Owning/Starting an EM Group

[Renaissance Man]

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I recently read two really informative threads about starting up a dental practice, and the other about starting a plastic surgery clinic. I was wondering if anyone on here has any experience or knowledge about owning/managing/starting an EM group? Do the owners of your groups still do clinical work? Would you ever do it?

 

[Apollyon]

Starting an EM group is a chicken and egg function - first, you need a fully functional group, ready to go, 100%, on a certain day. However, you also need a hospital or hospital group that has an opening for a group - meaning the hospital is either brand new, or have booted out the last, lock, stock, and barrel. If the second event occurs, you need a full crew ready to jettison any prior engagements at a moment's notice to jump in.

The difference between this and a dental or plastic surgery clinic is the only thing stopping the clinics is competition; a person can select where they will put their office, and, if there is a void, they fill it. That is not so with the EM group, and, mostly for it, EM docs have to work in locations they can't select.

I actually work in a new group, but what this group did was form a local organization with the same people, and the prior contract holders were "absentee landlords", and didn't have an option to send in more resources. The founding partners had to put up collateral, though, including, for most of them, their houses. Had it failed, they would have been homeless.

 

[Arcan57]

Starting an EM group is a chicken and egg function - first, you need a fully functional group, ready to go, 100%, on a certain day. However, you also need a hospital or hospital group that has an opening for a group - meaning the hospital is either brand new, or have booted out the last, lock, stock, and barrel. If the second event occurs, you need a full crew ready to jettison any prior engagements at a moment's notice to jump in.

The difference between this and a dental or plastic surgery clinic is the only thing stopping the clinics is competition; a person can select where they will put their office, and, if there is a void, they fill it. That is not so with the EM group, and, mostly for it, EM docs have to work in locations they can't select.

I actually work in a new group, but what this group did was form a local organization with the same people, and the prior contract holders were "absentee landlords", and didn't have an option to send in more resources. The founding partners had to put up collateral, though, including, for most of them, their houses. Had it failed, they would have been homeless.

Didn't your contract have language specifically forbidding interfering with the old group's contract with the hospital? If not, the contract holders were fools.

The thing most people don't understand about starting a group is the massive amount of money required up-front. And as Apollyon noted, banks won't lend to you because of a sound business plan. You're going to need to put up signficiant collateral (usually house) or max out your consumer debt (a far from ideal second-choice). Even though you aren't having to fund a building or equipment, you're looking at ~6 months before your collections ramp up to their normal level (or even getting paid at all). Meaning you're floating the salaries of all of the attendings in the group for half a year (let's say small group 10 docs at $240k/yr = $1.2 million through those first 6 months).

Having deep pockets (and a large pool of docs) is what gives the practice management groups a leg up on getting contracts, because floating the salaries becomes trivial when you're making $10s-100s of millions in profit/year.

 

[Renaissance Man]

Sorry for my noobness, but what do you mean practice management groups? This all sounds really complicated, hospitals don't contract out EM services to more than one group at a time?

 

[Apollyon]

Didn't your contract have language specifically forbidding interfering with the old group's contract with the hospital? If not, the contract holders were fools.

I got there after all the shenanigans, so I don't know the specifics of how they got around it.

 

[Arcan57]

I got there after all the shenanigans, so I don't know the specifics of how they got around it.

I'd be interested to know, since at least in the language of my contract they could go after me for damages (loss of projected revenue which would be in the millions).