means he would get half of your collections... this may become tricky - what will the formula be?

 

[ampaphb]

by 6 months the checks should start rolling in --- interesting offer...

but c-arm (150k), table (10k), RF machine (25k) = 180-190k so you will have to pay him about 100k over 1.5 years to be part owner...

and if he is co-owner of the equipment then that means he would get half of your collections... this may become tricky - what will the formula be?

Key word is "should" - unless you are on every plan from the day you open your doors, the only checks that will be rolling in at 6 months are typically Medicare. It can take up to a year to participate with all the insurance plans, since many of them drag their feet in the credentialing process

 

[Tenesma]

agreed you will have to realize that 99% of your patients the first 4-6 months will be medicare...

now i made the mistake of screwing up my medicare paperwork when i re-assigned benefits for my company and that caused a 5 month extra delay

and i also haven't been paid on railroad medicare - and some of those bills are almost 18 months old... and that is because they can be superslow getting you set-up

 

[Mister Mxyzptlk]

If he represents you as being an employee of his practice then that should grease the skids getting on plans. Ask him to find out from the provider relations reps how that would work and how long it would take. It's a good investment of time and effort for him because he has a stake in seeing you survive.

This is a bit risky in terms of flying on your own in 6 months. I would not buy a house and I would save up a 3-month cash cushion. However, the upside is a much faster track.

Reward is usually proportional to risk. High risk = high reward, but also a bigger potential downside (in this case, not having sufficient cash flow in 6 months). If you're faint of heart or can't afford to take a financial hit, do a hospital deal or one of the 4-years-to-partnership arrangements. However, you will pay for your added safety with lower returns for a few years.

 

[ampaphb]

If he represents you as being an employee of his practice then that should grease the skids getting on plans. Ask him to find out from the provider relations reps how that would work and how long it would take. It's a good investment of time and effort for him because he has a stake in seeing you survive.

This is a bit risky in terms of flying on your own in 6 months. I would not buy a house and I would save up a 3-month cash cushion. However, the upside is a much faster track.

Reward is usually proportional to risk. High risk = high reward, but also a bigger potential downside (in this case, not having sufficient cash flow in 6 months). If you're faint of heart or can't afford to take a financial hit, do a hospital deal or one of the 4-years-to-partnership arrangements. However, you will pay for your added safety with lower returns for a few years.

I see no higher reward than any other typical productivity arrangement - seems to me, it is high risk, average reward, and as a result, not worth it. As Dr G says, if he expects you to take the potential financial hit in 6 months, you had better be reaping some ADDITIONAL advantage, like the ability to participate in ancillary revenue streams at the 6 month mark.

 

[Mister Mxyzptlk]

but c-arm (150k), table (10k), RF machine (25k) = 180-190k so you will have to pay him about 100k over 1.5 years to be part owner...

Siemens Iso-L - less than $85K new. You can finance it with Siemens over 5 years. I would guess about $1,500-2,000 / month. Much less painful than a lump sum, which you don't have anyway.

RF - This is not a mission-critical piece of equipment. You should wait until you have enough volume that it will break even within a reasonable time.

Table - you can have a carpenter build it for $500 if you aren't fussy about being able to tilt it.

Monitor - a few hundred $ on dotmed.com or eBay.

Figure $1K+ to stock meds and supplies.

Emergencies - I would also get a Banyan Kit and an AED. This will run about $2-3K. Check eBay for AED but make sure you get one that meets AHA specs. Some need a software upgrade or can't be upgraded at all.

This can be done for less than $100K if you hold off on the RF machine.

 

[Tenesma]

have you tried the carpenter table with a 450 lbs patient?

i absolutely agree with RF device... you should only really start thinking about buying an RF once you are doing more than 1 RF per week - and you should definitely have one if you are doing more than 2 RF per week...

i didn't start doing more than 2 RFS per week until my 8th month in practice

what you can do is play the "trial" game with the various reps - save up all your RFs for one day a month and do like 8-10 RFs with one device - and get to use all the probes/needles/ etc for free - then try a different device the next month --- i settled for neurotherm because of the 3-lesion capability (saves time IMHO) and I hated Stryker (what a painful device and their needles are way too top-heavy - which is really annoying in skinny people)

 

[Tenesma]

1.5 years to setting up your own corporation

there may be an issue with this, because who will do the billing? who will be receiving the collections? who OWNS the A/R - this may be a way for him to charge you a "billing" or "management" fee...

 

[ampaphb]

Siemens Iso-L - less than $85K new. You can finance it with Siemens over 5 years. I would guess about $1,500-2,000 / month. Much less painful than a lump sum, which you don't have anyway.

RF - This is not a mission-critical piece of equipment. You should wait until you have enough volume that it will break even within a reasonable time.

Table - you can have a carpenter build it for $500 if you aren't fussy about being able to tilt it.

Monitor - a few hundred $ on dotmed.com or eBay.

Figure $1K+ to stock meds and supplies.

Emergencies - I would also get a Banyan Kit and an AED. This will run about $2-3K. Check eBay for AED but make sure you get one that meets AHA specs. Some need a software upgrade or can't be upgraded at all.

This can be done for less than $100K if you hold off on the RF machine.

Some manufacturers will let you rent the RF machine for the day - a buddy of mine in VA lines up 5-10 RF patients, and makes a day of it

 

[Mister Mxyzptlk]

"what you can do is play the "trial" game with the various reps"

This also works with credit cards offering 6 months at 0%. Just skip from one to the next and roll over the balances. Interest-free loans! Make sure you mark your calendar though. Once the 21% interest hits on Day #181 it can be painful.

 

[dahlilama]

Thanks to all for your comments and suggestions.

 

[PAINBILLER]

agreed you will have to realize that 99% of your patients the first 4-6 months will be medicare...

now i made the mistake of screwing up my medicare paperwork when i re-assigned benefits for my company and that caused a 5 month extra delay

and i also haven't been paid on railroad medicare - and some of those bills are almost 18 months old... and that is because they can be superslow getting you set-up

Why such a delay? Once you're set up with Medicare, it should only be a matter of providing your numbers to Railroad Medicare, no additional applications, etc. I've only dealt with Palmetto GBA though so maybe the requirements are different with other carriers.

 

[Tenesma]

palmetto is killing me softly --- first they entered the numbers wrong into their system - so it took a bunch of managers to fix it on their side - then i just switched from individual medicare number to a group medicare number --- then another delay - now they are saying it is a matter of the EDI to start working for payments to go out --- miserable -- thank god it is only a handful of patients