Anyone had their group bought by a CMG?

This forum made possible through the generous support of SDN members, donors, and sponsors. Thank you.
EctopicFetus

EctopicFetus

Keeping it funky enough
20+ Year Member
Joined
May 3, 2004
Messages
12,665
Reaction score
3,460
Curious if anyone has any personal stories or know of anyone who worked for either an SDG or something similar and sold the ED group to a CMG?
Members don't see this ad.
 
EctopicFetus said:
Curious if anyone has any personal stories or know of anyone who worked for either an SDG or something similar and sold the ED group to a CMG?
Click to expand...

Most of the stories I know don't involve a purchase. Most involve a termination of the contract by the hospital so they can hire the CMG.
 
Sorry if I ask these questions but I'm just starting med school this fall, thus far from residency. I do have an initial interest EM though. What are cmg's ? Are those the equivalent to the anesthesia ams (sp?)...just curious.
 
Members don't see this ad :)
Hercules said:
Most of the stories I know don't involve a purchase. Most involve a termination of the contract by the hospital so they can hire the CMG.
Click to expand...

Exactly. The only real inherent value a group has is the contract. Since this usually has a specific time frame, and probably an out clause, not much reason for a CMG to spend money to "purchase" something with no other value. Especially since to them, the physicians are all interchangeable.

You have made me curious though.
 
coachB said:
Exactly. The only real inherent value a group has is the contract. Since this usually has a specific time frame, and probably an out clause, not much reason for a CMG to spend money to "purchase" something with no other value. Especially since to them, the physicians are all interchangeable.

You have made me curious though.
Click to expand...

It happens occasionally, usually when the hospital is happy with the group but the group can't recruit enough to keep up for expansion. While the docs being interchangeable mindset is definitely a thing, if you can keep the docs without having to deal with the hassle and expense of locums then offering a buyout to the group makes sense.
 
deuist said:
Contract management group. These are large corporations that staff multiple emergency departments around the country.
Click to expand...
Anesthesia residents and attendings talk a lot about the equivalent contract groups within their specialty, and what they have to say is not positive. Is EM moving in that direction? That is, cmg's increasingly taking over ed's and putting downward pressure on physicians' earning and work environment?
 
coachB said:
Exactly. The only real inherent value a group has is the contract. Since this usually has a specific time frame, and probably an out clause, not much reason for a CMG to spend money to "purchase" something with no other value. Especially since to them, the physicians are all interchangeable.

You have made me curious though.
Click to expand...
Agree. Ever seen an EM doc replaced by another? Even seen that doc pay the other to "buy out" the job?

Hell no.

It happens with doctors that own an outpatient practice, but not EM. A CMG taking over 20 docs jobs is no different just because it's 20 doctors. EM groups generally have few assets. They supply hourly help. They don't own any patient base the hospital doesn't already have, they have no ancillaries, no surgery centers, no Urgent Care buildings or other real estate, no equipment and have no business to take elsewhere to leverage a hospital. This makes any EM job (even a CMG job) inherently unstable beyond your 90-120 termination clause, no matter what BS "group stability" talking points you're given. (It also makes you more mobile and unattached, on the upside).

Why would a predatory EM group pay you for your job, when they can convince the hospital to fire you for free? You're simply told your contract is not being renewed. What's there to buy, or sell?

Think about it.

If anything, the hospital has the "practice" and patient base that would be worth buying. I suppose if competition for ED contracts got that intense, EM groups and CMGs could potentially have to buy the contract themselves, not the other way around (haven't seen this happen either, and with the shortage of BC/BE EPs there probably won't be too many bidding wars for ED contracts in the near future).
 
Last edited:
I was in the midst of applying to Exigence in Buffalo when TeamHealth bought them out. So, yes, it has happened. Now, it is "Exigence of TeamHealth", and you can see their ads in the back of the throwaways. The president/founder of Exigence is Greg Daniel, whom you young'ns do not know/recall was the plaintiff in the Daniel vs ABEM lawsuit about the closure of the practice track. TeamHealth wanted Dr. Daniel due to his expertise with opening and running urgent cares. If you want my opinion of Exigence of TeamHealth, PM me.
 
Members don't see this ad :)
I know of docs in a smaller democratic group who willingly joined/were bought out by a larger democratic group, usually to protect themselves from a looming takeover by a CMG. Sometimes they got a chunk of cash as part of the deal, but usually they just got the benefits of being in a bigger group and lost a little bit of autonomy. I also know of small democratic and small non-democratic groups who lost their contract to a CMG and then joined the CMG. What they each negotiated with the CMG as a signing bonus is beyond me.
 
EctopicFetus said:
So no.. no one has heard of this happening. I have read some reports but dont know the specifics.

I did some reading and one of the CMGs spent $150 million to buy a GAS group. To me they are no different than EPs. They own little (or nothing) and are just as interchangeable.

Some good nuggets in here. http://www.kevinmd.com/blog/2013/12/anesthesia-practice-sold-warning-young-doctors.html
Click to expand...
It's a group that covered 28 practice sites including multiple asc's and it's anesthesia. Apples to oranges.
 
EctopicFetus said:
There was a guy who owned a slew of contracts. He sold out to Team...

https://www.teamhealth.com/News-And....aspx?id=635C2D33-F622-4418-8FA3-D6853012B928

This was his retirement plan.
Click to expand...
So one guy at the top owned the contracts, got a big payout and the pit docs got little or nothing, and had little if any choice in the matter?

Sounds like a typical predatory contract takeover. They probably could have picked them off one at a time but figured they'd pay a few bucks to get them all at once, for convenience. I'd be surprised if the front lines doctors got anything significant.
 
EctopicFetus said:
Curious if anyone has any personal stories or know of anyone who worked for either an SDG or something similar and sold the ED group to a CMG?
Click to expand...


it does happen - don't know the particulars but most of the docs were kept on, technically the larger group isn't a CMG i suppose but a much larger EM group. SDG was having problems recruiting from what i understand.
 
The White Coat Investor said:
Not going to say who, and I think it was just their share of the accounts receivable at the time of acquisition. Many were surprised to find they made more money because the larger group had negotiated better with the insurance companies.
Click to expand...
I think (but am not entirely sure) that ectopic is referring to a recent anesthesia group that was bought out, where each anesthesia MD was rumored to have received in excess of a million dollars by selling the group. I haven't heard of this kind of thing happening in EM, unless it was a pyramid group where one guy got some cash and everyone else got very little. If it has, please slap me in the face right now, and tell me, "Where did it all go wrong?" While getting the accounts receivable on you own patients is great, it would likely amount to being paid for one or two months after you left a group (if that). Although that's more than most people get, it sure as heck isn't enough to retire on. In fact, you might be able to negotiate this into your contract anyways, on the condition you were with a group long enough and your collections had covered your "start up expenses" from the first few month you work there.
 
Mr. Hat said:
I witnessed it happen at the ED where I was working as a tech a few years back. The democratic group that had been staffing the ED for as long as I'd been alive was given 90 days notice that their contract was being terminated, and a CMG was brought in. They were not given any compensation at all by the hospital or CMG. Evidently the new hospital CEO was good friends with one of the CMG bigwhigs, or so I'm told. The democratic group was stable, had no problems hiring people as they expanded (it was actually extremely competitive to get a job with them), and hadn't lost anyone in about 5 years. They consistently ranked at or near the top for patient satisfaction and other metrics within the hospital system, and were well respected by the consultants and primary care docs in the area. The nurses and techs were very distraught when we lost them, and I still keep in touch with many who were in that group.

When the new group came in, several of the old group docs were offered jobs at what would amount to a pretty large pay cut. Only a few took it, and the rest all got good jobs elsewhere but many had to move. Today, not a single one of the docs who came in with the CMG takeover are still at that shop, and only a small handful who were there a year ago are there now. The director is actually a pretty cool person and many of the physicians are good, but they just can't seem to retain them. Sad deal.

So yeah, it happens. And to be honest I'm still not entirely over it.
Click to expand...
What you describe is not a "buy out." It's called being fired. This happens to EM groups all the time. Ectopic knows this. That's why he asked if anyone has been "bought out." A buyout implies you sell your contract to someone and make money in the deal. That absolutely is not the norm. The norm is to be booted out with no "buy out."
 
Birdstrike said:
What you describe is not a "buy out." It's called being fired. This happens to EM groups all the time. Ectopic knows this. That's why he asked if anyone has been "bought out." A buyout implies you sell your contract to someone and make money in the deal. That absolutely is not the norm. The norm is to be booted out with no "buy out."
Click to expand...
Oh. Duh. I are good at reading.
 
Dr.McNinja said:
So, your group's getting bought out?
Click to expand...
NO. asking more for a friend. We were talking about this.

Hercules said:
Do you know if he owned the freestanding EDs it referenced as well? Or did he just staff them?
Click to expand...
He didnt own any EDs just the contracts.

Birdstrike said:
So one guy at the top owned the contracts, got a big payout and the pit docs got little or nothing, and had little if any choice in the matter?

Sounds like a typical predatory contract takeover. They probably could have picked them off one at a time but figured they'd pay a few bucks to get them all at once, for convenience. I'd be surprised if the front lines doctors got anything significant.
Click to expand...
Yep. He was older and had been doing this for a while. Actually paid his workers decently but in the end isnt a sellout the way to go for him personally. Oh and the guys who worked got nothing.. zip ...zero.
 
Yes - This happened to my first job out of residency. "2-year Partnership track." The group was very poorly run with a questionable payor mix. A non-physician CEO wanted to invest in condos, and was ousted. There were loans being taken out each fall for payroll. There were lawsuits against the group from former physicians who "left" on unfavorable terms. The partners were nice guys and good friends - still to this day - but could not run a business. The group sold to a large CMG and did very well. They did not, however, have the lawsuits discharged or bought, so they are still probably paying legal fees. The group was sold two months after I "would have" become partner. I didn't get the chance because they had started negotiating the sale months before I was a candidate and simply never made it an issue. I was given a severance package that at the time I thought was "Fair." 6 months later I saw the partners with new rolex watches, new cars, and new houses, so I think I probably missed the boat somewhere (read: I think I got hosed).

NOTHING CHANGED. Same physicians, same leadership, and no issues with the hospital. As was mentioned before, the CMG's have negotiated much better insurance payments, and overall have no interest in losing doctors from new contracts - it saves them a ton of time and risk to simply buy a stable group, take the contract, and move forward business as usual.

THINGS WERE BETTER. We immediately got a 20% pay raise overnight. The paycheck stub had a different logo, but the reimbursement was better. We got more staffing to buffer our needs, and less shift work was an option if you wanted it. They were able to recruit much faster than the prior group could. We were employees with the old group, and employees with the new group - with better insurance coverage and a healthier 401k match, if we wanted it.

To the OP - this was a good experience and the group is still successful there. I would probably still be working there if my current opportunity had not come along. Most public CMG's (TeamHealth, EMcare) are looking for this ideal model because they can invest and write down debt at the same time - not to mention profit passively from the contract's productivity. Groups like the concept for the retirement option mentioned above, or to simply get out of impossible debt...
 
NinerNiner999 said:
Yes - This happened to my first job out of residency. "2-year Partnership track." The group was very poorly run with a questionable payor mix. A non-physician CEO wanted to invest in condos, and was ousted. There were loans being taken out each fall for payroll. There were lawsuits against the group from former physicians who "left" on unfavorable terms. The partners were nice guys and good friends - still to this day - but could not run a business. The group sold to a large CMG and did very well. They did not, however, have the lawsuits discharged or bought, so they are still probably paying legal fees. The group was sold two months after I "would have" become partner. I didn't get the chance because they had started negotiating the sale months before I was a candidate and simply never made it an issue. I was given a severance package that at the time I thought was "Fair." 6 months later I saw the partners with new rolex watches, new cars, and new houses, so I think I probably missed the boat somewhere (read: I think I got hosed).

NOTHING CHANGED. Same physicians, same leadership, and no issues with the hospital. As was mentioned before, the CMG's have negotiated much better insurance payments, and overall have no interest in losing doctors from new contracts - it saves them a ton of time and risk to simply buy a stable group, take the contract, and move forward business as usual.

THINGS WERE BETTER. We immediately got a 20% pay raise overnight. The paycheck stub had a different logo, but the reimbursement was better. We got more staffing to buffer our needs, and less shift work was an option if you wanted it. They were able to recruit much faster than the prior group could. We were employees with the old group, and employees with the new group - with better insurance coverage and a healthier 401k match, if we wanted it.

To the OP - this was a good experience and the group is still successful there. I would probably still be working there if my current opportunity had not come along. Most public CMG's (TeamHealth, EMcare) are looking for this ideal model because they can invest and write down debt at the same time - not to mention profit passively from the contract's productivity. Groups like the concept for the retirement option mentioned above, or to simply get out of impossible debt...
Click to expand...
Why would any group "buy out" for even a penny, an ED contract when they can just have the hospital terminate the contract and take it for free?
 
Birdstrike said:
Why would any group "buy out" for even a penny, an ED contract when they can just have the hospital terminate the contract and take it for free?
Click to expand...
It costs big money to replace docs. Buying the contract and keeping even a handful more docs than you would with a hostile takeover may be cheaper. Also, it's theoretically possible that the SDG may have been able to negotiate some sort of penalty for the hospital breaking the contract prior to expiration.
 
Birdstrike, I do think there is a reason for a buyout. The question is whats the amount? My guess is that its under $1M per partner. My better guess is about 1 years worth of income which is closer to 3-400k.

Many of the SDGs are well positioned in the hospital and the CMG cant penetrate that. They can promise the world but remember they all lost contracts in the past due to poor performance.
 
EctopicFetus said:
Birdstrike, I do think there is a reason for a buyout. The question is whats the amount? My guess is that its under $1M per partner. My better guess is about 1 years worth of income which is closer to 3-400k.

Many of the SDGs are well positioned in the hospital and the CMG cant penetrate that. They can promise the world but remember they all lost contracts in the past due to poor performance.
Click to expand...
If you can get a buy out for your contract, great. More power to you. The norm from what I've seen, has followed a simple formula from a hospital standpoint.

Step one- terminate or fail to renew current groups contract.

Step two- bring in new group for a new contract.

Step three- offer old group's individual physicians jobs with new group, with zero dollars changing hands to buy them out of their contract. Zero dollars, not even a "Peace out, bro, nice workin' with ya." Just a freely opening exit door.

In fact, this just happened at the hospital down the street with huge EM presence on the medical staff, and even in administration. They were told simply, "We are replacing you." There was no, "We are replacing you. Oh...and by the way, can we give you each a million dollars?"

If you were a hospital CEO, why would you pay a group to leave, when you can let their contract time out, and expire, for free?
 
The hospital CEO wouldnt pay a thing. the CMG would pay the SDG. The hospital in theory wouldnt notice a difference since there would have to be some sort of contract with the doctors to make sure they stayed for at least a transition period.
 
EctopicFetus said:
The hospital CEO wouldnt pay a thing. the CMG would pay the SDG. The hospital in theory wouldnt notice a difference since there would have to be some sort of contract with the doctors to make sure they stayed for at least a transition period.
Click to expand...
Why would they do that, when they can just go convince the hospital CEO they will do the job cheaper, get an agreement from the hospital that they can have the contract in the future and then wait a few months for the old group's contract to lapse?
 
EctopicFetus said:
Curious if anyone has any personal stories or know of anyone who worked for either an SDG or something similar and sold the ED group to a CMG?
Click to expand...

Long time poster but due to the nature of this I made a new account. My group has gone through this a few times. We operate a model which limits the number of partners and we employee some physicians. Our split is about 60/40, partners to employees.

We have received offers from some of the big CMGs for over $1m per partner but it hasn't made sense to me. If I could get closer to $2m it would make sense to give up my annual compensation of 600k+.

Sorry I can not give more details. PM me if interested, I would rather not post further details on here.
 
Birdstrike said:
Why would they do that, when they can just go convince the hospital CEO they will do the job cheaper, get an agreement from the hospital that they can have the contract in the future and then wait a few months for the old group's contract to lapse?
Click to expand...
I cant speak for others but our group receives almost nothing from the hospital. How can someone be cheaper than that? Also, you are assuming the hospital wants a new group.
 
EctopicFetus said:
I cant speak for others but our group receives almost nothing from the hospital. How can someone be cheaper than that? Also, you are assuming the hospital wants a new group.
Click to expand...

There's a simple way to find out how much your group's contract is worth. Have your group's president shop it around to a couple CMGs and see what they'll offer for it, if anything. Don't take my or anyone else's word for it.
 
I would warn you that by "shopping" it around you expose yourself. The CMGs have to sign a disclosure to basically not take over your contract for a period of time. Usually 18-36 months. The issue is after that they can see the "weaknesses" of your contract and thus you have exposed your self.
 
Again.. this isnt for me.. just a friend whose group is pursuing this.
 
moneyEMdoc said:
I would warn you that by "shopping" it around you expose yourself. The CMGs have to sign a disclosure to basically not take over your contract for a period of time. Usually 18-36 months. The issue is after that they can see the "weaknesses" of your contract and thus you have exposed your self.
Click to expand...
So how do you get an offer from a group without getting bids? This makes no sense to me.

Regardless, (speaking to EM hopefuls and EM residents) I think the take home point is that such a situation is not going to be able to be relied upon for 99% or more of future Emergency Physicians. If it's true, more power to you, though.

$600,000 per year and you're being offered $1,000,000 cash in hand to go away, and you're turning the offer down because it's too crappy?

Hmm...seems to good to be true, and if true, certainly a 99.99%ile situation. Again, if true great for you.
 
You'd be stupid not to take a $1 million payout. Say I believe that you make $600k. You get bought out and go work for a standard job that pays $400k. The yearly difference is $200k. You are telling me that a group offered you the equivalent of 5 years of the "bonus" you get for being a partner and you didn't take it? Those $600k jobs aren't gong to last long and you always run the risk of your contract getting unilaterly cancelled and then you are left with nothing.
 
GeneralVeers said:
You'd be stupid not to take a $1 million payout. Say I believe that you make $600k. You get bought out and go work for a standard job that pays $400k. The yearly difference is $200k. You are telling me that a group offered you the equivalent of 5 years of the "bonus" you get for being a partner and you didn't take it? Those $600k jobs aren't gong to last long and you always run the risk of your contract getting unilaterly cancelled and then you are left with nothing.
Click to expand...

I agree. Someone tells me, "Hey go ---- yourself! Here's $1,000,000 to go away!" and I "go away" every time, like a good little soldier. Something very strange about...
 
You must log in or register to reply here.

Similar threads

bravotwozero
APP getting bought out by Schumacher
2 3
Replies
100
Views
10K
emergentmd
E
D
Thoughts on CMG controlling shifts
2
Replies
50
Views
4K
emergentmd
E
Pudortu
CMG Reckoning
2 3
Replies
134
Views
10K
ScepticSkeksis
ScepticSkeksis
cyanide12345678
Anyone here who started their own private practice?
2
Replies
50
Views
5K
FamilymedMD
F
alpinism
The CMG name and shame thread for med students
Replies
24
Views
4K
Kryptocoin
K
Top