Opened My Own Practice Update.... Year 3.5

[InvestingDoc]

I've posted the original here, and the second update here, and the third update.


Here we go! A raw update at my private practice. It has been some wild up and downs. I can't believe that this Feb 2023 will be year 4 I'm open full time. Time is flying by.


I meant to do one of these updates yearly, but time got away from me. 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. However, all members of my family owns some kind of business. Currently, out of the 2 brothers and me, I am technically the least successful in business. My brother takes the cake there who co-founded and sold his oil and gas company for 5.4B back in 2010s. 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.


Workload:


I have scaled back in my workload. At the peak, I was seeing 100-150 patients a week. Now I am seeing about 90 to 110 patients a week. I'm working more on admin time, high level things like adding more hours to our office hours, adding new services, and adding more doctors or PAs. I now do about 6 or 7 hours of patient care a day and 1-2 hours of admin. This also allows me to not do all my admin time outside of regular business hours.



I now have an office manager. She helps keeps the day-to-day tasks running, which has been a huge help in lowering my stress level. While she is not perfect, it sure has been a welcome help. However, I still struggle with this idea that I need an office manager. I find myself micromanaging her at times, which I am working on improving. I think if I didn’t have kids, I would totally manage myself and save the cash.


I'm using dragon to dictate my notes and usually leave right at 5 or maybe by 530 at the latest.


I added on executive wellness visits. We get paid $400 cash for these visits after lab fees. So far these have been wonderful additions to the practice. In the past month in a half I have done about 20 of these. Not a single Rx has come from one of these visits so far, which is very interesting.

Another New Doctor Employee Has Started And Left

The initial lady physician that I hired is now a business partner. The male physician that I hired, that just didn't work out. We had a second location and then I divested that clinic since it was just too far from my main office.


New Partner


I sold a minority percentage of my practice to the doctor who joined me 3 years ago. Working with her has been wonderful and it was a super easy decision to have her join the business side of things. She has worked for 3 years just as has or harder than I have on the practice, never asking for more or never complaining. Beyond this partner, I don't ever see myself allowing anyone else to buy into the practice going forward.


Inflation

Pre pandemic we could get away with hiring employees for about $15-$20 an hour. Now we can't even find anyone unskilled for less than $20 an hour. Medical assistant used to be around $19 on average, now its $25 on average. Inflation has been very real.


Insurance:


We still are a traditional practice. We take everything but Medicaid. Currently we are in talks to possibly drop Cigna. They just told us that our new contracted rates will be decreased by 8% and I’m trying to negotiate with them.



We take payment at the time of service, so our collection rate is still > 90%. This year we are on track for our first year of over 2 million in revenue to the practice. That is pretty darn exciting, and this year had our first month with revenue > $200k during a single month.


Commercial insurance has been the biggest headache. They refuse to negotiate with us and almost all pay less than Medicare.



Personal Life:


We now have two kids, one girl and one boy. They are 2.5 and 1.5 years old. Its a lot of work but a lot of fun. I definitely don’t spent the time I used to on the practice admin like I did pre-kids. I enjoy getting back home to playing peekaboo with my kids instead of working late at the office on more admin stuff.



To say that things were stressed in my life during the past 2 years would be an understatement. From moving offices, buying a new house, selling our old house, the birth of a new kids, selling a portion of my practice, selling the second location that we had to another group, my wife’s health issues, and looking to open another location in our city....just to name a few....was a bit too much to take on.


At one point earlier this year, there were so many moving parts to my life that I was sleeping maybe 5 hours a night from the stress, and I started to have palpitations daily. I have since reached a better balance in my life without the high stress levels. That was not sustainable or healthy. My balance is not perfect, but it is much better.

We sold our house and bought a new house within the past year. We had a house in the central part of the city and sold it for 950k, I purchased it for $440k 4 years ago. We bought a house 6 miles away for 990k that is over twice the size of the first house. (1400 vs 3100 sq ft). We now have a garage with our house!


My wife continues to battle with her skin cancers. This will be an ongoing issue that will most likely never resolve unfortunately since she was diagnosed with Gorlin’s syndrome.


Employees:


I now have 15 employees, including 2 full time billers.


I have a MD that works with me and 2 PAs. We are expanding to another clinic location in the south side of town but taking our time with the possible economic downturn. In the meantime we have saved up about half a million dollars in cash in reserves for this addition.


We now on average see about 400 patient encounters a week.

We now offer full benefits, including PTO, 401k match, dental, vision, and disability to all employees.

New Building:

My last post I talked about moving into the new building April of 2020. Due to construction delays, we didn't fully ramp up until about November 2020. So many construction delays. We went from 2 exam rooms to 8 exam rooms plus a dedicated lab room.

I could not be happier to be in our current office. I lucked out on construction. I bought the property for about $1.7 million, and now I could easily sell it for $2 million only 2 years in the future due to the rapid property market appreciation in our area.


This will most likely be the only building we own in the future. I plan on allocating future money to growth rather than owning the commercial real estate.

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[InvestingDoc]

Income:
The most frequent question I get asked, how much is the income as a private practice doctor.

I'm re-investing so much money back into the practice to grow that this is lower than you might think. Hiring 2 new PAs and having them ramp up, cost a lot of money. I must pay them up front and wait for the billing to roll in and for them to get fully booked before I make any money. That takes time


***Gross revenue for the practice my first year was almost nothing, like $40,000 since I started part time that year from August through December while I was a hospitalist. Even though I was part time open and not open a year, I'm going to call this year one and go by calendar years. Technically I hit year 4 open full time Feb 2023.

Year 1 ~$40,000
Year 2 ~$700.000
Year 3 ~ 1,200,000
Year 4 ~1,700,000
Year 5 ~ (on track) 2,100,000

Last year I personally made about $350k. This year, it will be less since I plan on spending about a quarter of a million dollars on opening the new office location. This will bring my income down to around $300k for the year or maybe even a little less.

Ideally, I would like to stay around $200k - $250k a year for the near future and invest the rest back into the practice to focus on growth. I want to grow faster and much larger. I don’t have any debt besides my house and commercial loan on the building and try to live pretty frugally. I don’t really have big personal expenses that I need to keep up with.


Growth

My last post we had about 5,000 lives that we cared for. Today we have about 15,000-16,000 lives that we care for.


My goal is to grow the practice as large as I can. I have no intention of selling out right now. The long-term exit plan is to divest….but once we are really big if we ever make it that far.

The future:

I'm still trying to hire more primary care docs /internal medicine docs to join me. This has been very difficult. We find three types of applicants.

1. The new grad where timing just didn't add up right.
2. The doctor who has issues (multiple lawsuits, huge gaps in care or switching jobs every 1.5 years for the past 15 years.)
3. The doctor who got a taste of big money and does not want to take a pay cut for outpatient medicine. (Going from 350k as a hospitalist locums to 250k outpatient is a hard sell for these docs).

For this reason, we have been hiring PAs so far since we have not found a good fit just yet. However, we are in talk with 4 other doctors right now in a “franchise” like model where we set everything up, and they essentially “own” that location but pay us a management fee.



Looking Back

Owning a business is hard. I knew it was a lot of work but for the past 4 years it has been many hours poured into this business. This has led to a lot of sleepless nights, some fights with the wife about lack of vacation, and moments of maybe even depression and anxiety. Don't get me wrong, there have been so many more ups than downs though.


The pandemic had lots of lows though. I had a doctor who I lost a lot of money on, and I was worried about the financial future of my practice during that whole episode. There were death threats from patients about the covid vaccine, to the point where I had to have a gun on me when coming in and out of my office for fear for my life. There also were times where I was questioning if waking up at 5am every day to do admin tasks to make this practice grow was really the best thing long term. I went through doubts of maybe I should just maximize profits now and stop focusing on the growth.


My blog and vlog on youtube, I attempt to show how real it can be owning your own practice. It is possible and very possible to be successful owning a practice. However, it has been a labor of love. Your practice does not have to be as admin intense as mine. I am doing this in an effort to grow and grow big.


Maybe I’m a bit masochistic, but overall, I wake up every day enjoying tackling whatever business problem is thrown my way. I could have saved myself a lot of headaches and stress by staying small, doing a micro practice. However, the end game with staying small is concierge medicine or do 100% of the work myself for all these tasks. Our problems get bigger as we grow, but so does the bank account and the support staff that we hire to help tackle these problems.


Happy to answer any questions anyone may have.



I wanted to make a plug for my youtube. I started taking vlogging more seriously. I’ll admit, my channel needs work and my videos are a work in progress, but if you would like, consider subscribing since I think I will switch from blog to youtube videos in the near future since the blog posts take much longer to make and I'm finding the YouTube video making to be much more fun. If you have any feedback on the videos, open to suggestions.

 

[NewYorkDoctors]

I echo my practice follows a similar trajectory. I have far fewer employees than you and I perform a large number of office based procedures. Therefore, I keep a larger proportion of the revenue. However, I want to state this your practice is indeed thriving and is a model of how an entrepreneurial physician can make it all happen.

Not to hijack this thread, but I want to reiterate to anyone who is thinking of doing Nephrology and just "hoping it will work out" that it will not if you try to follow the traditional model of private practice nephrology. If you love academic nephrology and want to stay in the academic sphere, then please do so. you will get all the intellectual stimulation of the field and you will see all the rare diseases of the field in an academic medical center.

but anyone who wants to make a successful private practice, you should follow the blueprint Investingdoc has done and just do GIM. If you want to grab that renal degree to be a "hypertension specialist," then please feel free. But do not feel compelled to stay locked into a dead end Nephrology job in the private practice market.

There were death threats from patients about the covid vaccine, to the point where I had to have a gun on me when coming in and out of my office for fear for my life.

Sheesh that's tough. In NYC, patients couldn't get enough of the COVID vaccine to the point that they come in asking for the second booster and ask about the new formulation. Any right-leaning patients who come in do not bring up the vaccine. I will mention in once and when they decline, I stop the conversation before I hear any conspiracy theories flowing.

For the record, I find the MAGA-heads as brainless and dimwitted as the woke shill Amazon Rings of "Prime" crowd.

 

[Appellatelove]

Curious how is compensation structured for your employees (rvu driven)? Why not offer them partnership?

 

[InvestingDoc]

Curious how is compensation structured for your employees (rvu driven)? Why not offer them partnership?

A tiered RVU system for the doctors. PAs start on salary then move to tiered RVU.

I want to grow and i expect that we may run into a capital call in the future as we ramp up growth. Growing a business takes a lot more money than you think. I don't want to have to go to all future partners to ask them for money to grow and I don't want to take on PE or VC money. The current partner is completely fine with our current growth plans and okay with a personal contingency of a capital call in the event if the market goes south or expenses to get additional clinics up and running take away more than we think.

 

[NewYorkDoctors]

If you salary the PAs , do they have a patient cap ?I noticed declining enthusiasm for salaried Employees so I have added productivity incentives (which is basically RVU system ) for my PA and RRT. you still need to see these patients anyway so I figure your PAs aren’t that bad off and overworked

 

[InvestingDoc]

If you salary the PAs , do they have a patient cap ?I noticed declining enthusiasm for salaried Employees so I have added productivity incentives (which is basically RVU system ) for my PA and RRT. you still need to see these patients anyway so I figure your PAs aren’t that bad off and overworked

We do not have a patient cap for new PAs. However, they average about 16 patients a day with pretty much all visits being an average of 30 minutes long. This ends up being a pretty sweet deal when some of these visits take 5 minutes for an ear ache. The PAs often are billing for much lower level visits than the MDs, with 5 times the level 3 codes since we use them for same day urgent visits. We then tell them that if they see more than that, that we will switch them over to a RVU contract and they can make more money. We start our PAs on the low end, at $108k per year due to the low volume and low acuity they see plus the pretty chill schedule. We never double book them. One of our PAs has been doing amazing, seeing about 20-22 visits per day, including some complicated visits so we are happy to compensate for that accordingly.

 

[NewYorkDoctors]

how are you lab services? in office phlebotomy? although I am in NYC and labs are a dime a dozen, some of these patients just DO NOT want to wait on line at a commercial lab. to be fair, I would not want to either.

to save on the overhead of hiring an actual phlebotomist, my PA and I do venous phlebotomy and my RRT and I do arterial punctures ourselves. (I have an ISTAT machine for point of care labs for ABG and blood gas electrolytes - these are useful in a pinch in my subspecialty patient population) We have portable vein finders $600 on amazon from VeinLite and I have my point of care ultrasound devices to localize arteries in tough situations. I get involved when its a difficult patient anatomy. things have worked fairly well. the lab gave us all the supplies we could want a centrifuge to spin down the SST tubes.

 

[InvestingDoc]

how are you lab services? in office phlebotomy? although I am in NYC and labs are a dime a dozen, some of these patients just DO NOT want to wait on line at a commercial lab. to be fair, I would not want to either.

to save on the overhead of hiring an actual phlebotomist, my PA and I do venous phlebotomy and my RRT and I do arterial punctures ourselves. (I have an ISTAT machine for point of care labs for ABG and blood gas electrolytes - these are useful in a pinch in my subspecialty patient population) We have portable vein finders $600 on amazon from VeinLite and I have my point of care ultrasound devices to localize arteries in tough situations. I get involved when its a difficult patient anatomy. things have worked fairly well. the lab gave us all the supplies we could want a centrifuge to spin down the SST tubes.

I guess I should clarify. We have a lab group that has space inside of our office that is like Quest, they pay for the Phlebotomist and all the supplies. They bill for it. We can do client bill for cash pay services, which we do mark up a bit and make a very small profit off of. We ran some numbers and it really does not make sense to do our own labs until we have maybe twice the volume we currently have. Some of these machines are like $200k and the payoff is just too long in the future. Plus all the government credentialing from CLIA we just leave it to the lab company for now.

 

[NewYorkDoctors]

I guess I should clarify. We have a lab group that has space inside of our office that is like Quest, they pay for the Phlebotomist and all the supplies. They bill for it. We can do client bill for cash pay services, which we do mark up a bit and make a very small profit off of. We ran some numbers and it really does not make sense to do our own labs until we have maybe twice the volume we currently have. Some of these machines are like $200k and the payoff is just too long in the future. Plus all the government credentialing from CLIA we just leave it to the lab company for now.

Right. Got it.

I have a CLIA small-medium certificate which I use to run point of care tests like the Abbott IDNow (which I need to do before running PFTs for COVID19 and not to mention just in general for all the viral URI evaluations) , the ISTAT point of care labs (which is only really useful for my subspecialty patients - need a quick potassium, bicarb, and pH in advanced CKD patients - need an ABG for certain pulmonary cases - need a troponin for a CAD patient with worsening chest pain and cannot see the cardiologist, and does not want to just "go to the ED because they have been burned before" and the EKG is "at baseline". As a matter of fact, I have done a mini-ROMI over the course of a full 8 hour day with 3 serial EKG and 3 ISTAT troponins in the office before - all negative and the patient avoided the ED ... and got a nuc with his cardiologist the next day. high five cheaper for the health system and i made no more money than an office visit and the point of care testing and EKGs), as well as doing my own urinalyses dipstick and microscopy for glomerulonephritis patients.

I know a hematologist that got full lab and CLIA certification to run his own CBCs and other relevant labs. but that's because his patients in his infusion center always need blood work.

for laboratory services, i have a similar set up in which the lab does everything. the only thing is they don't send a phlebotomist. they send us supplies for us to do it ourselves. we can bill 36415 and 99000. the latter seldom pays by some insurers.

 

[InvestingDoc]

Right. Got it.

I have a CLIA small-medium certificate which I use to run point of care tests like the Abbott IDNow (which I need to do before running PFTs for COVID19 and not to mention just in general for all the viral URI evaluations) , the ISTAT point of care labs (which is only really useful for my subspecialty patients - need a quick potassium, bicarb, and pH in advanced CKD patients - need an ABG for certain pulmonary cases - need a troponin for a CAD patient with worsening chest pain and cannot see the cardiologist, and does not want to just "go to the ED because they have been burned before" and the EKG is "at baseline". As a matter of fact, I have done a mini-ROMI over the course of a full 8 hour day with 3 serial EKG and 3 ISTAT troponins in the office before - all negative and the patient avoided the ED ... and got a nuc with his cardiologist the next day. high five cheaper for the health system and i made no more money than an office visit and the point of care testing and EKGs), as well as doing my own urinalyses dipstick and microscopy for glomerulonephritis patients.

I know a hematologist that got full lab and CLIA certification to run his own CBCs and other relevant labs. but that's because his patients in his infusion center always need blood work.

for laboratory services, i have a similar set up in which the lab does everything. the only thing is they don't send a phlebotomist. they send us supplies for us to do it ourselves. we can bill 36415 and 99000. the latter seldom pays by some insurers.

We have a low level complexity CLIA which sounds like the same one that you have. To do CBC, CMP, that type of stuff you need moderate clia which requires a lab director and all kinds of policies which we don't want to get into that type of regulation and compliance yet.

 

[NewYorkDoctors]

I added on executive wellness visits. We get paid $400 cash for these visits after lab fees. So far these have been wonderful additions to the practice. In the past month in a half I have done about 20 of these. Not a single Rx has come from one of these visits so far, which is very interesting.

While I do not do "executive" visits, I do have upper middle class or upper class individuals (or varying backgrounds not just Caucasian) who come to me because they googled im multispecialized and bring their high deducible commercial insurance (lol) to go over the most clinically irrelevant of issues. THey just need a lot of hand holding and reassurance. Some of these patients balk at paying later on. sigh.

For instance, someone with thyroid nodules that meet TR-4. They just don't want to get an FNA (fear of needles i guess) and then get frequent sonograms (they pay out of pocket) and just don't want to do any action but just want to deliberate and talk nonstop. They have seen all the specialists in the world then they come to me to ask my opinion.

I kindly tell them I am not a thyroid specialist and I defer. But based on Up To Date, they should consider X Y Z versus conservative monitor A B C.

Despite a clear algorithm and choice for plan of action, these kind of patients just want to drive in circles like the round abouts in Europe

Addendum: sometimes these conversations devolve into frantic what if what if what if discussions.
Although my first move is to provide empathy and give a chance for open dialogue, my second move is to highlight several possibilities in the algorithm and what to expect (sometimes it feels more like 14,000,605 that Dr Strange saw with the Time Stone), and my third move is to pull the Homer Simpson line. I often devolve into using the third move fairly often for these patients. Some get a chuckle and get the hint. Others take it literally and get more panicked. The Step 1 /2 /3 board exam answer of "establish more frequent office visits" has never rung more true (or more hollow).

 

[aafisahar]

wait 350k after all that work? hard pass

 

[Osteoth]

wait 350k after all that work? hard pass

No price to be paid for freedom and the potential for more.

 

[CleverAlias]

In an environment where CMS and by extension the insurance industry as a whole is cutting reimbursement in absolute terms while inflation/costs are rising at >10% a year, are you at all concerned that physician-owned practices taking insurance will simply become financially nonviable regardless of how lean and efficient?

You are obviously putting in immense effort into this venture and investing much of the revenue into growth, so I presume that if there is anyone who would have done the cold, hard financial due diligence into the sustainability of general medicine private practice into the future it would be you. Really interested to hear your thoughts on this.

 

[KaiBuzz]

What city/state are you in that you are getting less than Medicare rates from commercial insurers?

 

[forchinet121]

I've posted the original here, and the second update here, and the third update.


Here we go! A raw update at my private practice. It has been some wild up and downs. I can't believe that this Feb 2023 will be year 4 I'm open full time. Time is flying by.


I meant to do one of these updates yearly, but time got away from me. 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. However, all members of my family owns some kind of business. Currently, out of the 2 brothers and me, I am technically the least successful in business. My brother takes the cake there who co-founded and sold his oil and gas company for 5.4B back in 2010s. 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.


Workload:


I have scaled back in my workload. At the peak, I was seeing 100-150 patients a week. Now I am seeing about 90 to 110 patients a week. I'm working more on admin time, high level things like adding more hours to our office hours, adding new services, and adding more doctors or PAs. I now do about 6 or 7 hours of patient care a day and 1-2 hours of admin. This also allows me to not do all my admin time outside of regular business hours.



I now have an office manager. She helps keeps the day-to-day tasks running, which has been a huge help in lowering my stress level. While she is not perfect, it sure has been a welcome help. However, I still struggle with this idea that I need an office manager. I find myself micromanaging her at times, which I am working on improving. I think if I didn’t have kids, I would totally manage myself and save the cash.


I'm using dragon to dictate my notes and usually leave right at 5 or maybe by 530 at the latest.


I added on executive wellness visits. We get paid $400 cash for these visits after lab fees. So far these have been wonderful additions to the practice. In the past month in a half I have done about 20 of these. Not a single Rx has come from one of these visits so far, which is very interesting.

Another New Doctor Employee Has Started And Left

The initial lady physician that I hired is now a business partner. The male physician that I hired, that just didn't work out. We had a second location and then I divested that clinic since it was just too far from my main office.


New Partner


I sold a minority percentage of my practice to the doctor who joined me 3 years ago. Working with her has been wonderful and it was a super easy decision to have her join the business side of things. She has worked for 3 years just as has or harder than I have on the practice, never asking for more or never complaining. Beyond this partner, I don't ever see myself allowing anyone else to buy into the practice going forward.


Inflation

Pre pandemic we could get away with hiring employees for about $15-$20 an hour. Now we can't even find anyone unskilled for less than $20 an hour. Medical assistant used to be around $19 on average, now its $25 on average. Inflation has been very real.


Insurance:


We still are a traditional practice. We take everything but Medicaid. Currently we are in talks to possibly drop Cigna. They just told us that our new contracted rates will be decreased by 8% and I’m trying to negotiate with them.



We take payment at the time of service, so our collection rate is still > 90%. This year we are on track for our first year of over 2 million in revenue to the practice. That is pretty darn exciting, and this year had our first month with revenue > $200k during a single month.


Commercial insurance has been the biggest headache. They refuse to negotiate with us and almost all pay less than Medicare.



Personal Life:


We now have two kids, one girl and one boy. They are 2.5 and 1.5 years old. Its a lot of work but a lot of fun. I definitely don’t spent the time I used to on the practice admin like I did pre-kids. I enjoy getting back home to playing peekaboo with my kids instead of working late at the office on more admin stuff.



To say that things were stressed in my life during the past 2 years would be an understatement. From moving offices, buying a new house, selling our old house, the birth of a new kids, selling a portion of my practice, selling the second location that we had to another group, my wife’s health issues, and looking to open another location in our city....just to name a few....was a bit too much to take on.


At one point earlier this year, there were so many moving parts to my life that I was sleeping maybe 5 hours a night from the stress, and I started to have palpitations daily. I have since reached a better balance in my life without the high stress levels. That was not sustainable or healthy. My balance is not perfect, but it is much better.

We sold our house and bought a new house within the past year. We had a house in the central part of the city and sold it for 950k, I purchased it for $440k 4 years ago. We bought a house 6 miles away for 990k that is over twice the size of the first house. (1400 vs 3100 sq ft). We now have a garage with our house!


My wife continues to battle with her skin cancers. This will be an ongoing issue that will most likely never resolve unfortunately since she was diagnosed with Gorlin’s syndrome.


Employees:


I now have 15 employees, including 2 full time billers.


I have a MD that works with me and 2 PAs. We are expanding to another clinic location in the south side of town but taking our time with the possible economic downturn. In the meantime we have saved up about half a million dollars in cash in reserves for this addition.


We now on average see about 400 patient encounters a week.

We now offer full benefits, including PTO, 401k match, dental, vision, and disability to all employees.

New Building:

My last post I talked about moving into the new building April of 2020. Due to construction delays, we didn't fully ramp up until about November 2020. So many construction delays. We went from 2 exam rooms to 8 exam rooms plus a dedicated lab room.

I could not be happier to be in our current office. I lucked out on construction. I bought the property for about $1.7 million, and now I could easily sell it for $2 million only 2 years in the future due to the rapid property market appreciation in our area.


This will most likely be the only building we own in the future. I plan on allocating future money to growth rather than owning the commercial real estate.

Your brother sold a company for 5 billion dollars?? Did he give you any money? At that point I would completely stop working in medicine and focus on investing that money with my brother.

 

[InvestingDoc]

wait 350k after all that work? hard pass

Yup, mostly because I re-invested a lot of the money back into growing the practice. If I went as lean as possible...I would probably be closer to $450k-500k or more if I just focused on going solo, staying small. However, this is what I'm putting my energy into for "passive income" down the road.

It is expensive to grow a practice or start one. Especially during a pandemic and hyperinflation like we have been seeing. Keep in mind, that growing the business there were some big financial lessons alone the way like I posted above. Also, hiring new docs or PAs means that I have to pay them tens of thousands of dollars before I even see a cent of that from insurance company sometimes. The growth and ramping up phase is expensive.

The larger I get, the more I can passively make off of the rent that is paid by the practice to the commercial real estate, and the other employees that I bring on to work for the system that I own. Otherwise, I am just jumping on a plane doing locums every other week, or working for someone else with my only good chance of passive income being real estate and leverage there. Not really interested in that for now.

Looking at my salary as "this is it" is missing the long game. I'm in this to grow it, to have others work with me to grow the practice, work independently and deliver care the way we want to. This is becoming more and more rare, and at some point the scales will tip back to physicians wanting to take ownership over their "business of medicine."

I am thinking of potential 5-10 years now and not worried about if I made 350k or 400k this year.

Who knows, that is what running a business is all about. I might be dead wrong and look back 10 years from now thinking...wow what a waste of all that energy and time. I also might look back and realize that this grew to be something to be proud of and continue to provide independent care for the patients we serve.

We will see. It is the path I'm highly invested in and we will see how it turns out. It is clearly not for everyone.

 

[InvestingDoc]

What city/state are you in that you are getting less than Medicare rates from commercial insurers?

Large major city in Texas.

 

[InvestingDoc]

Your brother sold a company for 5 billion dollars?? Did he give you any money? At that point I would completely stop working in medicine and focus on investing that money with my brother.

He didn't own 100% of that company so that was not all his by far, but yeah he co-started the company, took it public, and then sold out to another O&G company based out of Dallas. He retired in his upper 20s. He has not given me a cent. He took a few years off to chill and now is invested in a few car dealerships when he is not on his ranch, hanging with his family, or at his vacation houses.

 

[InvestingDoc]

In an environment where CMS and by extension the insurance industry as a whole is cutting reimbursement in absolute terms while inflation/costs are rising at >10% a year, are you at all concerned that physician-owned practices taking insurance will simply become financially nonviable regardless of how lean and efficient?

You are obviously putting in immense effort into this venture and investing much of the revenue into growth, so I presume that if there is anyone who would have done the cold, hard financial due diligence into the sustainability of general medicine private practice into the future it would be you. Really interested to hear your thoughts on this.

It is still possible, but I think everything that you mentioned is making it much more difficult to achieve self-employment as a physician in the future.

The mix of high student debt obligations, the lack of mentors in the medical community, and lower pay from commercial insurance makes it exceedingly difficult for someone to start a practice. It is a trend that will harshly decline in the near future. However, keep in mind that when I started my practice pretty much everything everyone told me was true...was all just hearsay. No one who was giving me advice ever ran a practice or had any idea what they were talking about. If I would have listened to them, I would have thought it was completely impossible.

I do think the above reasons is why we will see more DPC, more cash services, and more "fringe" providers who say go more for a "niche" style of practice or patients.

Doctors already give us so much of our youth to go into medicine, it is a hard sell to tell them to grind it for 4 years like I have been to HOPEFULLY grow a practice that can be large and one day powerful. I have mentored numerous individuals who want to start their own private practice and 9/10 of them drop out due to other financial obligations and not wanting to yet again delay income or their lifestyle they want.


However.

I am starting to see a swing back to smaller groups though. Patients who come see us are tired of seeing a different doctor every time, tired of the hour long wait to see the doctor, feeling like cattle being run through the system. The future smaller practices will have to adapt to the new changes as you stated above.

How we are doing this is by outsourcing labor for cheaper wages, automating everything and anything we can, mining our data to look for ways to improve all the time, and trying new things like executive wellness to not have all our eggs in one basket in terms of revenue production. We question everything and try to automate every single things we can.

We try to be efficient, lean, while letting our docs or PAs practice independently the way they want to practice.

I might be wrong, but for me the status quo for me was for waking up at 5am and doing hospital rounds 6am until 6pm and missing every other weekend or holiday....well that time was costing me way more (even if measured in time rather than dollars) than the road I'm currently going down. Everyone has a different path...this is mine and just trying to blog/vlog my way through it to show what the imperfect path is like.

It's possible, and you might be able to do it better than me. I have inspired a few to go solo, and I love the conversations I have with them while we all blaze our own path.

 

[drk310]

It is still possible, but I think everything that you mentioned is making it much more difficult to achieve self-employment as a physician in the future.

The mix of high student debt obligations, the lack of mentors in the medical community, and lower pay from commercial insurance makes it exceedingly difficult for someone to start a practice. It is a trend that will harshly decline in the near future. However, keep in mind that when I started my practice pretty much everything everyone told me was true...was all just hearsay. No one who was giving me advice ever ran a practice or had any idea what they were talking about. If I would have listened to them, I would have thought it was completely impossible.

I do think the above reasons is why we will see more DPC, more cash services, and more "fringe" providers who say go more for a "niche" style of practice or patients.

Doctors already give us so much of our youth to go into medicine, it is a hard sell to tell them to grind it for 4 years like I have been to HOPEFULLY grow a practice that can be large and one day powerful. I have mentored numerous individuals who want to start their own private practice and 9/10 of them drop out due to other financial obligations and not wanting to yet again delay income or their lifestyle they want.


However.

I am starting to see a swing back to smaller groups though. Patients who come see us are tired of seeing a different doctor every time, tired of the hour long wait to see the doctor, feeling like cattle being run through the system. The future smaller practices will have to adapt to the new changes as you stated above.

How we are doing this is by outsourcing labor for cheaper wages, automating everything and anything we can, mining our data to look for ways to improve all the time, and trying new things like executive wellness to not have all our eggs in one basket in terms of revenue production. We question everything and try to automate every single things we can.

We try to be efficient, lean, while letting our docs or PAs practice independently the way they want to practice.

I might be wrong, but for me the status quo for me was for waking up at 5am and doing hospital rounds 6am until 6pm and missing every other weekend or holiday....well that time was costing me way more (even if measured in time rather than dollars) than the road I'm currently going down. Everyone has a different path...this is mine and just trying to blog/vlog my way through it to show what the imperfect path is like.

It's possible, and you might be able to do it better than me. I have inspired a few to go solo, and I love the conversations I have with them while we all blaze our own path.

I already commented this to you on a different platform - your growth is excellent but your model should consider pivoting to either cash pay (DPC) or an IPA model which CMS is pushing people towards anyway to control medicare costs. Your local market would dictate which approach is better. Change is hard once you've grown to this size, but efficiency will be key to maintain this ship.

The fee for service model is currently discouraged and with future medicare cuts, FFS is becoming progressively unsustainable. Scaling helps with shared overhead, but the margins will keep going down eventually. Meanwhile, your salaried employees will continue to expect annual raises. You'll need to consider pivoting eventually unless something major changes in our system.

Congrats on your success so far - your breed of physician is becoming rare and I hope you succeed in the war against PE/hospitals/employment in general. I'm picturing braveheart right now.

 

[chessknt]

I already commented this to you on a different platform - your growth is excellent but your model should consider pivoting to either cash pay (DPC) or an IPA model which CMS is pushing people towards anyway to control medicare costs. Your local market would dictate which approach is better. Change is hard once you've grown to this size, but efficiency will be key to maintain this ship.

The fee for service model is currently discouraged and with future medicare cuts, FFS is becoming progressively unsustainable. Scaling helps with shared overhead, but the margins will keep going down eventually. Meanwhile, your salaried employees will continue to expect annual raises. You'll need to consider pivoting eventually unless something major changes in our system.

Congrats on your success so far - your breed of physician is becoming rare and I hope you succeed in the war against PE/hospitals/employment in general. I'm picturing braveheart right now.

Yea if braveheart got shot in the legs before the fight and had to face a navy SEAL squad fully armed with air support.

 

[NewYorkDoctors]

Yea if braveheart got shot in the legs before the fight and had to face a navy SEAL squad fully armed with air support.

what a great sequel that would make

no but really. opening a successful private practice regardless of how you do it is like coffee and other things (use your own imagination to ad lib it). Once you go... dark roast... you can't go back.

addendum: i mean don't get me wrong. academic medicine is a good gig but your earning potential is far less than what an independent financially viable private practice can bring. money isn't everything though. teaching residents / fellows and doing scholarly work is also very career fulfilling as well. that's why I do voluntary faculty work with my hospitals' fellowship programs (pulm + renal). I'm not one of those who bothers the fellows to write my notes for me. I just bring the procedures to them and minimize the paper work they do (which I can remotely do on the EMR in my office anyway after seeing the inpatients)

 

[jstwannagraduaaate!!!]

Out of curiosity, besides primary care what specialties would pp be feasible? GI? ENT? Uro? Psyc? Allergy Pain?

 

[NewYorkDoctors]

Out of curiosity, besides primary care what specialties would pp be feasible? GI? ENT? Uro? Psyc? Allergy Pain?

in general if you can do your own office based procedures then you can make it work. the procedures and overall volume drive the revenue.

Cardiology, GI, heme onc, pulmonary can all easily drive the revenue in light of the various office based procedures one can do.

 

[InvestingDoc]

NewYorkDoctor gave you a great response that I agree with.

Anything that is not based on procedures can survive and thrive, but you have to keep costs low. There are several ENT PP in town here and they do their own in office surgeries, CT scans and such.

The big draw of doing a procedure is the facility fee. This is why surgical centers can make great investments for their owners. The problem is that lets say you are PP GI....which I know one guy in town who is solo. It is almost impossible for him to get on the call schedule at any hospital since he has no backup and he has a group of like 100 other GI doctors to compete with for call time.

You effectively get "locked" out of these markets by volume of doctors not willing to share their call. The same can be said for surgical centers. Good luck getting privileges at some locations if it is 100% owned by PE or a large mega group that is competing with you in town. For some surgeons or procedural based docs, it can be harder if you rely on hospital call to bring in volume and procedures.

 

[ChordaEpiphany]

I echo my practice follows a similar trajectory. I have far fewer employees than you and I perform a large number of office based procedures. Therefore, I keep a larger proportion of the revenue. However, I want to state this your practice is indeed thriving and is a model of how an entrepreneurial physician can make it all happen.

Not to hijack this thread, but I want to reiterate to anyone who is thinking of doing Nephrology and just "hoping it will work out" that it will not if you try to follow the traditional model of private practice nephrology. If you love academic nephrology and want to stay in the academic sphere, then please do so. you will get all the intellectual stimulation of the field and you will see all the rare diseases of the field in an academic medical center.

but anyone who wants to make a successful private practice, you should follow the blueprint Investingdoc has done and just do GIM. If you want to grab that renal degree to be a "hypertension specialist," then please feel free. But do not feel compelled to stay locked into a dead end Nephrology job in the private practice market.


Sheesh that's tough. In NYC, patients couldn't get enough of the COVID vaccine to the point that they come in asking for the second booster and ask about the new formulation. Any right-leaning patients who come in do not bring up the vaccine. I will mention in once and when they decline, I stop the conversation before I hear any conspiracy theories flowing.

For the record, I find the MAGA-heads as brainless and dimwitted as the woke shill Amazon Rings of "Prime" crowd.

Really interesting you say this. My father was a private practice nephrologist. He started his own practice as a founding partner in the 90s, and I like to joke that I'm the child of the only kind of physician who works like a dog and still doesn't make any money. He's told me a lot more about the practice and the ups and downs that I saw, but didn't experience, as a child, and it seems you're dead on. Nephrology is a tough gig, and just keeping the doors open (let alone actually making a decent income) is near dead these days. Medicare's iron grip on the specialty hasn't done them any favors either as dialysis units are fighting for patients covered by private insurance. There were a lot of really ugly regional battles over patients, referrals, and share of the dialysis market, and they were fighting big companies (e.g., DaVita, Fresenius, etc...). I also think he did the hypertension thing on top of more classic nephrology. Though I think there are probably areas of the country with the right mix of demand, payer mix, and lack of competition where private practice nephrology could flourish. I couldn't even begin to tell you where.

He eventually did make some money, but it all happened pretty late in life (60+), and it had nothing to do with practicing medicine. First he invested in some dialysis units that did very well, and then his practice restructured and merged with a larger private practice (and that came with a sizeable payout). Not sure how much, but enough to retire comfortably in his late 60s. He basically said that reimbursement peaked in the 90s and just got chiseled away as his local area got dominated by a single private insurance company that used its monopoly to play hardball with local practices. They had a tough time hiring physicians because they could make more as a hospitalist, or they could travel one state over where the insurance mix was better and practices could pay more. His pessimism about medicine nearly kept me away from the profession entirely. A lot of what happened in nephrology is bound to happen with other specialties, but I'm inclined to think it's close to the worst specialty right now.

wait 350k after all that work? hard pass

$350K is the income. @InvestingDoc is making a lot more than that in reality. They own a business which is growing in value. Even if you ignore the value of the established revenue streams, they have physical assets (like the building) which they are paying for through practice revenue but ultimately belong to OP. The money that goes towards the principal of that loan is not really an expense. It's more like paying yourself and investing in a very low appreciation asset. The building cost $1.7M, so I'd imagine that alone is on the order of ~$100k/yr towards the principal, let alone investment back into the practice, which is... an investment, not completely lost dollars.

So a few things could play out. If OP finishes paying off that loan, their take home income immediately rises as expenses are lower. OP could sell the practice. OP could take on partners and collect buy in from them. OP could merge with a larger practice and receive some sort of payout. Payouts for a well-run private practice are in the millions. If we conservatively say that OP can recoup $5M (in 2022 dollars) at the end of their career from all this investment, that's like investing an extra $60K/year for 30 years, and OP is only 3.5 years into this. Their income could also easily grow as they expand and hire more people.

So that $350K probably functions a lot more like $400-500K in reality. It's probably still easier to just study up in med school and match cards/GI, but this is a more lucrative path than any employed route in primary care. Seems to me the more relevant factor here is pride in your work. The extremes of medicine (tenure track academic vs. private practice owner) are built for people who want to take a risk and make something tangible with their career. The middle ground (employed non-tenure academic or community) provides more work-life balance and involves a lot more doctoring (but still manages a very good paycheck). Different strokes.

 

[NewYorkDoctors]

Really interesting you say this. My father was a private practice nephrologist. He started his own practice as a founding partner in the 90s, and I like to joke that I'm the child of the only kind of physician who works like a dog and still doesn't make any money. He's told me a lot more about the practice and the ups and downs that I saw, but didn't experience, as a child, and it seems you're dead on. Nephrology is a tough gig, and just keeping the doors open (let alone actually making a decent income) is near dead these days. Medicare's iron grip on the specialty hasn't done them any favors either as dialysis units are fighting for patients covered by private insurance. There were a lot of really ugly regional battles over patients, referrals, and share of the dialysis market, and they were fighting big companies (e.g., DaVita, Fresenius, etc...). I also think he did the hypertension thing on top of more classic nephrology. Though I think there are probably areas of the country with the right mix of demand, payer mix, and lack of competition where private practice nephrology could flourish. I couldn't even begin to tell you where.

He eventually did make some money, but it all happened pretty late in life (60+), and it had nothing to do with practicing medicine. First he invested in some dialysis units that did very well, and then his practice restructured and merged with a larger private practice (and that came with a sizeable payout). Not sure how much, but enough to retire comfortably in his late 60s. He basically said that reimbursement peaked in the 90s and just got chiseled away as his local area got dominated by a single private insurance company that used its monopoly to play hardball with local practices. They had a tough time hiring physicians because they could make more as a hospitalist, or they could travel one state over where the insurance mix was better and practices could pay more. His pessimism about medicine nearly kept me away from the profession entirely. A lot of what happened in nephrology is bound to happen with other specialties, but I'm inclined to think it's close to the worst specialty right now.

$350K is the income. @InvestingDoc is making a lot more than that in reality. They own a business which is growing in value. Even if you ignore the value of the established revenue streams, they have physical assets (like the building) which they are paying for through practice revenue but ultimately belong to OP. The money that goes towards the principal of that loan is not really an expense. It's more like paying yourself and investing in a very low appreciation asset. The building cost $1.7M, so I'd imagine that alone is on the order of ~$100k/yr towards the principal, let alone investment back into the practice, which is... an investment, not completely lost dollars.

So a few things could play out. If OP finishes paying off that loan, their take home income immediately rises as expenses are lower. OP could sell the practice. OP could take on partners and collect buy in from them. OP could merge with a larger practice and receive some sort of payout. Payouts for a well-run private practice are in the millions. If we conservatively say that OP can recoup $5M (in 2022 dollars) at the end of their career from all this investment, that's like investing an extra $60K/year for 30 years, and OP is only 3.5 years into this. Their income could also easily grow as they expand and hire more people.

So that $350K probably functions a lot more like $400-500K in reality. It's probably still easier to just study up in med school and match cards/GI, but this is a more lucrative path than any employed route in primary care. Seems to me the more relevant factor here is pride in your work. The extremes of medicine (tenure track academic vs. private practice owner) are built for people who want to take a risk and make something tangible with their career. The middle ground (employed non-tenure academic or community) provides more work-life balance and involves a lot more doctoring (but still manages a very good paycheck). Different strokes.

Oh I am a full time pulmonologist. I run my own pulmonary practice with a full PFT and CPET laboratory. So my post was slightly misleading there.

I am board certified in nephrology as well as hypertension as well but that's not my full time practice. I will help out other doctors for "tough cases" that involve renal or other multisystem diseases. but my primary revenue stream is NOT from nephrology.

 

[NEApplicant]

Employees:


I now have 15 employees, including 2 full time billers.


I have a MD that works with me and 2 PAs. We are expanding to another clinic location in the south side of town but taking our time with the possible economic downturn. In the meantime we have saved up about half a million dollars in cash in reserves for this addition.


We now on average see about 400 patient encounters a week.

We now offer full benefits, including PTO, 401k match, dental, vision, and disability to all employees.

How common is it to have 15 employees for a practice with 2 MDs?

 

[NewYorkDoctors]

I currently have
1 MD (me)
1 PA (to see primary care with me)
2 respiratory therapists to run the PFT and CPET labs
4 secretaries / patient navigators
1 office manager who is also an RN

i do not have any billing staff since I personally do my own billing. it's really not that hard to do. it's just another time sink at night. do I really want a stranger to know my finances? but hey what else do I do night? ive got kids now and I am closing on middle age so night life is stream the latest shows otherwise.


I would wonder who all the employees are in InvestingDoc's office.

Perhaps 2 RNs? phlebotomist? EKG tech? some medical assistants for vital signs and other things like the MMSE, TUG test, etc?

He is very generous with his employees based on offering full benefits like that.

 

[InvestingDoc]

2MDs and 2PAs, not just 2 MDs. 1MD is me and I don't count myself as a regular employee in the 15 calculation. So, 3 other employees are these people. We all average about 17 patient encounters(ish) a day. Plus:


1 Check in Staff (front desk)
1 Check Out staff (front desk)
5 Medical Assistants ( one for each doc/PA and one float)
1 Office Manager
2 full time Billers (work from home)
3 People working from home. Phone / portal message / Prior auth / paperwork employees who work from home doing this kind of stuff.


The 15 number comes from QuickBooks payroll, who is on the biweekly payroll and that is who I listed above.

 

[NewYorkDoctors]

2MDs and 2PAs, not just 2 MDs. 1MD is me and I don't count myself as a regular employee in the 15 calculation. So, 3 other employees are these people. We all average about 17 patient encounters(ish) a day. Plus:


1 Check in Staff (front desk)
1 Check Out staff (front desk)
5 Medical Assistants ( one for each doc/PA and one float)
1 Office Manager
2 full time Billers (work from home)
3 People working from home. Phone / portal message / Prior auth / paperwork employees who work from home doing this kind of stuff.


The 15 number comes from QuickBooks payroll, who is on the biweekly payroll and that is who I listed above.

If you ever wanted to cut costs, you could do do your own PAs. I know that sounds like SHOCK WHAT?

I do my own PAs and honestly its really quite fast. For radiology, I use Evicore, RadMD, and the UHC PA portal.
UHC Medicare and straight Medicare do not need radiology PAs for the common CT and MRIs.
If something is being ordered for the appropriate indication, then hitting the online prompts is like an online survey

For meds I use surescripts or covermymeds. but i do not go out of my way to PA everything a patient wants. if a patient really needs it and I know the proper indications (usually the subspecialty meds), I know what to click to get it to go through it. im not wasting time on DAW nexium or diclofenac topical patches for patients.
im doing things like Fasenra, Nucala, Ofev, etc..



What do all of these have in common?
They all need the physicians notes. I usually finish the note and then click the questions then just upload everything

extra time sink? yes

but some things like a LDCT for lung screening, or hematuria with abnormal US that needs CT urogram is instant same day approval for the managed Medicare population

the commercial and managed Medicaid population always need chart note reviews.

but for some of those instant approvals, i have my front desk schedule radiology same day. happy satisfied patients.

Of note I use dual computer screens with extend in all exam rooms and I have six monitors in my office room and i need to synthesize a lot of data.

office EMR hospital EMR radiology PACS systems lab portals, PA portals, uptodate... etc..

I will admit minimizing and maximizing multiple tabs on one screen would make me go nuts and want to hire someone to do PAs too. but if the cost is a few extra computers....

 

[EVILDENTIST]

Yea if braveheart got shot in the legs before the fight and had to face a navy SEAL squad fully armed with air support.

I'm a dentist a few years out and was looking for something else and landed up on this thread.
Thank you for that laugh!

 

[stayinalive]

I have not and will not be opening up my own practice, but I have really enjoyed reading and following the OP's journey and it has been very insightful. Really appreciate you sharing your experiences with everyone.