Cost to start surgical clinic?

[nychila]

Roughly how much initial investment would the founder require to start a surgical clinic (eg. general surgery, orthopedic) with 8 offices (for 8 surgeons), 4 exam rooms, 3 OR suites, and a few recovery rooms? I'm curious about very rough estimates for the cost of medical equipment, electronic hardware/software, rent in a mid-sized city, staff salaries (excluding the surgeons' salaries), and business operations. Would a million dollars cover it?

Is it possible for a surgeon to start this surgical clinic by himself without partners or investors so that the founder would wholly own the business?

---

Members don't see this ad.

 

[michaelrack]

Sounds like you want to start both a surgical office and a ambulatory surgical center. A million isn't enough- you will need at least twice that, maybe more

 

[Etorphine]

Great question, but I don't think $1 million would even begin to cover it. I hope someone on this board might have some experience.

 

[SouthernSurgeon]

Google says...

http://www.beckersasc.com/news-anal...tory-surgery-center-a-primer-from-a-to-z.html

Capital requirements. The typical development of a stand-alone ASC, with tenant improvement, requires a cost of approximately $220 to $250 or more per square foot to become operational. Additionally, money is also needed for equipment. Of the total budget amount, a substantial portion of the money can be provided through debt financing without guarantees. However, a certain portion of the debt may require personal guarantees (such as tenant improvements and working capital). Moreover, a cash capital contribution of a substantial amount must also usually be contributed to an ASC venture. Typically, anywhere from $500,000 (on the low side) to $1,500,000 is required as an equity cash contribution in total by the owners.

 

[Smurfette]

First of all, you'd have to be cautious about Stark laws depending on what services you are providing.
Second, you are proposing paying for 8 surgeon salaries (and malpractice), support staff for each, office space & other overhead, plus an ambulatory surgery center with OR space, OR equipment relevant to the surgeon's specialties, OR staff salaries, sterile processing space and sterilizing equipment and support staff, anesthesia equipment and provider compensation (whether you contract or hire directly). You also would need to have an EMR. No way a million will cover all that.
Third, you are going to take a while to build up this practice, so you need enough capital available to cover expenses until you have enough revenue.

 

[nychila]

Google says...

http://www.beckersasc.com/news-anal...tory-surgery-center-a-primer-from-a-to-z.html

Terrific article - thanks southernIM!

The article says it costs about a million for each OR, so a complete ASC with 3 ORs would cost about 3 million dollars to start up.

 

[SouthernSurgeon]

Terrific article - thanks southernIM!

The article says it costs about a million for each OR, so a complete ASC with 3 ORs would cost about 3 million dollars to start up.

Please note that that is talking about how much initial capital you would need, not how much it would cost in total. As others have said the cost would be much higher.

 

[ruralsurg4now]

It's not worth it. After you spend millions setting it up, you'll start making money off it and someone will go "OMG, HOW UNFAIR!!" and then you'll lose it all.

 

[nychila]

It's not worth it. After you spend millions setting it up, you'll start making money off it and someone will go "OMG, HOW UNFAIR!!" and then you'll
lose it all.

I'm not sure how much private practice will exist in the future, or whether ambulatory surgical centers will exist at all... sigh.

 

[ruralsurg4now]

I'm not sure how much private practice will exist in the future, or whether ambulatory surgical centers will exist at all... sigh.

It won't. The reason so many private practices are being bought out is because there is a deliberate increase in regulations and paperwork to make it impossible for them to exist. So they just allow themselves to be bought out. Then they become employees who have to follow the rules of the hospital. And the hospital, in turn, has to follow the government rules. It's a control structure.

 

[DrBodacious]

It won't. The reason so many private practices are being bought out is because there is a deliberate increase in regulations and paperwork to make it impossible for them to exist. So they just allow themselves to be bought out. Then they become employees who have to follow the rules of the hospital. And the hospital, in turn, has to follow the government rules. It's a control structure.

Private practice isn't going anywhere, especially in surgical fields. Dealing with hospital beurocracy is still worse that meeting government regs, which you can just pay a business manager to manage. Hospital employed surgery positions will no doubt become more popular, but private practice will still be viable, and likely still the majority practice model. ASCs get reimbursed at 58 percent of the facility fee that is allowed to hospitals, but they can be managed more efficiently, and probably still have a higher profit margin. So, they are really a "win-win-win" for the patients, insurance company, and surgery center investors, as long as they are well run.

In reference to the OP. As other people have alluded, start up ASCs are almost certainly financed. Banks will want about 20% cash invested and a detailed business proposal that justifies the expenses. The cost is highly variable, depending the quality of construction and what contractor bids are available and land development costs, architecture bids, zoning approval hoops to jump though, etc. I. E. You could end up having to pay $30,000 to install a fire hydrant somewhere. It depends on how "business friendly" your local government is, and the market rates for developing.

 

[DrBodacious]

Also in reference to OP, of course it is possible to have one person completely control a large practice. The issue is finding 8 surgeons in one area who want to be employees. The majority of surgeons want to have some investment stake in their practice, and will probably choose to start a separate practice if that isn't an option.

 

[DrBodacious]

Another point about surgery centers is that the physician allowable fees for cases are lower in an ASC compared to a hospital. I. E. You get paid maybe 90% of what you would relative to doing the case in a hospital. Mind you, if you are a partner, you should make that back from you stake in the ASC, and ASCs tend to be much more physician friendly regarding turn over, so you can probably still have a more profitable day in an ASC. Lots of things to consider.

 

[DrBodacious]

Another thing you asked was about operating costs and equipment for a clinic. Equipment is variable. I am an ENT and have quite a but of equipment, but a straight general surgeon probably doesn't have as much. Lumping EHR licensing in to this, maybe figure on $30,000 - $100, 000 per physician for start up, depending on economies of scale.

As far as general overhead costs: In my specialty, overhead per full time physician is ballpark $600,000 a year, on average across the country for different types of practices. This may include equipment rental and EHR costs for some practices.