I have posted in the past about the UC I opened up with several of my EM partners from our SDG, and I’ve answered a lot of PMs about it so I’ll post a compilation of some of those PMs here. Hopefully it will help answer some of your questions and give you my personal experience.
Owning an UC should be lucrative if done correctly. I would not plan on working in an UC as an exit strategy as you may not enjoy UC clinically. It is lower acuity/less exciting, but it also isn't slow or relaxing. During our peak flu season we see up to 100-120/pts per day in a 10 hour shift (during the COVID pandemic we set a record with >150 patients one day). Seeing 10 patients/hour is definitely not a relaxing way to coast into retirement. My personal recommendation would be to open the UC early on in your career (We opened ours 2 years after I left residency) and use it as a side hustle that spits off (relatively) passive income and helps accelerate your path to financial independence. That passive income should be able to build up your warchest so that you don't have to work in your 50s unless you just want to.
When we opened ours 9 years ago, I spent a ton of time researching on-line, doing online lectures, meeting with other UC owners, etc. Usually the UCAOA will do an urgent care start up track at their annual meeting which is pretty good from what I hear. Opening an UC is not complicated, and as long as you put in the time on the front end, it's very doable. I had no prior experience other than 2 years in college in the business school before I switched over to Classics and premed.
What is typical startup cost?
Depends on whether you lease or build. Leasing is less up front expense and less risk. However if you run a successful urgent care that stays around for 10-15 years you'll have spent all that rent money with nothing to show for it when you could own the building and land. You also won't be able to lease free standing buildings as often. Many times leasing will put you in a strip mall which has a statistically worse chance of succeeding than a freestanding UC.
Cost to build is somewhere around $1M-$2M with the biggest variable being the cost of the land you purchase. You don’t actually need to have that much cash on hand as most banks will loan you the money with anywhere from 10-20% down. That total though does not include salary or equipment. You'll need a separate line of credit or working capital loan to cover those. Depending on how quickly you hit profitability that LOC may need to be $200k up to $500k.
If you build your own structure then you will usually split the practice into two LLCs for accounting purposes. One LLC will be the practice itself and one LLC will essentially be a real estate LLC that has ownership of the land and property. Your practice LLC will rent from the real estate LLC. As far as income, obviously you could set rent extremely low to maximize your practice's profits, but essentially that would just be shifting money from one pile to the other.
Reasonable expected rate of return on the investment?
Hard to value this on average as it depends on so many factors. First you have to separate the operational LLC of the UC from the real estate LLC (although the finances of the two are related since the rent from one goes to the other). For the real estate, we put down 10-15% split between the 5 partners and then secured a loan. Since inception, the real estate LLC has paid out each of us a 16% cash-on-cash return while paying down the loan and building up equity over the past 9 years.
As far as the operational side, the annual partner dividends have been a huge help in accomplishing financial goals and have been pretty stable for each of us for the past 7 years. I’m less comfortable posting those numbers on a searchable public forum (as I would be sharing my partners’ finances as well) but I’m happy to answer by PM if anyone is interested. Harder to calculate the ROI there since we only each put in about $5k for the operational side. Our main contribution was that each of us committed to working 6 shifts/month without pay for the first 6 months to give time for the business to ramp up and to create the workflow and train up the staff to use our system. That means we each contributed about 300 hours of clinical time so I guess you could value that at whatever rate you could be making in EM or UC in your area (though these were all day shifts essentially). Even assuming $300/hr, it’s a pretty impressive ROI.
How long does it take to become profitable?
There's not a set time frame for profitability as it depends largely on controlling initial expenses and ramping up your volume. Your net income is simply going to be your revenue which will be your collections per patient (run your business better, control your AR, and get paid more per patient) multiplied by your annual visits (busier UC gets more revenue from increased volume) minus your expenses (learn not to overstaff or overpay for things). The faster you ramp up, the quicker you will hit your break even point and become profitable. We were cash flow positive in month 4 or 5 I believe, and we paid off our working capital loans by month 8 or 9. Then we hired employed physicians and started paying ourselves dividends after the 1st year.
How many hours do you spend doing admin stuff and how many hours do you work in the UC clinically? How much does it infringe on your main clinical EM gig?
I spent (conservatively) about 1000-1500 hrs setting up the UC in the year leading up to opening it. You could probably do it in less time, but I tend to be an over planner who likes to have all my contingencies worked out ahead of time. That time spent consisted of learning the business, running models, writing a business plan, securing financing, working with architects and contractors on the construction, interviewing staff, etc. In year 9 it is a pretty well-oiled machine with little required time on our part. We take turns serving as the president for 2 year terms and that partner probably puts in 5-10 hrs/month on admin while serving in that capacity while the others have no major admin responsibility. We each work 1 shift about every 2-3 months just to keep a minimal presence and make sure everything keeps on track. As such it doesn't infringe on our EM job at all really (We also have a lifestyle friendly SDG and work ~120 hrs/month in the ED).
Hope that helps!
