Opened My Own Practice.... An Update

[InvestingDoc]

here is the previous thread: Opened My Own Practice

I wrote that one year ago. Wow, one year sure has flown by quickly. For those who might be new to my journey. Here is the TLDR for the background: I am the first in my family to be a doctor, I grew up not well off financially at all but almost all of my family is some kind of business owner. I am an IM doctor who graduated, was a hospitalist for 2.5 years then opened my own practice outpatient. I did everything by myself and created everything from scratch (including my website). Lets check in to see how things are going.

I'd like to post an update on how things are going for those who might be curious.

Workload:

Back then I was seeing 50ish patients a week. Now I'm up to 100-150 patients a week, completely maxed out. This past Friday I saw 32 patients with only one exam room half the day. I still share space with a general surgeon that I am subleasing from until our new clinic is finished being built. That should be done in about 3 months. We will more than 5X our current space.

I'm using dragon to dictate my notes and usually stay 30 minutes after work to finish dictations.

I've seen 4,000 new patients in the past year and my panel is pretty much maxed out. I've since hired another doctor to join me and trying to hire yet another doctor or PA to join the clinic.


New Doctor Employee Has Started

I hired a doctor to join me and things are going well. It took me 6 months to see 50 patients a week, she is seeing that her first month in. She is working part time now but will ramp up as time goes on.

It has been pretty cool to have a doctor join me and share the vision to grow the practice.

I offered a path to partnership for them.

We are seeing about 200 patients a week with only 2 exam rooms and with sharing the space with a general surgeon several half days a week. Insane I know, but we make do.


Insurance:

We almost doubled the amount of insurance payers that we take.

We take payment at the time of service, so our collection rate is > 90%. This helped us cross the 100k/month in gross revenue.

Commercial insurance has been the biggest headache. They refuse to negotiate with us and almost all pay less than Medicare. We will soon be dropping at least one commercial payer due to severely low reimbursement. They are so low that we actually lose money on some vaccines we give to their patients.



Personal Life:

We had our first child, a beautiful baby girl. She has colic so that has been a bit tough but shes healthy otherwise.

My wife was diagnosed with skin cancer and had Mohs surgery with plastic reconstruction.

My wife will undergo 2 more surgeries this year to hopefully get rid of the tumor in her jaw once and for all. *fingers crossed* That should happen April to Juneish.

I started to blog a bit more and am even going to try vlogging. We will see how that goes...





Employees:



Last year I had 1 employee full time and was sharing another employee.

Today I have 7 employees and 1 physician employee (8 total + me)

I have a dedicated biller who now 100% only works for me.

I'm a bit embarrassed to say that last year we did not have benefits other than time off for my one employee. Now I provide health insurance for everyone and an optional retirement benefit.



New Building:

I have purchased and I am building a 1.5 million dollar building to move into for a home base for my practice. This should be complete in April 2020.



The future:

Still trying to hire more primary care docs to join me. I'm also looking at opening more locations after our home base gets established a bit more. I think I'm about a year or two away from this. Once we get home base working well, then we can start really opening more locations and hiring more doctors.



---------

I do miss being a hospitalist at times. I miss the time off a bit. However, I'm making more money and in charge of my future. If I wanted to just keep it where it is at, I could put things on autopilot for a long time and probably be okay. However, that is not the direction that I plan on going and will see how far I can keep growing this.

If you are thinking of opening a practice, do it! It was one of the best things I've ever done. We need more physicians taking ownership of the business aspect of medicine back.

It is a lot of work and I love the admin side of owning a business. For those who only want to show up, see patients, and collect a paycheck.... you will not have fun going down this road. I guess if that describes you....well PM me and maybe we can work something out as my practice continues to grow

Just kidding, in all seriousness consider opening your own practice or being your own boss. It is so very much worth it.

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[deleted859689]

Do you have any recommended reading on how to start your own practice?

 

[deleted941485]

here is the previous thread: Opened My Own Practice

I wrote that one year ago. Wow, one year sure has flown by quickly. For those who might be new to my journey. Here is the TLDR for the background: I am the first in my family to be a doctor, I grew up not well off financially at all but almost all of my family is some kind of business owner. I am an IM doctor who graduated, was a hospitalist for 2.5 years then opened my own practice outpatient. I did everything by myself and created everything from scratch (including my website). Lets check in to see how things are going.

I'd like to post an update on how things are going for those who might be curious.

Workload:

Back then I was seeing 50ish patients a week. Now I'm up to 100-150 patients a week, completely maxed out. This past Friday I saw 32 patients with only one exam room half the day. I still share space with a general surgeon that I am subleasing from until our new clinic is finished being built. That should be done in about 3 months. We will more than 5X our current space.

I'm using dragon to dictate my notes and usually stay 30 minutes after work to finish dictations.

I've seen 4,000 new patients in the past year and my panel is pretty much maxed out. I've since hired another doctor to join me and trying to hire yet another doctor or PA to join the clinic.


New Doctor Employee Has Started

I hired a doctor to join me and things are going well. It took me 6 months to see 50 patients a week, she is seeing that her first month in. She is working part time now but will ramp up as time goes on.

It has been pretty cool to have a doctor join me and share the vision to grow the practice.

I offered a path to partnership for them.

We are seeing about 200 patients a week with only 2 exam rooms and with sharing the space with a general surgeon several half days a week. Insane I know, but we make do.


Insurance:

We almost doubled the amount of insurance payers that we take.

We take payment at the time of service, so our collection rate is > 90%. This helped us cross the 100k/month in gross revenue.

Commercial insurance has been the biggest headache. They refuse to negotiate with us and almost all pay less than Medicare. We will soon be dropping at least one commercial payer due to severely low reimbursement. They are so low that we actually lose money on some vaccines we give to their patients.



Personal Life:

We had our first child, a beautiful baby girl. She has colic so that has been a bit tough but shes healthy otherwise.

My wife was diagnosed with skin cancer and had Mohs surgery with plastic reconstruction.

My wife will undergo 2 more surgeries this year to hopefully get rid of the tumor in her jaw once and for all. *fingers crossed* That should happen April to Juneish.

I started to blog a bit more and am even going to try vlogging. We will see how that goes...





Employees:



Last year I had 1 employee full time and was sharing another employee.

Today I have 7 employees and 1 physician employee (8 total + me)

I have a dedicated biller who now 100% only works for me.

I'm a bit embarrassed to say that last year we did not have benefits other than time off for my one employee. Now I provide health insurance for everyone and an optional retirement benefit.



New Building:

I have purchased and I am building a 1.5 million dollar building to move into for a home base for my practice. This should be complete in April 2020.



The future:

Still trying to hire more primary care docs to join me. I'm also looking at opening more locations after our home base gets established a bit more. I think I'm about a year or two away from this. Once we get home base working well, then we can start really opening more locations and hiring more doctors.



---------

I do miss being a hospitalist at times. I miss the time off a bit. However, I'm making more money and in charge of my future. If I wanted to just keep it where it is at, I could put things on autopilot for a long time and probably be okay. However, that is not the direction that I plan on going and will see how far I can keep growing this.

If you are thinking of opening a practice, do it! It was one of the best things I've ever done. We need more physicians taking ownership of the business aspect of medicine back.

It is a lot of work and I love the admin side of owning a business. For those who only want to show up, see patients, and collect a paycheck.... you will not have fun going down this road. I guess if that describes you....well PM me and maybe we can work something out as my practice continues to grow

Just kidding, in all seriousness consider opening your own practice or being your own boss. It is so very much worth it.

I like it.

Physician in charge of the practice. Calling the shots. Reaping the rewards.

The way God intended.

 

[InvestingDoc]

Do you have any recommended reading on how to start your own practice?

There really is not a great resource out there so perhaps I should make one...

I started with the AMA 6 mistakes to avoid when stating up your practice

I then went over to AAFP website

The biggest benefit to me we my lawyer. Once I had a business plan, I hired Jim Kelso as my lawyer to set it up. His wife is a doctor and he is located in San Antonio. He spent like an hour on the phone and talked me though what I need to do. I paid him a grand and he stet up the business structure, mailed me a binder with everything I would need legally for the business and then I hit the ground running.


I then just opened a checking account, hired a group to credential me, and hit the ground running.

I wrote a bit about opening my practice here.


This makes me realize that I should do a long post about the nitty gritty about opening up my own practice step by step. I'll work on it this week.

In business you can write a business plan forever and plan for everything but you just gotta go for it. Stay lean in the beginning, get a good lawyer, and find a good location. The rest will just kind of fall into place as you go along.

 

[deleted859689]

There really is not a great resource out there so perhaps I should make one...

I started with the AMA 6 mistakes to avoid when stating up your practice

I then went over to AAFP website

The biggest benefit to me we my lawyer. Once I had a business plan, I hired Jim Kelso as my lawyer to set it up. His wife is a doctor and he is located in San Antonio. He spent like an hour on the phone and talked me though what I need to do. I paid him a grand and he stet up the business structure, mailed me a binder with everything I would need legally for the business and then I hit the ground running.


I then just opened a checking account, hired a group to credential me, and hit the ground running.

I wrote a bit about opening my practice here.


This makes me realize that I should do a long post about the nitty gritty about opening up my own practice step by step. I'll work on it this week.

In business you can write a business plan forever and plan for everything but you just gotta go for it. Stay lean in the beginning, get a good lawyer, and find a good location. The rest will just kind of fall into place as you go along.

time to do a lot of reading. Also thank you so much for posting threads like this on SDN and educating people like me!

 

[DrImg2020]

Looking through your blog! It’s so helpful and seems like a journey I’d like to make. Thank you and have a prosperous life. Keep us updated!

 

[DennisReynolds]

As a 4th year who just finished their last Internal medicine residency interview, this thread just gave me chills and goosebumps. Hopefully in 5 years, I can be where you are at and taking it to the next level!

Congrats on all of your success!!!

 

[fldoctorgirl]

Can you talk a bit about how much you are personally making at the end of the day, and your clinic hours that go along with it? And then, how many hours/week you typically spend on top of clinic hours? I think it's really awesome what you've managed to build.

 

[bronx43]

My man. Always an inspiration to us all.

The medical building real estate is a big deal and I’m glad you are going to buy.

 

[InvestingDoc]

Can you talk a bit about how much you are personally making at the end of the day, and your clinic hours that go along with it? And then, how many hours/week you typically spend on top of clinic hours? I think it's really awesome what you've managed to build.

I'm reinvesting money into the practice so net income will be skewed because of this. For example, I now have 8 computers, 2 printers, 2 EKG machines, chairs, desk, I paid $25k for architect, $10k in lawyer fees to name a few costs. So growth is eating into profits but we have assets on the books which is a plus.

I wont say exactly how much I'm making but it's almost six figures more than the offers I was getting to join large practices in the area as an employee even after all my reinvesting expenses.


I used to work 8am to 5pm with 15min to 30 minutes for lunch. I don't eat a long lunch and if I'm going to be there I'm going to see patients.

Since we share space with a surgeon and are down to one room some days, I had to extend hours. Afterall, we now have 3 doctors there on some days sharing 2 exam rooms. We can not all physically be there at the same time. We now go 7am to 6pm M-F. We have never been open on the weekend.

I currently work 7am to 1pm Monday, Noon to 6pm Tues/wed and full days on thursday and Friday.

During the "off time" I'm either with my daughter or working on admin for the clinic. I have more things that I'm working on that I haven't disclosed yet. Those two other things are side projects under LLC's that I've set up to see if it takes off. Still way too early to talk about those business ventures but one is tech related, the other is in manufacturing / custom goods. If it doesn't work out, well I'm only going to have about $10,000 in it so it's not a huge loss. You can win them all in business after all but have to take calculated risks.

In the beginning of my practice, I was sitting around waiting for patients to walk through the door. So even though I was at work 40 hours to 50 hours a week, I would only see patients maybe 20 hours of that and spent 20 on admin or setting up the practice. This includes altering my website, working on social media, working on employee handbooks....you get the idea. I was sooooo slow in the beginning. I am not a coder and I should have paid someone on upwork to do what I needed. I would have saved so much time. I was hard headed and was determined to get that damn box on my website to be in the exact location and size that I wanted but damn sometimes it is just hard and frustrating. I shouldn't have been wasting my time watching youtube how to alter the css and back end of my website. I should have just paid someone to do those more specialized tasks.

Once this was all set up, I naturally started to get more and more busy and the rest is as written above.

The 50 hours then transitioned to 40 hours patient care and maybe 10 hours on admin a week at this point in time.


I have more than a moderate degree of anxiety and for me instead of taking meds I've always tried to put my energy into projects. I tried to use the anxiety as some kind of positive energy to keep building on the clinic. Otherwise I would go crazy wondering if anyone was going to come see me in my practice. If I'm making some kind of progress, I feel much better. It also got me off my wifes back from asking her 1000x...."so you think anyone else is going to book to see me this week?"

 

[xoggyux]

Hi sir. Very informative post. I am very happy with you. We need more of you around!
I am very curious about a few things. I am sure some of these questions you might have answered in other threads or in your forum, believe me I will be slowly but surely devouring the info in your forum but regardless, if you have time to answer some of my questions I would appreciate it.

What would you say is the balance of clinical vs administrative that you are currently doing, what you were doing at the beginning of your business enterprise. By administrative I mean anything regarding your business/practice affairs. If you had to take a weekend to go to home depot to buy the flooring and countertops for your practice or if you have to go a Saturday to meet with the bank manager for a mortgage on your practice's building. I can seldom find reliable information regarding how much time medical entrepreneurs actually work to build up a practice. The closest to a straight answer was an old professor of mine that build up his family practice from scratch about 30 years prior. He said he worked as a pig for about 5 years before the practice started growing. Recently he told me he got offered about 4mil USD for his practice. At the time it seemed ridiculously great investment until I learned more about investments and realized that it was not such a great deal if analyzed from a financial perspective. Here is the way I see it. What does working like a pig means? Well I don't know, but for the sake of the argument, I am going to say 1.5 to 2.0 FTE (full-time employment). He told me he did this for about 5 years. If I were to work as a hospitalist, 1.5-2.0 employment at current rates and put every penny over $50k ("living like a resident") for 5 years I am sure I can save at least 1million dollar and that is on the conservative side ( assuming 250k average hospitalist for 1x FTE, approximately 375-500k for 1.5-2.0 FTE - 40% tax rate = 225-300k - 50k = 175-250k over 5 years = 875k-1.25M not counting interest, so lets round to 1million).
Now, if we put this 1 million in an investment account at just 8% and not add a penny over 30 years the final balance would be a bit over 10million dollars.
Now, 10m dollars is much higher than 4million that this guy got offered so clearly there is something wrong with this math. Of course, we need to adjust for inflation, as clearly my professor would not have been able to save 1m dollars with his salary 30years ago which probably was under 100k at that time. Rather than adjust backward, I will adjust forward the 4m USD 30 years in the future. To my surprise, at 3% inflation rate, 4million today would be about 9,709,049 in the future. Very close to the 10M that we would get if we simply work our ass off and invest it. Also, notice that I was conservative with my investment assumptions as well, 10% return on investment is not unrealistic either and at that rate, 1M invested over 10 years could end up being ~17millions).

There are advantages of owning your own practice, I do not deny this. But for those of us that do not enjoy the business or administrative part of medicine, I find it hard to justify trading my time commodity for administrative/business tasks rather than clinical tasks which I enjoy far more. If I am told that I needed to work for the next 5 years 80/week 48 weeks/year and I had to choose between 100% medicine and 50% medicine 50% administrative, I'd take the 100% medicine happily.

There is obviously an opportunity cost when you put some of your time to build a business (be it medical practice, real state, etc). I want to know your opinion regarding my assumptions here. Do you think I am overestimating the amount of your time that you are putting into your business? Do you disagree with my math? Perhaps you agree but you like the mixture of business/clinical (that's fine too! people can enjoy two or more things!). I just want to hear your thoughts on the matter.

 

[InvestingDoc]

My man. Always an inspiration to us all.

The medical building real estate is a big deal and I’m glad you are going to buy.

Thanks! Trust me, it has been a bit of a wild ride with lots of expensive lessons along the way.

Rent in my area is insane. It would be exactly the same cost for my to rent compared to buy. It was a no brainier to buy.

 

[IMGASMD]

Hi sir. Very informative post. I am very happy with you. We need more of you around!
I am very curious about a few things. I am sure some of these questions you might have answered in other threads or in your forum, believe me I will be slowly but surely devouring the info in your forum but regardless, if you have time to answer some of my questions I would appreciate it.

What would you say is the balance of clinical vs administrative that you are currently doing, what you were doing at the beginning of your business enterprise. By administrative I mean anything regarding your business/practice affairs. If you had to take a weekend to go to home depot to buy the flooring and countertops for your practice or if you have to go a Saturday to meet with the bank manager for a mortgage on your practice's building. I can seldom find reliable information regarding how much time medical entrepreneurs actually work to build up a practice. The closest to a straight answer was an old professor of mine that build up his family practice from scratch about 30 years prior. He said he worked as a pig for about 5 years before the practice started growing. Recently he told me he got offered about 4mil USD for his practice. At the time it seemed ridiculously great investment until I learned more about investments and realized that it was not such a great deal if analyzed from a financial perspective. Here is the way I see it. What does working like a pig means? Well I don't know, but for the sake of the argument, I am going to say 1.5 to 2.0 FTE (full-time employment). He told me he did this for about 5 years. If I were to work as a hospitalist, 1.5-2.0 employment at current rates and put every penny over $50k ("living like a resident") for 5 years I am sure I can save at least 1million dollar and that is on the conservative side ( assuming 250k average hospitalist for 1x FTE, approximately 375-500k for 1.5-2.0 FTE - 40% tax rate = 225-300k - 50k = 175-250k over 5 years = 875k-1.25M not counting interest, so lets round to 1million).
Now, if we put this 1 million in an investment account at just 8% and not add a penny over 30 years the final balance would be a bit over 10million dollars.
Now, 10m dollars is much higher than 4million that this guy got offered so clearly there is something wrong with this math. Of course, we need to adjust for inflation, as clearly my professor would not have been able to save 1m dollars with his salary 30years ago which probably was under 100k at that time. Rather than adjust backward, I will adjust forward the 4m USD 30 years in the future. To my surprise, at 3% inflation rate, 4million today would be about 9,709,049 in the future. Very close to the 10M that we would get if we simply work our ass off and invest it. Also, notice that I was conservative with my investment assumptions as well, 10% return on investment is not unrealistic either and at that rate, 1M invested over 10 years could end up being ~17millions).

There are advantages of owning your own practice, I do not deny this. But for those of us that do not enjoy the business or administrative part of medicine, I find it hard to justify trading my time commodity for administrative/business tasks rather than clinical tasks which I enjoy far more. If I am told that I needed to work for the next 5 years 80/week 48 weeks/year and I had to choose between 100% medicine and 50% medicine 50% administrative, I'd take the 100% medicine happily.

There is obviously an opportunity cost when you put some of your time to build a business (be it medical practice, real state, etc). I want to know your opinion regarding my assumptions here. Do you think I am overestimating the amount of your time that you are putting into your business? Do you disagree with my math? Perhaps you agree but you like the mixture of business/clinical (that's fine too! people can enjoy two or more things!). I just want to hear your thoughts on the matter.

Not op nor started own practice.
Seen several transitions from owners to employees, both in IM and anesthesia. I think your numbers seen reasonable, but there is no money that you can put on job security, autonomy and “the way YOU want to practice.”

 

[xoggyux]

Not op nor started own practice.
Seen several transitions from owners to employees, both in IM and anesthesia. I think your numbers seen reasonable, but there is no money that you can put on job security, autonomy and “the way YOU want to practice.”

Well, those things are nice but the terms don't don't mean much. For instance, the practice can go out of business and autonomy has its limits. Yes, you are your own boss, but if you are "soft" on yourself (e.i don't meet "metrics" or equivalent) the practice does not succeed and you could end up losing a lot of money/go bankrupt. My colleagues that work in private practice do not seem to be less stressed about work than myself or have more flexibility, they don't seem to work less either. I wonder what the deal is, especially after knowing that most private practices are being slowly bought up by larger and larger corporations and disappearing. In other words, if being the owner of your own practice is so good, if being the boss is so good, why is it that so many are being sold off? How much is hype "of being the boss" vs real tangible benefits?
I'd be wary also of having all my eggs in 1 basket. For instance, I think it is safer to have my investments independent from the medical field as a way of diversification.
While you might be able to drive profit higher because you are a health professional "insider". In the event that there was to be a relatively big policy change that affects the medical compensation, your doctor's income, and your practice's worth could both be in jeopardy simultaneously. For instance, say company A launches a camera pill that is cheap and controlled by AI and capable of administering bioabsorbable glue that takes care of GI bleeds. Under this scenario, a GI doctor's salary could be affected dramatically due to fewer procedures, likewise, his practice and expensive colonoscopy equipment and GI suite could also come down in value significantly. So both his salary and investment take a hit. However, if instead he was a hospital employee and his investments were in index funds or real state, only his salary would be affected while his investments would be safe.

 

[bronx43]

Well, those things are nice but the terms don't don't mean much. For instance, the practice can go out of business and autonomy has its limits. Yes, you are your own boss, but if you are "soft" on yourself (e.i don't meet "metrics" or equivalent) the practice does not succeed and you could end up losing a lot of money/go bankrupt. My colleagues that work in private practice do not seem to be less stressed about work than myself or have more flexibility, they don't seem to work less either. I wonder what the deal is, especially after knowing that most private practices are being slowly bought up by larger and larger corporations and disappearing. In other words, if being the owner of your own practice is so good, if being the boss is so good, why is it that so many are being sold off? How much is hype "of being the boss" vs real tangible benefits?
I'd be wary also of having all my eggs in 1 basket. For instance, I think it is safer to have my investments independent from the medical field as a way of diversification.
While you might be able to drive profit higher because you are a health professional "insider". In the event that there was to be a relatively big policy change that affects the medical compensation, your doctor's income, and your practice's worth could both be in jeopardy simultaneously. For instance, say company A launches a camera pill that is cheap and controlled by AI and capable of administering bioabsorbable glue that takes care of GI bleeds. Under this scenario, a GI doctor's salary could be affected dramatically due to fewer procedures, likewise, his practice and expensive colonoscopy equipment and GI suite could also come down in value significantly. So both his salary and investment take a hit. However, if instead he was a hospital employee and his investments were in index funds or real state, only his salary would be affected while his investments would be safe.

These are great points. I’m a fan of entrepreneurs but the medical landscape is a strange beast. We have to keep in mind that hospitals are able to charge and collect more than independent practices and they divert a lot of their inpatient and ancillary income to their outpatient referral base.
Furthermore, if you’re on your own, you have zero negotiating power.

If we break down the math, let’s say that you’re on your own and get $107 for a level 4 visit from Medicare(less if certain private payers). Assuming a reasonably low overhead of 40%, you’re taking home $64.
A level 4 visit is 1.5 wRVUs which means you’re pocketing about $42 per wRVU. I have seen most employed docs comp in the high 40s and low 50s.

Real estate is always a good way to offset this as I’ve seen docs create a LLC to buy office real estate then divert a lot of their revenue into it.

 

[Horners]

Well, those things are nice but the terms don't don't mean much. For instance, the practice can go out of business and autonomy has its limits. Yes, you are your own boss, but if you are "soft" on yourself (e.i don't meet "metrics" or equivalent) the practice does not succeed and you could end up losing a lot of money/go bankrupt. My colleagues that work in private practice do not seem to be less stressed about work than myself or have more flexibility, they don't seem to work less either. I wonder what the deal is, especially after knowing that most private practices are being slowly bought up by larger and larger corporations and disappearing. In other words, if being the owner of your own practice is so good, if being the boss is so good, why is it that so many are being sold off? How much is hype "of being the boss" vs real tangible benefits?
I'd be wary also of having all my eggs in 1 basket. For instance, I think it is safer to have my investments independent from the medical field as a way of diversification.
While you might be able to drive profit higher because you are a health professional "insider". In the event that there was to be a relatively big policy change that affects the medical compensation, your doctor's income, and your practice's worth could both be in jeopardy simultaneously. For instance, say company A launches a camera pill that is cheap and controlled by AI and capable of administering bioabsorbable glue that takes care of GI bleeds. Under this scenario, a GI doctor's salary could be affected dramatically due to fewer procedures, likewise, his practice and expensive colonoscopy equipment and GI suite could also come down in value significantly. So both his salary and investment take a hit. However, if instead he was a hospital employee and his investments were in index funds or real state, only his salary would be affected while his investments would be safe.

You make really good points, but your argument assumes that someone w a PP won’t have a investment account alongside the PP. OP said they are making 6 figures above the offers in surrounding groups. So they not only have more income to invest into an index fund, but they ALSO own the equity in their own practice. The only time your scenario makes real sense is if:

1. PP owner does not invest their money like any reasonable person should (15% index fund investments of gross income).

2. PP owner makes the same or less than an employed doc.

3. PP owner works 1.5-2 FTE jobs. (OP said they work 50 hrs a week, which is arguably a 1 FTE in medicine anyway).

4. The idea that working as an employee frees you from administrative responsibilities is false. Employed docs still deal with paper work, prior authorizations, peer-to-peer phone calls etc...


You’re also discounting the joy of not working your butt off to make someone else rich. You’re also discounting the drive to work harder when you know you own it vs when you know you’re replaceable the second a cheaper alternative comes up.

Your points are well made though, which is, the path to financial success isn’t necessarily only through PP and can be done through being an employee, working hard, living below your means and investing hard. This is not to say though that owning a PP is not a financially palpable and good option though.


Sent from my iPhone using SDN

 

[xoggyux]

You make really good points, but your argument assumes that someone w a PP won’t have a investment account alongside the PP. OP said they are making 6 figures above the offers in surrounding groups. So they not only have more income to invest into an index fund, but they ALSO own the equity in their own practice. The only time your scenario makes real sense is if:

1. PP owner does not invest their money like any reasonable person should (15% index fund investments of gross income).

2. PP owner makes the same or less than an employed doc.

3. PP owner works 1.5-2 FTE jobs. (OP said they work 50 hrs a week, which is arguably a 1 FTE in medicine anyway).

4. The idea that working as an employee frees you from administrative responsibilities is false. Employed docs still deal with paper work, prior authorizations, peer-to-peer phone calls etc...


You’re also discounting the joy of not working your butt off to make someone else rich. You’re also discounting the drive to work harder when you know you own it vs when you know you’re replaceable the second a cheaper alternative comes up.

Your points are well made though, which is, the path to financial success isn’t necessarily only through PP and can be done through being an employee, working hard, living below your means and investing hard. This is not to say though that owning a PP is not a financially palpable and good option though.


Sent from my iPhone using SDN

"You make really good points, but your argument assumes that someone w a PP won’t have an investment account alongside the PP."
Well, that is not an unreasonable assumption to simplify a scene. Sure, you can mortgage the practice's building and you can buy the equipment/renovations/etc on credit that way you have leftovers to invest in other types of investments. I don't think that is much advantageous.

1. Well, that is the point. Arguably if you are starting a practice, I can see the scenario when paying off debt associated with the practice quickly and early on can be beneficial even if you have to delay savings into investment accounts. For instance, there are plenty of people that end up paying off their home or student loans right after residency. While mathematically this might not be the most optimal (4-5% interest vs what the market can give you of 8-10%) the reality is that the scenario that has you paying your loans and mortgage has behavioral advantages and a guaranteed return.
I have no issues with either of the two strategies. Both seem reasonable (and profitable) to me.

2. PP owner makes the same or less than an employed doc.
How come? I always thought they would do more? I think this is what I have seen actually, they tend to do more (assuming they actually own). What could happen is that take-home might be lower early on as they are paying off debts associated with practice (mortgage on the building, remodels, US machine, outpatient surgical equipment, etc.) They also seem to work more though, which might offset a little bit their extra income. The key here is the opportunity cost, the 59k you put on your 401k every year could very well go into paying the 1M dollar of your medical building that much faster.

3. PP owner works 1.5-2 FTE jobs. (OP said they work 50 hrs a week, which is arguably a 1 FTE in medicine anyway).
That was surprising. If this is the case, it is clearly a great deal. Perhaps this might be the case due to some business background. I certainly don't think I could do all of what he did for less than 2FTE and I don't think the average Doc can either. Certainly not early on after residency graduation.

"You’re also discounting the joy of not working your butt off to make someone else rich. "
Actually I am not. I am making myself rich by investing my savings and I work as many hours as I can for the first 3-4 years out of residency to build up that cushion. It might very well be that someone else is also being benefitted with my hard work but that is OK. I can live with that. I am doing what I am doing mostly for myself (and my family). "The joy" is an important point. It does not matter what you invest in, but it is usually not a good idea to invest it in something you dont enjoy. For instance, if you invest heavily in real state and you don't enjoy being a landlord, chances are you are going to 1. be miserable or 2. hire people to do that job you don't like, which essentially cuts in your profit market and your return at the end might not necessarily be much different than the market return.

"Your points are well made though, which is, the path to financial success isn’t necessarily only through PP and can be done through being an employee, working hard, living below your means and investing hard. This is not to say though that owning a PP is not a financially palpable and good option though."

Absolutely.

 

[fldoctorgirl]

I'm reinvesting money into the practice so net income will be skewed because of this. For example, I now have 8 computers, 2 printers, 2 EKG machines, chairs, desk, I paid $25k for architect, $10k in lawyer fees to name a few costs. So growth is eating into profits but we have assets on the books which is a plus.

I wont say exactly how much I'm making but it's almost six figures more than the offers I was getting to join large practices in the area as an employee even after all my reinvesting expenses.


I used to work 8am to 5pm with 15min to 30 minutes for lunch. I don't eat a long lunch and if I'm going to be there I'm going to see patients.

Since we share space with a surgeon and are down to one room some days, I had to extend hours. Afterall, we now have 3 doctors there on some days sharing 2 exam rooms. We can not all physically be there at the same time. We now go 7am to 6pm M-F. We have never been open on the weekend.

I currently work 7am to 1pm Monday, Noon to 6pm Tues/wed and full days on thursday and Friday.

During the "off time" I'm either with my daughter or working on admin for the clinic. I have more things that I'm working on that I haven't disclosed yet. Those two other things are side projects under LLC's that I've set up to see if it takes off. Still way too early to talk about those business ventures but one is tech related, the other is in manufacturing / custom goods. If it doesn't work out, well I'm only going to have about $10,000 in it so it's not a huge loss. You can win them all in business after all but have to take calculated risks.

In the beginning of my practice, I was sitting around waiting for patients to walk through the door. So even though I was at work 40 hours to 50 hours a week, I would only see patients maybe 20 hours of that and spent 20 on admin or setting up the practice. This includes altering my website, working on social media, working on employee handbooks....you get the idea. I was sooooo slow in the beginning. I am not a coder and I should have paid someone on upwork to do what I needed. I would have saved so much time. I was hard headed and was determined to get that damn box on my website to be in the exact location and size that I wanted but damn sometimes it is just hard and frustrating. I shouldn't have been wasting my time watching youtube how to alter the css and back end of my website. I should have just paid someone to do those more specialized tasks.

Once this was all set up, I naturally started to get more and more busy and the rest is as written above.

The 50 hours then transitioned to 40 hours patient care and maybe 10 hours on admin a week at this point in time.


I have more than a moderate degree of anxiety and for me instead of taking meds I've always tried to put my energy into projects. I tried to use the anxiety as some kind of positive energy to keep building on the clinic. Otherwise I would go crazy wondering if anyone was going to come see me in my practice. If I'm making some kind of progress, I feel much better. It also got me off my wifes back from asking her 1000x...."so you think anyone else is going to book to see me this week?"

This seems like a really awesome set up. I know the work going into it was a lot, but looks like you're really starting to reap the rewards! Thank you for being so open about everything. Good luck, I'll be following your journey

 

[InvestingDoc]

Well, I think others have brought up a lot of good points sparked by xoggyux questions.

In the end it all comes down to personal finance is personal.


The real benefits of owning a business as I see it come in several flavors

1. Being in control of your own destiny, schedule, and having no boss breathing down your neck
2. Tax write offs. My cell phone I use for business...tax write off. Internet at home I use to log into work frequently...tax write off paid for by my business. Some doctors even buy or lease a car through their business if they travel to multiple locations.
3. Having employees work for you and make you money. Every time I hire someone, I can potentially take a cut of whatever they make until they make partner.
4. Owning real estate. The assets of my practice are worth very little. How much is a used computer and EKG machine really worth? Probably 20% of what I paid for it. The real estate though I can use to build wealth, take tax deductions on depreciation, essentially have other doctors who join me help cover overhead and the mortgage payment. This is where most practice owners make the majority of their money. The actual practice otherwise is worth I would bet close to nothing.
5. In control of my retirement accounts and how much I want to put into those accounts. I can create my own match, I can decide what kind of account to open. There is more freedom.


I think there are some very good points being brought up. The admin work is a lot of work in the beginning and you are not directly being compensated for this time. However, when you sign on to a group, I guarantee that they are taking something out of your salary to do the admin work on your behalf. So, if you really want you can hire someone on your own to fill these admin roles in your private practice.


There was also a point that you can potentially go bankrupt by starting your own practice. I would argue that if this happened, then it was done on poor management and planning.

While starting up a practice you can sublease from someone else, moonlight or do locums on the side and keep costs low. It only cost me like $15k to start up my practice. So even if it failed I was out $15k plus my opportunity cost. My overhead in the beginning was like $3k a month. I did one weekend of locums and boom, my overhead was covered.


I would like to throw out an interesting thought to challenge the idea that joining a large established group is the way to go. The rise of midlevels has become cheaper in many ways for companies. The hospitalist group that was in the hospital I worked at let go 3 doctors and replaced them with midlevels. All done by some admin that has never practiced medicine a day in their life but looking at the numbers. Everyone there kept saying their job was secure because it is a multi billion dollar organization. Wrong. The most underperforming docs were replaced and the remaining ones were given more metrics to meet in order to increase productivity.

I think that we might see a squeeze on non specialist income in the future as midlevels grow in popularity. I'm not trying to hate on them, they provide service. However, with medicine having such a huge growth in admin who has never practiced medicine a day in their life and look only at the numbers....it is a logical next step to replace your high income with someone who can do the job for less money. They sure as hell are not going to support replacing their admin jobs.

I hear you when you say that you don't have an interest in the administrative aspect of medicine but don't get mad when you one day find out that the table you were sitting at making decisions about how you practice medicine is replaced by someone who is happy to be paid to tell you what to do. It might sound a little harsh but at the end of the day I'm a huge advocate for doctors taking back control over medicine and to be in control you have to have administrative duties.

 

[xoggyux]

There was also a point that you can potentially go bankrupt by starting your own practice. I would argue that if this happened, then it was done on poor management and planning.

Well yes. In retrospect you can say it was poor management but (apart from obvious thieves/hacks/scammers) nobody is doing the job thinking that they are doing poor management. Everyone usually thinks they are doing well until the **** hits the fan.
Most MDs have little to no experience with business management/administration but we have a lot of experience thinking we are smart and can do anything on our own xD so I like to be extra cautious that's all. It does seem that you have some background on this, which puts you in a wonderful position. I am enjoying your blog.
I wonder since you mention you enjoyed hospitalist work. Did you consider creating your own hospitalist practice? If not, why not? Are you considering using your outpatient practice as wedge leverage to open doors for hospitalist work (e.i get privileges in hospitals nearby to follow your outpatients while hospitalized, etc?

 

[InvestingDoc]

Well yes. In retrospect you can say it was poor management but (apart from obvious thieves/hacks/scammers) nobody is doing the job thinking that they are doing poor management. Everyone usually thinks they are doing well until the **** hits the fan.
Most MDs have little to no experience with business management/administration but we have a lot of experience thinking we are smart and can do anything on our own xD so I like to be extra cautious that's all. It does seem that you have some background on this, which puts you in a wonderful position. I am enjoying your blog.
I wonder since you mention you enjoyed hospitalist work. Did you consider creating your own hospitalist practice? If not, why not? Are you considering using your outpatient practice as wedge leverage to open doors for hospitalist work (e.i get privileges in hospitals nearby to follow your outpatients while hospitalized, etc?

I have Privileges at the nearby hospital. I have not used it to admit patients but I have been approached by multiple different subspecialty surgical groups and asked to provide hospitalist care for their patients directly.

At this point I had to politely decline because I just cannot simply manage those patients well with all of the things I have going on. I have left the door open that I told them that if I hire up enough and some people are hungry to start up a group, then they will be the first people I call.

I think there is a reason why most practices have divested from either inpatient or outpatient medicine and have focused on 1 of them when it comes to general medicine. It is very hard to do both well and very hard to staff both well.

When I look back at hospital medicine, the thing I missed the most is expedited work-up, consultants available same day for management. Sometimes in primary care, it can take 3 months to get them back in to see their specialist.

You are right though, some doctors are not great at managing their money and would probably not be great at managing a business but there is always time to learn!

 

[KeikoTanaka]

Random Question - But, given the recent surge in DPC, do you think this is an option you would have considered? Is there any particular reason you chose PP solely with insurance and not the DPC model that seems to be taking off?

 

[CDI]

Ugh. Painful to read this. Mostly cause it’s just so awesome.

I am afraid to pull the trigger and do what you’ve done even with a blatant safety net.

I’m closing in on 2 years as a hospitalist myself. My father is a primary care physician who has an established solo practice for nearly 30 yrs now. Family always thought I was going to take over. I would inherit the practice straight up.

Instead I opted to become a hospitalist followed by, admin + telemedicine. I now work from home 80% of the week and make more money than I do as a hospitalist. Problem is...I still work for the man!

 

[InvestingDoc]

Random Question - But, given the recent surge in DPC, do you think this is an option you would have considered? Is there any particular reason you chose PP solely with insurance and not the DPC model that seems to be taking off?

I thought about doing DPC and I think it could do well in certain markets. I have a friend in the same city who is doing DPC from scratch. She is actually seeing patients out of her apartment which is something I never would do but hey I just stay in my lane when it comes to running my practice and don't offer advise unless she asks for it (which she has not). I don't know how much money she is making but tells me she is doing okay and keeps growing her practice.

The main reason I have avoided DPC is that tons of doctors in my area has switched over to that service. In the last year, 3 of them within a 5 mile radius of me have shut down and these doctors have switched back to insurance based models and now work for a large group. The last search that I did put it at over 15 DPC doctors within a 5 mile radius of my clinic.

I actually have a few patients who do not have insurance, pay me cash and pay me extra for extended time if they want. It is hardly much, I would say it brings in maybe only a grand each month.

A part of the reason I also did not want to do DPC is that I wanted to run a business and grow it quickly. I knew I wanted to hire other doctors because I don't want to be on call 24 7, I want a be able to take days off and not have to worry about who is going to cover me, and have other doctors to work with me that can cover me. There is a potential to initially make a little bit of money too off of the people I employ until they become partners.

I'm actually in talks now to hire yet another doctor to join my group so I should have 2 docs working for me in the coming months.

Ugh. Painful to read this. Mostly cause it’s just so awesome.

I am afraid to pull the trigger and do what you’ve done even with a blatant safety net.

I’m closing in on 2 years as a hospitalist myself. My father is a primary care physician who has an established solo practice for nearly 30 yrs now. Family always thought I was going to take over. I would inherit the practice straight up.

Instead I opted to become a hospitalist followed by, admin + telemedicine. I now work from home 80% of the week and make more money than I do as a hospitalist. Problem is...I still work for the man!

Well, telemedicine I have heard is nice but I've also heard reimbursement is low. Like 20ish dollars a visit. There is a premium to not leaving your house though.

The grass always looks greener but if you think you might be happier then I would of course say go for it and make the switch.

 

[drk310]

Thank you for your update! I started my solo private practice in my subspecialty around the same time as you and I was a bit nervous starting out since literally no one I knew was doing the same thing, but your posts last year were definitely enlightening. Luckily I had some help from my family too but it was mostly done on my own and with a little trial and error. Im a little over a year into my practice and I'm booked out 2 months, still covering 3 hospitals just to get my name out there.

The amount of work and responsibility is not a joke. But I agree with you, when you are in charge of your own life and schedule, and you're calling the shots, it makes the effort worth it.

One thing that helped tremendously was picking the right location in a slightly underserved area with low overhead costs. It also allowed me to negotiate contract rates with HMOs that pay better than some commercial insurances.

Also, the best marketing strategy to grow my practice fast was referrals from my own patients who are happy with their care. Physician based referrals can sometimes be very political, especially when dealing with HMOs. Working hard, treating patients right, and staying up to date in your field will naturally make your practice grow by word of mouth alone. Just my two cents.

 

[NITRAS]

Thanks for posting. Very interesting.

Going from leasing 1.5-2 clinic rooms to a $1.5M seems a big jump in risk/liability. Especially considering that new construction is the most expensive per square foot.

 

[xoggyux]

Ugh. Painful to read this. Mostly cause it’s just so awesome.

I am afraid to pull the trigger and do what you’ve done even with a blatant safety net.

I’m closing in on 2 years as a hospitalist myself. My father is a primary care physician who has an established solo practice for nearly 30 yrs now. Family always thought I was going to take over. I would inherit the practice straight up.

Instead I opted to become a hospitalist followed by, admin + telemedicine. I now work from home 80% of the week and make more money than I do as a hospitalist. Problem is...I still work for the man!

Save for extremely rare situations this is probably the way it will feel most of the time. Think about it, even CEOs have to tippy-toe around their board. I am sure there are a handful of CEOs that want to do me radical things that they think would be great in the long term but are prevented to do it due to the short leash of their board.

When you have a practice you might not have a medical director or administrative bureaucrat breathing behind your neck but rather you get other pressure points (aka mortgages, payment obligations, etc.)

Don't get me wrong, I am sure plenty of people would choose this scenario vs other in which you have a direct supervisor. But the idea that this is some sort of "freedom" is unrealistic. The best scenario is finding the "job" that fits your style and personality. If you want a 9-5 job that you can forget about once you leave the clinic/hospital/office and don't mind much someone "snooping" around your metrics and saying something from time to time be an employee or contractor. If managing a business is something that fullfills you, then thats your answer

 

[IMGASMD]

Save for extremely rare situations this is probably the way it will feel most of the time. Think about it, even CEOs have to tippy-toe around their board. I am sure there are a handful of CEOs that want to do me radical things that they think would be great in the long term but are prevented to do it due to the short leash of their board.

When you have a practice you might not have a medical director or administrative bureaucrat breathing behind your neck but rather you get other pressure points (aka mortgages, payment obligations, etc.)

Don't get me wrong, I am sure plenty of people would choose this scenario vs other in which you have a direct supervisor. But the idea that this is some sort of "freedom" is unrealistic.

It’s a choice that people have to make. Sounds like you’re better off being an employee and have people tell you want to do and how to practice.

 

[xoggyux]

It’s a choice that people have to make. Sounds like you’re better off being an employee and have people tell you want to do and how to practice.

That's precisely my point. You always have people telling you what to do. If you think owning a business is different you are delusional. Just take a look of what happened with Hong Kong and many of the CEOs of big companies.

I have a slightly different attitude on how to "maximize" freedom. I think being fully aware of the pros and cons of your particular situation is key. I think diversification is security and security approximates freedom. If in 10 years we are both worth the same but your $$ is tied to the valuation of your practice, you will have a more complicated exit strategy should you want to retire.

 

[InvestingDoc]

Thanks for posting. Very interesting.

Going from leasing 1.5-2 clinic rooms to a $1.5M seems a big jump in risk/liability. Especially considering that new construction is the most expensive per square foot.

It is a big risk but renting in my area was just as expensive per month with built in rent increases + NNN increases with time. Rent in my area for commercial real estate is going for about $45 per sq ft per year including NNN. This is way above national average of about 15-20 per sq ft per year but then again I'm close to the new apple one billion dollar campus with facebook, google, expedia etc all building or leasing high rises nearby. I don't see any lack of demand in the area any time soon and there is literally no where else to build where I'm located right off the major road. I figured it was about as good as an investment as I could have picked for commercial real estate. When I figured rent vs buy I kept figuring out that I would come out ahead long term. The only downside is that I have to put down about $300-400k of my own cash now to buy the new development. There is also the lag time of it taking about a year to build.

With renting I can not take depreciation on the structure and since I'm in the process of hiring my 2nd doctor to join me (by June we should be a 3 physician practice), they can effectively help pay my mortgage note.

 

[AshNiffler]

Ugh. Painful to read this. Mostly cause it’s just so awesome.

I am afraid to pull the trigger and do what you’ve done even with a blatant safety net.

I’m closing in on 2 years as a hospitalist myself. My father is a primary care physician who has an established solo practice for nearly 30 yrs now. Family always thought I was going to take over. I would inherit the practice straight up.

Instead I opted to become a hospitalist followed by, admin + telemedicine. I now work from home 80% of the week and make more money than I do as a hospitalist. Problem is...I still work for the man!

Do you mind sharing more about your telemedicine practice? I got the impression its only primary care

 

[deleted980918]

Inspirational! Have a few questions if you don't mind sharing.

1. Did you have any student loan when you started your own practice?
2. How is the competition in the area?
3. Do you think starting one's own practive is more challenging in IM subspecialty like cardiology?

 

[InvestingDoc]

Inspirational! Have a few questions if you don't mind sharing.

1. Did you have any student loan when you started your own practice?
2. How is the competition in the area?
3. Do you think starting one's own practive is more challenging in IM subspecialty like cardiology?

1. Yes I had ~150k in student loans when I graduated medical school but worked during residency, paid some of it off then paid it off in full within 1.5 years of graduation.

2. Competition is extremely tough. 2 very large MSO clinics nearby (over 100 doctors in each group) and about 15 other small practices within 10 miles. Interestingly, since I opened at least half of the small solo practices have either flipped to concierge medicine or the docs retired. I've gotten maybe 15% of my patients from them shutting down and patients moving to my practice.

3. I do think it is more challenging. For those doing procedures you have to get credentialed at a place to do the procedures and get privileges. Lets say you are GI. Where are you gonna do all your scopes? If you are cards, are you going to get STEMI call?

Probably not since the other group is going to have all of it and not easily let you get any call. Although it is not legal in my state to block someone from getting call, I personally know of a surgeon who was blocked from getting on the calls schedule by the two big groups in town that was on the scheduling committee. These two groups split the call amongst themselves. He got a lawyer involved and then they finally gave up some of the call to him. However, even when he did get his call, since the surgeons were friends with the hospitalist that worked for the large MSO group that employed the surgeons, when my solo surgeon friend said lets do the gallbladder in a week as outpatient, the hospitalist would almost always send them to their own surgeon rather than following up with him.

There were lots of sneaky tricks like this that really made it hard for him to break into the hospital call cycle and build his practice. They were even just calling him for the uninsured patients for a little while until he had to get his lawyer involved yet again.

The same can be said for GI or cards. Good luck getting the board members or committee members to give up good calls or any calls to you or even OR suite time to do your procedures. They will make your life difficult and expect it to be hard to get started.

So, TLDR, yeah I think it is much harder to do IM subspecialty solo or small practices in a competitive environment.

 

[deleted980918]

Very informative. I appreciate the time and effort you put into your blog and sharing the journey with us!

 

[CDI]

Do you mind sharing more about your telemedicine practice? I got the impression its only primary care

Need to be in the right system/location to deploy it as a hospitalist. Example is the hospital at home model which is what everyone across the U.S. wants to aim for.

 

[Laradd]

Just wanted to say thank you for sharing the journey. This is the kinda insight and posts that truly make SDN different.

 

[Kardio]

There really is not a great resource out there so perhaps I should make one...

Your posts are inspirational.

If you publish an ebook (and give it a med student price ), I’ll bite!

 

[Verumontanum2020]

Good post. I have owned and operated private practices for almost 20 years (even before medical school). I think we are primed to start a movement of more private practice and start taking healthcare back. I did my MBA thesis on a cash pay model and have been putting it in to use with many practices I consult with. I agree, going into private practice can be one of the most rewarding things one can do. However, if you don't know what you are doing, be prepared to spend money hiring someone to teach you, or spend money making mistakes. It won't be cheap either way, but you can make it big.

 

[GIMD1429]

Hi sir. Very informative post. I am very happy with you. We need more of you around!
I am very curious about a few things. I am sure some of these questions you might have answered in other threads or in your forum, believe me I will be slowly but surely devouring the info in your forum but regardless, if you have time to answer some of my questions I would appreciate it.

What would you say is the balance of clinical vs administrative that you are currently doing, what you were doing at the beginning of your business enterprise. By administrative I mean anything regarding your business/practice affairs. If you had to take a weekend to go to home depot to buy the flooring and countertops for your practice or if you have to go a Saturday to meet with the bank manager for a mortgage on your practice's building. I can seldom find reliable information regarding how much time medical entrepreneurs actually work to build up a practice. The closest to a straight answer was an old professor of mine that build up his family practice from scratch about 30 years prior. He said he worked as a pig for about 5 years before the practice started growing. Recently he told me he got offered about 4mil USD for his practice. At the time it seemed ridiculously great investment until I learned more about investments and realized that it was not such a great deal if analyzed from a financial perspective. Here is the way I see it. What does working like a pig means? Well I don't know, but for the sake of the argument, I am going to say 1.5 to 2.0 FTE (full-time employment). He told me he did this for about 5 years. If I were to work as a hospitalist, 1.5-2.0 employment at current rates and put every penny over $50k ("living like a resident") for 5 years I am sure I can save at least 1million dollar and that is on the conservative side ( assuming 250k average hospitalist for 1x FTE, approximately 375-500k for 1.5-2.0 FTE - 40% tax rate = 225-300k - 50k = 175-250k over 5 years = 875k-1.25M not counting interest, so lets round to 1million).
Now, if we put this 1 million in an investment account at just 8% and not add a penny over 30 years the final balance would be a bit over 10million dollars.
Now, 10m dollars is much higher than 4million that this guy got offered so clearly there is something wrong with this math. Of course, we need to adjust for inflation, as clearly my professor would not have been able to save 1m dollars with his salary 30years ago which probably was under 100k at that time. Rather than adjust backward, I will adjust forward the 4m USD 30 years in the future. To my surprise, at 3% inflation rate, 4million today would be about 9,709,049 in the future. Very close to the 10M that we would get if we simply work our ass off and invest it. Also, notice that I was conservative with my investment assumptions as well, 10% return on investment is not unrealistic either and at that rate, 1M invested over 10 years could end up being ~17millions).

There are advantages of owning your own practice, I do not deny this. But for those of us that do not enjoy the business or administrative part of medicine, I find it hard to justify trading my time commodity for administrative/business tasks rather than clinical tasks which I enjoy far more. If I am told that I needed to work for the next 5 years 80/week 48 weeks/year and I had to choose between 100% medicine and 50% medicine 50% administrative, I'd take the 100% medicine happily.

There is obviously an opportunity cost when you put some of your time to build a business (be it medical practice, real state, etc). I want to know your opinion regarding my assumptions here. Do you think I am overestimating the amount of your time that you are putting into your business? Do you disagree with my math? Perhaps you agree but you like the mixture of business/clinical (that's fine too! people can enjoy two or more things!). I just want to hear your thoughts on the matter.

Hello. Thank you for your detailed post. If you don't mind, please PM me have a few questions regarding investment. I truly appreciate. Thank you.

 

[tantacles]

Hello. Thank you for your detailed post. If you don't mind, please PM me have a few questions regarding investment. I truly appreciate. Thank you.

Might be easier for you to PM that poster with your questions and then they can reply.

 

[DoctwoB]

"Commercial insurance has been the biggest headache. They refuse to negotiate with us and almost all pay less than Medicare. We will soon be dropping at least one commercial payer due to severely low reimbursement. They are so low that we actually lose money on some vaccines we give to their patients."

Congratulations on your success. The above is by far the most frustrating part. The insurance companies are cutting off their nose to spite their face. One of the principle drivers of increasing cost in American healthcare is consolidation. Its happening everywhere, practices are consolidating into hospital networks partly to lower costs (it usually doesn't) but mostly to have increased leverage negotiating with insurers. Many big systems negotiate rates 2-3 or even 4x medicare, which is reflected in higher insurance costs. That's why these systems can buy out practices, pay physicians a decent salary, and still make bank. If they just were willing to offer small independent practices a reasonable rate, they would reduce the incentive to consolidate and make their payouts lower in the long term, with physicians keeping a larger chunk of it rather then going to admin of local large hospital corp.

 

[InvestingDoc]

"Commercial insurance has been the biggest headache. They refuse to negotiate with us and almost all pay less than Medicare. We will soon be dropping at least one commercial payer due to severely low reimbursement. They are so low that we actually lose money on some vaccines we give to their patients."

Congratulations on your success. The above is by far the most frustrating part. The insurance companies are cutting off their nose to spite their face. One of the principle drivers of increasing cost in American healthcare is consolidation. Its happening everywhere, practices are consolidating into hospital networks partly to lower costs (it usually doesn't) but mostly to have increased leverage negotiating with insurers. Many big systems negotiate rates 2-3 or even 4x medicare, which is reflected in higher insurance costs. That's why these systems can buy out practices, pay physicians a decent salary, and still make bank. If they just were willing to offer small independent practices a reasonable rate, they would reduce the incentive to consolidate and make their payouts lower in the long term, with physicians keeping a larger chunk of it rather then going to admin of local large hospital corp.

I'm already getting offers to join large groups that say they get 20% more at least than what I get paid. Their argument is that even if they put 10% in their pocket for admin duties that I still come out 10% ahead.

I am saying no for now but I can see how this is enticing for some practices. We for now have instead opted to drop an insurance carrier who pays us 80% medicare and will try to renegotiate with them since we went from 0 patients when we signed up to now about 8k patients in our panel.