Would you buy this practice?

[SandmanMD]

Cross posting from the private physicians group to hopefully get more feedback here. Hopefully that’s not against the rules.


So I’ve found myself in an interesting situation.

A pain practice had its owner suddenly disabled due to a stroke. He will no longer be able to practice due to significant residual neurological losses. Unfortunately, not even in patient evaluations or med management.

The practice was not able to be sold as I guess other providers felt that patients would find their way to their doors for free with time.

Suddenly, the office manager decided to rent the office space and start a new pain practice in its location. Some staff stayed on and he hired a doc who had just retired a few months back. The doc is back working for a few months and is planning on retiring within 6 months.

The office manager reached out to me to see if I would consider joining him and save this practice. It’s currently structured as a non-physician entity with the doc who came out of retirement as the medical director.

My main question is how do I structure this?

Do I buy the whole thing for its assets, and keep the office manager on at a generous salary? His main asset is his marketing and attorney connections since he has been managing this practice for many years. I would consider his connection to referral sources as being valuable.

Do you give the office manager equity? How much equity? What’s the best way to compensate them for their work as the manager but also for their “connections” and their initiative in saving the practice.

The practice is just a fraction of its former size. As expected a vast majority of the patients have left. Some attorneys and a couple IM docs continue to be faithful and send patients. There is potential for this practice to get back to where it was with the right physician who is willing to put in massive efforts and chase down those previous referrals.

How would you structure this?

What would you offer the office manager? Would you give equity?

Would you jump on this “opportunity” and give up a lucrative current job? My current job does not want any personal injury patients so I would have to leave my current position to pursue this.

---

Members don't see this ad.

 

[RoloTomassi]

Has the manager made you an offer, and if so, what kind of partnership, financially and control-wise? Sounds like you both need each other fairly equally.

 

[SandmanMD]

Yes, basically he said tell me what you want to do and we’ll try and make it happen.

I’m trying to figure out what would be fair. Haven’t come across a situation where an office manager has equity in the practice

 

[RoloTomassi]

Will he tell you what his compensation formula was previously? I would start with getting that info. If he won't tell you or it's not in the financials, that's not a good start to the relationship.

Seems like he's more than your average employee, so I think some type of profit sharing would be fair. But, he's out of a job without you, whereas you can build it without him, even if it's harder. Also, keep in mind that over time when things become well-oiled, less of his effort will be required, whereas you will be working harder to keep up with the volume, so your structure should reflect that as well.

 

[Agast]

Honestly, the fact that this practice is still limping around despite the physician leaving makes me very suspicious that it is a high opioid practice and the office manager knows this. People typically follow doctors, not location.

 

[SandmanMD]

Will he tell you what his compensation formula was previously? I would start with getting that info. If he won't tell you or it's not in the financials, that's not a good start to the relationship.

Seems like he's more than your average employee, so I think some type of profit sharing would be fair. But, he's out of a job without you, whereas you can build it without him, even if it's harder. Also, keep in mind that over time when things become well-oiled, less of his effort will be required, whereas you will be working harder to keep up with the volume, so your structure should reflect that as well.

I agree that his compensation model is the most important information missing.

Also agree that going forward his value will diminish as the practice gets busy and a normal flow of patient inflows resume.

He is more than the average employee since he maintained the relationship with the attorneys and referring docs…and I want to value that. Just not sure what value to put on that.

Don’t want to give away too much value to him because it will take away what I can offer to bring in future physician partners to grow the practice.

 

[hyperalgesia]

If the main function of the office is to cater to lawyers and extract money form PI situations, it's not really a medical practice. It's more like a legal practice with in house medical consultation.

If you're not intimately familiar with that world, it might be wise to join as a part time consultant first to get a better feel before jumping in.

 

[BobLoblaw78]

No.

If I had to come up with an offer, I would buy it for assets only without equity. And I would try to guarantee him a generous salary as long as the clinic remained open.