Another Group bites the dust

[sum dude]

http://finance.yahoo.com/news/teamhealth-acquires-florida-emergency-physicians-200500105.html

Florida Emergency Physicians sells out to TeamHealth, completing purchase of one of the largest independently-owned groups in Florida and the southeast. The days of independent/"democratic" groups are dwindling, friends...

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[GeneralVeers]

This thread should be read by anyone considering joining a SDG. This is why they are very risky!

I looked at FEP, admittedly about 8 years ago. They wanted a sweat equity buy-in at the time of $106/hr for two years with a "substantial" monetary buy in at the end to become partner.

I feel bad for anyone who has put a year or two working for slave wages with these guys. If you are almost at the 2 year mark it has cost you literally $200-$300K in lost revenue.

 

[deleted109597]

Damn. And the FEP parties at ACEP were always the ****.

 

[Hercules]

This thread should be read by anyone considering joining a SDG. This is why they are very risky!

I looked at FEP, admittedly about 8 years ago. They wanted a sweat equity buy-in at the time of $106/hr for two years with a "substantial" monetary buy in at the end to become partner.

I feel bad for anyone who has put a year or two working for slave wages with these guys. If you are almost at the 2 year mark it has cost you literally $200-$300K in lost revenue.

That sounds like a crazy buy in. You definitely have to weigh the risks of any SDG buy in. Then again, in a really well run SDG, you may make more during the partnership track then the competing CMG positions. For me at least, that makes the decision a no brainer with almost no risk.


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[MSmentor018]

http://finance.yahoo.com/news/teamhealth-acquires-florida-emergency-physicians-200500105.html

Florida Emergency Physicians sells out to TeamHealth, completing purchase of one of the largest independently-owned groups in Florida and the southeast. The days of independent/"democratic" groups are dwindling, friends...

they've been holding out for a while.....someone must have really made some $$

 

[emergentmd]

This thread should be read by anyone considering joining a SDG. This is why they are very risky!

I looked at FEP, admittedly about 8 years ago. They wanted a sweat equity buy-in at the time of $106/hr for two years with a "substantial" monetary buy in at the end to become partner.

I feel bad for anyone who has put a year or two working for slave wages with these guys. If you are almost at the 2 year mark it has cost you literally $200-$300K in lost revenue.

So even if everything went well, you still likely would be in the red even if you made partner. I made partner 10 yrs ago before we sold to a CMG.

I was pulling in 200/hr prepartner. 106/hr is as much as some PAs make. Whoever takes that is just dumb

 

[VA Hopeful Dr]

So even if everything went well, you still likely would be in the red even if you made partner. I made partner 10 yrs ago before we sold to a CMG.

I was pulling in 200/hr prepartner. 106/hr is as much as some PAs make. Whoever takes that is just dumb

No kidding, that's what I (as an FP) make doing urgent care moonlighting...

 

[alpinism]

This thread should be read by anyone considering joining a SDG. This is why they are very risky!

I looked at FEP, admittedly about 8 years ago. They wanted a sweat equity buy-in at the time of $106/hr for two years with a "substantial" monetary buy in at the end to become partner.

I feel bad for anyone who has put a year or two working for slave wages with these guys. If you are almost at the 2 year mark it has cost you literally $200-$300K in lost revenue.

Holy ****.

Damn I feel bad for anyone who joined over the past 4 years.

 

[The White Coat Investor]

This thread should be read by anyone considering joining a SDG. This is why they are very risky!

I looked at FEP, admittedly about 8 years ago. They wanted a sweat equity buy-in at the time of $106/hr for two years with a "substantial" monetary buy in at the end to become partner.

I feel bad for anyone who has put a year or two working for slave wages with these guys. If you are almost at the 2 year mark it has cost you literally $200-$300K in lost revenue.

I thought we had a big buy in. Not only two years of low pay but then you have to bring cash to the table? Usually it's only one or the other, and that is particularly low.

 

[thorg12]

I would caution using the word SDG. Sure doesn't seem like one. 5 years with sweat and monetary buyin. And with senior partners.
Doesn't seem democratic to me

 

[Siggy]

I would caution using the word SDG. Sure doesn't seem like one. 5 years with sweat and monetary buyin. And with senior partners.
Doesn't seem democratic to me

You gotta be a permanent resident before you nationalize as a citizen.

 

[EctopicFetus]

I spoke to them as well though the deal wasnt as crappy but their partners were making trash money. I agree with WCI, there are decent groups out there where day 1 you make more than you would at an SDG without scheduling differences etc. Those groups are shrinking but they are out there. My old market in phoenix will soon have only 1 SDG which is crazy cause the CMGs were outsiders with no influence 2 years ago.

 

[EctopicFetus]

Also, I highly doubt TH paid a kings ransom for those guys. Im guessing TH got that whole thing for under 100M. My guess closer to 75M. Curious if anyone knows any details.

 

[BLADEMDA]

http://www.businesswire.com/news/ho...-Expands-Physician-Services-Arizona-Acquiring

 

[EctopicFetus]

http://www.businesswire.com/news/ho...-Expands-Physician-Services-Arizona-Acquiring

16 doctors meh..
Its the Northwest hospital guys in tucson. The gobbling of EM groups in Phoenix is more impressive. They are making lots of people millionaires.

 

[deleted109597]

16 doctors meh..
Its the Northwest hospital guys in tucson. The gobbling of EM groups in Phoenix is more impressive. They are making lots of people millionaires.

Anesthesia though. That's what they've done here as well. Hospital not happy with CMG, so they go out and buy up all the anesthetists. I'm sure they'll bid on hospitalists next, since I've only met a couple that weren't terrible. It's like perpetual residency with those guys.

 

[emergentmd]

Also, I highly doubt TH paid a kings ransom for those guys. Im guessing TH got that whole thing for under 100M. My guess closer to 75M. Curious if anyone knows any details.

I have intimate knowledge of TH buyouts. I must admit that Buyouts used to be rare. It usually was a takeover. Trust me, the CMGs are not paying millions b/c they cared for our livelihoods. They know paying millions up front is better than the disruption caused by bringing in a whole new group.

Looking at how big the Fla group was, I would bet the buyout was well short of 50 mil and closer to 25 Mil.

Not many millionares are made from these buyouts unless its a group with very few owners.

I am sure there are some Fla docs that reads these threads. My bet is most made about a year's salary assuming equity was distributed to the majority of partners.

 

[GeneralVeers]

I am sure there are some Fla docs that reads these threads. My bet is most made about a year's salary assuming equity was distributed to the majority of partners.

I'm curious as to what they are "buying". Most sign-on bonuses require about 2 years of commitment. When buying out a group, is there a standard time interval that those docs are indentured for?

Depending on the time commitment, a buyout may not be that valuable. One job I know of pays a $100K sign-on bonus, but you have to work full time for 2 years. That only equates to about $30/hour above the regular salary when you average it out.

 

[emergentmd]

I'm curious as to what they are "buying". Most sign-on bonuses require about 2 years of commitment. When buying out a group, is there a standard time interval that those docs are indentured for?

Depending on the time commitment, a buyout may not be that valuable. One job I know of pays a $100K sign-on bonus, but you have to work full time for 2 years. That only equates to about $30/hour above the regular salary when you average it out.

They are buying stability and Quality ED docs. You could never replace 100 quality docs with locums with no interest in the community. They are buying stability, decreased cost of disruption/training, and appeasing the hospitals.

IMO its the better and cheaper path which the CMGs have figured out. The cost to staff SUMMA the next 1-2 yrs will be as much or more than a buyout. Just for 1 month with doc's making 500-1000/hr, would be in the Millions.

The buyouts tend to be money to stay for 1-2 yrs and the pay is usually comparable. So from the SDG doc standpoint, its money upfront for what they would make in 5-10 yr of partnership distributions. From a risk standpoint, it is much better to get the money upfront that goes along with loss of autonomy.

 

[EctopicFetus]

Let me say we will disagree. There are 4 groups I know of who got bought in 3 states and the 3/4 had a large majority of partners. one was 100%, one was 80+% the other 90+%. The last was about 50%.

Each of these groups got over $1m/ partner.

EmergentMD I think you undervalue how much they are paying. I cant speak to TH but the deals I am familiar with are 2 with EmCare, one USACS, one was sheridan (prior to their merger with Envision).

 

[emergentmd]

I am talking about true SDGs where most have similar equity. Of course groups where there are 1-4 majority owners will walk away with 5+ millions.

They buyouts are priced just like any other business. Its multiples of some profit metric. That number distributed to a handful creates millionaires. That number distributed to equal SDG partners will not create millionaires.

That is why the Florida group likely got bought out for 30-40 mil. If this group were truly a SDG, and there were 100 docs, each prob walked away with 3-600K.

 

[sum dude]

I have intimate knowledge of TH buyouts. I must admit that Buyouts used to be rare. It usually was a takeover. Trust me, the CMGs are not paying millions b/c they cared for our livelihoods. They know paying millions up front is better than the disruption caused by bringing in a whole new group.

Looking at how big the Fla group was, I would bet the buyout was well short of 50 mil and closer to 25 Mil.

Not many millionares are made from these buyouts unless its a group with very few owners.

I am sure there are some Fla docs that reads these threads. My bet is most made about a year's salary assuming equity was distributed to the majority of partners.

You are grossly undervaluing the amount of money these deals are worth. You should at least double your figure. FEP, the Florida group had over 280,000 visits per year and 13 campuses. You can guestimate the cost of deal by estimating Accounts receivable for a few years. Say they collect 120/pt. 280k x 120 = 33.6 million. So you're looking ballpark at least ~75 million deal (I'd estimate closer to 100M, but whatever, let's go conservative). FEP had just a few Senior partners (<10) , despite having over a 100 physicians. The senior partners are getting multi-million dollar deals for selling ( groups much smaller than FEP have sold for ~30-40 million--if you have 5-7 partners....do the math). Junior partners, from what I heard, didn't get much more back than their buy-in, certainly not enough to justify selling to TH. Employees received a comical amount--we're talking not enough to buy an average luxury car, and that's after vesting (plus, taxes eat up 1/3 of that bonus, and you have to pay taxes UP FRONT in 2017 taxes to take the buyout.)

In the end, in these deals if you have a group of senior partner with majority shares, it makes them multi-millionares, a bunch of junior partners w/ 1-200k for going from independent group to TH, and sweat-equity employees (already getting paid less than CMG's in area in exchange for future promise of partnership) who get totally hosed. I can't

The secret in all of this is to create a time machine to the 90's to (a) become partner/invest in apple/google, or (b) slap the first line of EM physicians who started the selling to allow these big groups. It is what it is. Honestly if I was 50-something and having to deal with all the pain in the butt changes to health laws and administrators, I'd probably justify cashing-in for 5-7 million as well, and drown my guilt on my new yacht.

 

[da8s0859q]

Speaking as a guy who's first attending job is in an SDG with a two-year partnership track... ruh roh.

 

[bravotwozero]

Perhaps the guys signing on to SDGs should ask in writing that if the group gets bought out they will get their sweat equity paid back to them. Don't know if you'll get it bit worth asking


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[EMhawkeye]

I'm surprised the Summa fiasco isn't all over here #SEA strong

 

[TooMuchResearch]

Perhaps the guys signing on to SDGs should ask in writing that if the group gets bought out they will get their sweat equity paid back to them. Don't know if you'll get it bit worth asking


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How would it be paid back? The difference between what we're getting paid and local market rate?

 

[coachB]

I am talking about true SDGs where most have similar equity. Of course groups where there are 1-4 majority owners will walk away with 5+ millions.

They buyouts are priced just like any other business. Its multiples of some profit metric. That number distributed to a handful creates millionaires. That number distributed to equal SDG partners will not create millionaires.

That is why the Florida group likely got bought out for 30-40 mil. If this group were truly a SDG, and there were 100 docs, each prob walked away with 3-600K.

Ectopic speaks from first hand experience, and he didn't have to stick around to collect a seven figure payday.

 

[emergentmd]

You are grossly undervaluing the amount of money these deals are worth. You should at least double your figure. FEP, the Florida group had over 280,000 visits per year and 13 campuses. You can guestimate the cost of deal by estimating Accounts receivable for a few years. Say they collect 120/pt. 280k x 120 = 33.6 million. So you're looking ballpark at least ~75 million deal (I'd estimate closer to 100M, but whatever, let's go conservative). FEP had just a few Senior partners (<10) , despite having over a 100 physicians. The senior partners are getting multi-million dollar deals for selling ( groups much smaller than FEP have sold for ~30-40 million--if you have 5-7 partners....do the math). Junior partners, from what I heard, didn't get much more back than their buy-in, certainly not enough to justify selling to TH. Employees received a comical amount--we're talking not enough to buy an average luxury car, and that's after vesting (plus, taxes eat up 1/3 of that bonus, and you have to pay taxes UP FRONT in 2017 taxes to take the buyout.)

In the end, in these deals if you have a group of senior partner with majority shares, it makes them multi-millionares, a bunch of junior partners w/ 1-200k for going from independent group to TH, and sweat-equity employees (already getting paid less than CMG's in area in exchange for future promise of partnership) who get totally hosed. I can't

The secret in all of this is to create a time machine to the 90's to (a) become partner/invest in apple/google, or (b) slap the first line of EM physicians who started the selling to allow these big groups. It is what it is. Honestly if I was 50-something and having to deal with all the pain in the butt changes to health laws and administrators, I'd probably justify cashing-in for 5-7 million as well, and drown my guilt on my new yacht.

33 mil collections. is NOTHING for a 100 doc group. That comes out to 330k/yr in salary without distribution. If they really were at 33 mil in collections, their group sucked.

Maybe we were just terrible negotiators without any business savvy. Our group had over 250K annual visits. I can tell you that the value of the EM group has to do with profit and not collections. ROI is what buy out is based on not what they took in.

 

[EctopicFetus]

Emergent.. I know many groups who have sold.. All were near $1M or more. No one sold out for 200k.

Emcare is paying 6-10x earnings depending on how good it is. My old group which was lucrative did well as alluded to above. That being said after emcare took over they improved on our old model.

 

[The White Coat Investor]

Perhaps the guys signing on to SDGs should ask in writing that if the group gets bought out they will get their sweat equity paid back to them. Don't know if you'll get it bit worth asking

Hilarious. It's the risk you take. Don't want to take it, go work for USACS. I hear their boss is a pretty cool dude who really cares about EPs. But keep this in mind- every year that SDG keeps USACS out is a year when you actually get to have the unicorn job.

 

[bravotwozero]

You certainly have a point there. But saying my only choices are an SDG vs dom bagnoli is also quite 'hilarious'.


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[GeneralVeers]

You certainly have a point there. But saying my only choices are an SDG vs dom bagnoli is also quite 'hilarious'.


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"Dom Bagnoli" is just a euphemism for all corporate practice of Emergency Medicine. While all the companies are bad for similar reasons, his represents the worst of the worst.

 

[deleted109597]

But keep this in mind- every year that SDG keeps USACS out is a year when you actually get to have the unicorn job.

Some SDGs. Some. Plenty of them are predatory, and those are the ones that eventually became the CMGs basically.

 

[The White Coat Investor]

Some SDGs. Some. Plenty of them are predatory, and those are the ones that eventually became the CMGs basically.

The "D" in SDG means it isn't predatory to me. Call it an SG. Equal pay, equal vote, equal scheduling (or better yet market based scheduling), open books etc.