Practice buy in

IPSIS: Formerly the Spine Intervention Society
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There is a physician/private lending person at most large banks. I am sure suntrust has one in your area.
 
How would a practice calculate an appropriate buy in?
 
I took out a loan from the bank. The buying price was based on the current financials of the practice and the bank wanted look at that valuation to determine if they wanted to loan the money or not. In general, the more the practice is worth the more the buy-in would be. I would also say that it would be worth your time to get an independent valuation by a third-party if they are trying to set the price and tell you what the practice is worth. It may save you hundreds of thousands of dollars. Everyone that I’ve known that has bought into a practice has spent hundreds of thousands to over 1 million to buy in and it would only cost you 2-$3000 to have a company do the valuation.
 
hawkeye2009 said:
Pain practices aren't worth anything, except the hard assets (surgery center, fluoro, building if owned).

Be careful of "buy ins".
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how so with a loyal patient base and established referral patterns? It would be just like any other business
 
Wkrdoc said:
how so with a loyal patient base and established referral patterns? It would be just like any other business
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Exactly, one is buying physical assets in this case. They are buying into the established revenue stream(s).
 
Pain practices are indeed worth something… In fact they are worth a lot of money! All across the country private equity firms in venture capitalist or buying out paying practices at large multiples of EBITA. I own our practice along with my partner, each of us 50% owner. If a doctor joins our practice and wants to own any portion of it then they are going to have to pay for it. Right now if we sell our practice to any of these potential buyers whether that be a hospital system or private investor my partner and I would each get 50% of the selling price. If we decided to bring on the third partner and we all three have 33% ownership then all of a sudden we’re both giving away a large portion of our payday to the third guy.
 
gdub25 said:
Pain practices are indeed worth something… In fact they are worth a lot of money! All across the country private equity firms in venture capitalist or buying out paying practices at large multiples of EBITA. I own our practice along with my partner, each of us 50% owner. If a doctor joins our practice and wants to own any portion of it then they are going to have to pay for it. Right now if we sell our practice to any of these potential buyers whether that be a hospital system or private investor my partner and I would each get 50% of the selling price. If we decided to bring on the third partner and we all three have 33% ownership then all of a sudden we’re both giving away a large portion of our payday to the third guy.
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Well hopefully the third partner grew the practice so that the practice is valued higher. In theory this should maintain similar value for each partner assuming every partner produces similarly..
 
gdub25 said:
Pain practices are indeed worth something… In fact they are worth a lot of money! All across the country private equity firms in venture capitalist or buying out paying practices at large multiples of EBITA. I own our practice along with my partner, each of us 50% owner. If a doctor joins our practice and wants to own any portion of it then they are going to have to pay for it. Right now if we sell our practice to any of these potential buyers whether that be a hospital system or private investor my partner and I would each get 50% of the selling price. If we decided to bring on the third partner and we all three have 33% ownership then all of a sudden we’re both giving away a large portion of our payday to the third guy.
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Well...…………………….. Pain docs can move right in next door to you and in a matter of a couple years will have a practice very similar to yours. This would be the case unless you have spine surgeons as partners in your practice, or unless you are part of a large multi-specialty clinic and have built in referrals that are your partners. Otherwise, "loyalties" are worth nothing and can be changed through financial incentives/partnerships or directed care through ACOs. I just "neutered" a large pain practice by establishing a practice within a multi-specialty group that previously provided referrals to the independent pain practice. Why? They were very high cost with regards to procedures and imaging and that needed to change...……………..so it did. Incidentally, that practice had two docs who "bought in" to that practice within the last three years. They found out the hard way that pain practices aren't worth anything.

I don't know of any hospital, hospital system, or large physician group that is buying (or has ever bought) a pain practice. As those entities hold the referrals (the value of which determines a practice) there is absolutely no point in purchasing a pain practice- none.

When large groups/hospital systems "buy" large practices or groups, they do so over a seven year period and use the revenues from the "purchased" group to pay for the practices. In that manner, they are essentially getting the practices for nothing (as they use their ancillary revenues to "purchase" the practice) and have clauses that demand the physicians remain in the practice for a period of time to get the "buyout".

A new tactic used by the insurance companies is to get practices for nothing by catching them on the short end of a commercial ACO contract. The percentage risk rises over time; like a gambler, the practice eventually loses and the insurer gets the practice (and its assets) for nothing to pay off the loss on the contract.
 
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Yeah and they can put a Jimmy Johns right next to subway...

It’s called business
 
hawkeye2009 said:
This would be the case unless you have spine surgeons as partners in your practice, or unless you are part of a large multi-specialty clinic and have built in referrals that are your partners.
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Hey Hawkeye,
In your opinion, what type of specialties would be ideal in a multi-speciality clinic in order for a pain practitioner to thrive?
thanks in advance
 
hawkeye2009 said:
Well...…………………….. Pain docs can move right in next door to you and in a matter of a couple years will have a practice very similar to yours. This would be the case unless you have spine surgeons as partners in your practice, or unless you are part of a large multi-specialty clinic and have built in referrals that are your partners. Otherwise, "loyalties" are worth nothing and can be changed through financial incentives/partnerships or directed care through ACOs. I just "neutered" a large pain practice by establishing a practice within a multi-specialty group that previously provided referrals to the independent pain practice. Why? They were very high cost with regards to procedures and imaging and that needed to change...……………..so it did. Incidentally, that practice had two docs who "bought in" to that practice within the last three years. They found out the hard way that pain practices aren't worth anything.

I don't know of any hospital, hospital system, or large physician group that is buying (or has ever bought) a pain practice. As those entities hold the referrals (the value of which determines a practice) there is absolutely no point in purchasing a pain practice- none.
Click to expand...

If you can divert all the drug screens and DME to in-house and make them go to your ASC, that is the value of purchasing a pain group.
 
buckeye2132 said:
Is that illegal or a violation of stark law?
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No - refer to my previous thread on this. It's not a violation if it's in the SAME practice/building under the same tax ID. Ie- you are an Ortho group referring patients to your own PT departmernt in the same building. It IS a violation if it's referral to a family member.
 
hawkeye2009 said:
Well...…………………….. Pain docs can move right in next door to you and in a matter of a couple years will have a practice very similar to yours. This would be the case unless you have spine surgeons as partners in your practice, or unless you are part of a large multi-specialty clinic and have built in referrals that are your partners. Otherwise, "loyalties" are worth nothing and can be changed through financial incentives/partnerships or directed care through ACOs. I just "neutered" a large pain practice by establishing a practice within a multi-specialty group that previously provided referrals to the independent pain practice. Why? They were very high cost with regards to procedures and imaging and that needed to change...……………..so it did. Incidentally, that practice had two docs who "bought in" to that practice within the last three years. They found out the hard way that pain practices aren't worth anything.

I don't know of any hospital, hospital system, or large physician group that is buying (or has ever bought) a pain practice. As those entities hold the referrals (the value of which determines a practice) there is absolutely no point in purchasing a pain practice- none.

When large groups/hospital systems "buy" large practices or groups, they do so over a seven year period and use the revenues from the "purchased" group to pay for the practices. In that manner, they are essentially getting the practices for nothing (as they use their ancillary revenues to "purchase" the practice) and have clauses that demand the physicians remain in the practice for a period of time to get the "buyout".

A new tactic used by the insurance companies is to get practices for nothing by catching them on the short end of a commercial ACO contract. The percentage risk rises over time; like a gambler, the practice eventually loses and the insurer gets the practice (and its assets) for nothing to pay off the loss on the contract.
Click to expand...

since we are on the subject with you, how long would someone have to work making them money you did (say 1.2-1.5M) if invested well
 
25-30% of our patients are self referred based on word of mouth. We do zero online advertising or social media stuff, could definitely do more and try to increase that patient capture. So to answer your question, I believe it could easily be done.
 
Preferences that they have an established physician for primary care or orthopedics and or neurosurgery who would send us the patient. I do except referrals by family and friends of current patients. But anyone who just wants to come in and see me by word-of-mouth must be crazy. I try and have a terrible bedside manner. I really do not want to see a bunch of people who are on medications and do not have a referral.
 
KHE said:
Why are pain practices only "referral based?" Why could a doctor not establish a pain practice and with effective marketing build a patient base for themselves?
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Because you will get every drug addled loony from a 300 mile radius.

You need some kind of "filter" to prevent your practice from being flooded with a bunch of crazies.

You need to have a spine surgery group as your main referral source. They tend to filter out all the crap with their PAs and NPs and just send procedure oriented patients. The worst thing you can do is to advertise and take "self referrals". You will spend a few years weeding out all the bad patients you acquired with such a tactic.
 
hawkeye2009 said:
Because you will get every drug addled loony from a 300 mile radius.

You need some kind of "filter" to prevent your practice from being flooded with a bunch of crazies.

You need to have a spine surgery group as your main referral source. They tend to filter out all the crap with their PAs and NPs and just send procedure oriented patients. The worst thing you can do is to advertise and take "self referrals". You will spend a few years weeding out all the bad patients you acquired with such a tactic.
Click to expand...

This is exactly the truth. Pain isn't Family Medicine.
 
We take them all and require no referrals, has been the model of our clinic for 15 years. No one waits more than two weeks to be seen, we have no midlevels. This has been the overall approach we’ve used and it’s working well for us. Only thing we do is have our schedulers set expectations over the phone when they call to schedule. Our experience is that people chasing meds don’t schedule appts, turns out they don’t want to waste their time coming in knowing that we aren’t a pill clinic.
 
gdub25 said:
We take them all and require no referrals, has been the model of our clinic for 15 years. No one waits more than two weeks to be seen, we have no midlevels. This has been the overall approach we’ve used and it’s working well for us. Only thing we do is have our schedulers set expectations over the phone when they call to schedule. Our experience is that people chasing meds don’t schedule appts, turns out they don’t want to waste their time coming in knowing that we aren’t a pill clinic.
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Do you guys take Medicaid?


Sent from my iPhone using SDN
 
DOctorJay said:
Do you guys take Medicaid?


Sent from my iPhone using SDN
Click to expand...

We will if the referring doctor picks up the phone and explains the circumstances to us.

But, since our state Medicaid system doesn't pay for IPM services or opioids those patients just end up converting into cash-pay patients. We've worked out payment plans, Go-FundMe credits, etc and there's a reputable Pay-Day Loan Center down the street. The patients are very grateful since our prices are 1/3 of the HOPD.

I hate to see cash-paying patients discriminated against.
 
We are contracted with Medicaid but don’t see them unless it’s a special circumstance. Like drusso we too don’t get reimbursed for interventions and we don’t want to do meds on these patients.
 
gdub25 said:
We are contracted with Medicaid but don’t see them unless it’s a special circumstance. Like drusso we too don’t get reimbursed for interventions and we don’t want to do meds on these patients.
Click to expand...

That’s how you can get away with taking a lot of self referrals.

Not criticizing in any way.


Sent from my iPhone using SDN
 
It’s a tough situation, right? There’s some guilt about not accepting Medicaid patients but the harsh reality is there are too many barriers in place to effectively treat them. As for the self referral patients who choose not to schedule when our schedulers give them their talk track in our philosophy regarding “pain management”, well, it’s unlikely they want to get better and it probably wouldn’t be a worthwhile endeavor for them to come in anyway.
 
completely agree with you. mainly pointing this out for the question KHE presented above.
 
hawkeye2009 said:
Because you will get every drug addled loony from a 300 mile radius.

You need some kind of "filter" to prevent your practice from being flooded with a bunch of crazies.

You need to have a spine surgery group as your main referral source. They tend to filter out all the crap with their PAs and NPs and just send procedure oriented patients. The worst thing you can do is to advertise and take "self referrals". You will spend a few years weeding out all the bad patients you acquired with such a tactic.
Click to expand...

I disagree with you on this one. The majority of my patients are self-referred, I do not write any opioid Rxs at all. Not a single patient on long term opioids. I'll put malignant pain patients on opioids if/when I get them. Yes, we get a good number of people who initiate contact looking for opioids, but we screen them and they never set foot in the door.

Honestly, referrals from spine groups and orthopods have just as high or higher percentage of opioid seekers or dumps.

That said having a spine surgery group as a referral source is great, just dont agree self-referrals are the worst. There are many advantages, including patient "buy-in" to you as a physician. THEY have chosen YOU, already believe in your opinions when you see them.
 
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