Private practice mergers/acquisition experience

[podwho]

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Looking to get insight from anyone regarding the sale or merge of a podiatry practice. How was the experience. Timeline. Private equity or supergroup or hospital? Valuations. Etc.

 

[Boba Foot]

Private equity shouldn’t be allowed in healthcare, as shareholder profit is rarely in the patient’s best interest. For-profit healthcare leads to bad outcomes and bloated costs.

Don’t think that’s an answer you’re looking for, but it’s an answer everyone needs to hear.

 

[Feli]

Are you talking about experience for the owner? Partners? Associates?

...great, highly variable, bad (respectively).

 

[bloxxeeey]

Private equity shouldn’t be allowed in healthcare, as shareholder profit is rarely in the patient’s best interest. For-profit healthcare leads to bad outcomes and bloated costs.

Don’t think that’s an answer you’re looking for, but it’s an answer everyone needs to hear.

I’d argue that private equity makes health care more profitable which is in the benefit of its shareholders, owners which further improves the economy.

 

[Boba Foot]

I’d argue that private equity makes health care more profitable which is in the benefit of its shareholders, owners which further improves the economy.

Is the purpose of healthcare to improve the economy and enrich shareholders, or is it to treat patients and reach the best outcomes?

 

[heybrother]

I’d argue that private equity makes health care more profitable which is in the benefit of its shareholders, owners which further improves the economy.

You are being robbed daily through overpriced insurance premiums paid out to overpriced hospitals, bloated middlemen like private equity and executives at United, Aetna, and Humana.

Doctors used to be well paid and health insurance used to be affordable. How can both be true? Because the doctor patient relationship isn't the expensive part of healthcare. Doctors make up like 8% of total healthcare expenditure. A massive amount of the rest is bloat.

If I lock you in a room twice a week and drain 2 pints of blood off of you and then tell you - good news, the national blood selling industry is thriving - have I really done you a favor?

I just pulled a paystub from 2011 from my email. I was paying $47 (presumably 26 times a year) for an unbelievable, goldplated BCBS health plan. Presumably my employer was kicking something like that in, but now adays that plans wouldn't exist or would easily be over $1000 a month.

When I went to DMU for my first year DMU originally required us to buy a specific "gold" health insurance plan. By the time I graduated DMU had essentially completely dropped/remodeled the requirement and would accept any health insurance you purchased because the price had exploded.

I told this story elsewhere recently. My family's total health insurance premium is essentially $18000. For the luxury of paying this money my local hospital system will accept $10,000 for a c-section from United rather than their $60,000 price tag. Here's an idea. How about I kept my $18,000 and paid them $10,000 cash. I get it - I paid for the health insurance to protect me against catastrophe except the price itself has become the catastrophe. Why can't the hospital just set a reasonable price? Because crony capitalism.

I recently reviewed my IPAs contracts. I had 2 insurers that used to allow a good fee schedule. Both are less than Medicare now. I'm not asking for a $1000 for a nail surgery. Patient's and doctors can both experience good value. One of the said plans paid 185% of Medicare for CPT codes, 135% E&M, and 150% for radiology. If you could open a practice tomorrow and get paid at those rates - you would do great and patients would still receive care at a FRACTION of the care that thye receive at overpriced hospitals. But you can't. The ship has sailed. Where did the money go? Not to you or me.

 

[Jummy Biffett]

You are being robbed daily through overpriced insurance premiums paid out to overpriced hospitals, bloated middlemen like private equity and executives at United, Aetna, and Humana.

Doctors used to be well paid and health insurance used to be affordable. How can both be true? Because the doctor patient relationship isn't the expensive part of healthcare. Doctors make up like 8% of total healthcare expenditure. A massive amount of the rest is bloat.

If I lock you in a room twice a week and drain 2 pints of blood off of you and then tell you - good news, the national blood selling industry is thriving - have I really done you a favor?

I just pulled a paystub from 2011 from my email. I was paying $47 (presumably 26 times a year) for an unbelievable, goldplated BCBS health plan. Presumably my employer was kicking something like that in, but now adays that plans wouldn't exist or would easily be over $1000 a month.

When I went to DMU for my first year DMU originally required us to buy a specific "gold" health insurance plan. By the time I graduated DMU had essentially completely dropped/remodeled the requirement and would accept any health insurance you purchased because the price had exploded.

I told this story elsewhere recently. My family's total health insurance premium is essentially $18000. For the luxury of paying this money my local hospital system will accept $10,000 for a c-section from United rather than their $60,000 price tag. Here's an idea. How about I kept my $18,000 and paid them $10,000 cash. I get it - I paid for the health insurance to protect me against catastrophe except the price itself has become the catastrophe. Why can't the hospital just set a reasonable price? Because crony capitalism.

I recently reviewed my IPAs contracts. I had 2 insurers that used to allow a good fee schedule. Both are less than Medicare now. I'm not asking for a $1000 for a nail surgery. Patient's and doctors can both experience good value. One of the said plans paid 185% of Medicare for CPT codes, 135% E&M, and 150% for radiology. If you could open a practice tomorrow and get paid at those rates - you would do great and patients would still receive care at a FRACTION of the care that thye receive at overpriced hospitals. But you can't. The ship has sailed. Where did the money go? Not to you or me.

^THIS. This is exactly why I would never advise someone to go into medicine these days, let alone podiatry. We get screwed on both ends.

"Where did the money go?" exactly...United had record profits of $20.6 BILLION in 2022. Keep in mind that's after the multi-million dollar C-suite bonuses.

 

[bloxxeeey]

I think you all are missing the point. Without health insurance companies we’d end up having death panels, I’d rather these companies whose interest is in us paying premiums keep us alive than the government who has no incentive to keep us alive and healthy. There’s a reason for profit healthcare is in America, because it works.

 

[podwho]

Are you talking about experience for the owner? Partners? Associates?

...great, highly variable, bad (respectively).

I’m talking from perspective of any partner/owner doctor who has underwent that buyout process. I just want more insight into that process and other people’s experiences.

 

[Jummy Biffett]

I think you all are missing the point. Without health insurance companies we’d end up having death panels, I’d rather these companies whose interest is in us paying premiums keep us alive than the government who has no incentive to keep us alive and healthy. There’s a reason for profit healthcare is in America, because it works.

Huh? You trolling? I don't think any of us would agree that the current healthcare system is working

 

[dtrack22]

Huh? You trolling? I don't think any of us would agree that the current healthcare system is working

Americans are unhealthy in spite of a healthcare system that has some of the best medical and surgical treatment outcomes in the world. Especially when it comes to cancer. 100% of our Canadian physicians have family members who have driven across the border to the closest state for surgery.

The big problem with insurance in the US is that it is not “insurance.” It is a 3rd party payer system which is what allows for the hidden costs. Nothing wrong with gov provided social safety nets that provide healthcare when needed. But we should pay cash for routine maintenance and use insurance for actual emergencies, congenital diseases, non-elective surgery, etc. Premiums would be reasonable and prices would not inflate at nearly the rate they have with the administrative burdens and hidden costs associated with our private/government hybrid model. It should look and function a lot more like car insurance.

We keep our rather unhealthy population alive longer with a higher QOL than they would otherwise have if they were the same BMI in another country.

 

[Pronation]

I think you all are missing the point. Without health insurance companies we’d end up having death panels, I’d rather these companies whose interest is in us paying premiums keep us alive than the government who has no incentive to keep us alive and healthy. There’s a reason for profit healthcare is in America, because it works.

What’s wrong with death panels?

 

[Boba Foot]

You are being robbed daily through overpriced insurance premiums paid out to overpriced hospitals, bloated middlemen like private equity and executives at United, Aetna, and Humana.

@heybrother I love you

I think you all are missing the point. Without health insurance companies we’d end up having death panels, I’d rather these companies whose interest is in us paying premiums keep us alive than the government who has no incentive to keep us alive and healthy. There’s a reason for profit healthcare is in America, because it works.

Cmon buddy, this is nothing more than Fox News talking point fed to us by insurance companies making profit hand over fist in order to keep their status quo. There are no “death panels” in other countries with affordable, accessible health care. It’s a catchphrase invented to instill fear in the average American so we can continue to get gypped on our monthly insurance premiums and eventually our 401ks drained by end of life care.

All one has to do is read about the Modern Vascular debacle to understand why for-profit healthcare groups usually result in bad-faith actors.

 

[Jummy Biffett]

While we're on the topic of broken healthcare systems...this feels pretty dystopian and potentially devastating from a coding/billing standpoint. "Oh gee doc according to our AI recorded conversation the patient actually did not exhaust every single conservative measure, your surgery is denied". Probably inevitable though.

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[Adam Smasher]

I’m talking from perspective of any partner/owner doctor who has underwent that buyout process. I just want more insight into that process and other people’s experiences.

Lol we aren't interested in your question so we'll answer the question we wanted you to ask

 

[Boba Foot]

Not sure if im following correctly but I think this is an interesting idea.
Government takes over major illnesses.
General checkups etc on the patient to have their own health insurance if they want it.
Loss of life/limb/organ/function covered by government.

You basically described the French universal health care system and it works well.

 

[air bud]

You basically described the French universal health care system and it works well.

Why don't you go to France and enjoy not being a podiatrist and enjoy with their fancy French wine? Why do you hate Texas? I mean America? JK I hate Texas too

 

[Boba Foot]

Why don't you go to France and enjoy not being a podiatrist and enjoy with their fancy French wine? Why do you hate Texas? I mean America? JK I hate Texas too

Because I am a masochist and can't quit hundred degree summers. This one has been extra rough tho.

Side note: TIL Costco label French wine is actually pretty decent.

 

[heybrother]

I spoke to PE a few years ago. They offered 4 x EBITA. Another podiatrist in my town spoke to them a few years ago. He claimed they used to pay 8 x EBITA. They wanted 20% of clinic profit permanently. The money was 1/2 shares and 1/2 cash. Shares generated profit sharing from a nail lab and vascular lab the company owned. This "dividend" was meant to help with the lost profit from the 20% that was given up. I didn't go any further than their introductory pitch. I have 2 young children. I like my town. Giving up ownership when you need to practice another 15-20 years didn't seem sensible. I've sent more amputated toes to pathology than I have nail fungal tests. I refer to cardiologists because they are excellent, not because I profit from it.

They told me I'd still "run" my clinic and be in charge of the day to day. One of the questions that came to my mind when all this was going on is - "are their rates better than mine". The answer to that is - I don't know. I had some experiences with IPAs that suggested to me that certain insurers paid everyone the same, but since then I've received other information suggesting that was not the case. Medicare rates don't go up. Even if the commercial rates went up dramatically, taking 20% of profit off the top is a big hurdle to overcome. What if the rates went up, but I was paid exactly the same because I'd given up the 20%? Interesting considerations of who benefits there ie. "society pays more" to support an income stream for private equity. Consider also that PE driving up rates in other industries is something that presumably health insurance companies are now much better prepared to battle. USACS or one of the big anesthesiology companies in Denver drove up anesthesia unit rates to incredible heights. It ultimately made the front page of the Washingtonpost and ultimately lead to UHC fighting back hard.

Its worth taking a look at the anesthesia and emergency medicine forums to better understand the impact of private equity on medicine. Essentially, the history of private equity is that the people who do the best are the first people to sell. The PE groups always have something you are waiting for that is supposed to explode ie. companies shares or stock are ultimately supposed to be bought out by "someone else" (another PE group) for your big payday. Except that big payday involves you being the person who grinds and burns daily until it maybe happens. The shares may or may not be liquid and they may not go up in value. There are recent PE bankrupcies where the doctors will be eating a loss on the shares.

I still currently have a partner albeit one who is working less and less. He owns 50% of the practice though his percentage of practice revenue is substantially less than 50%. Were we to sell he would presumably receive 50% of the shares because regardless of his income he owns 1/2 the practice. Were I to hire another podiatrist in the future the practice would surrender 20% of their profit but there would be no shares associated with this person to balance out the loss. It is technically after all not my practice anymore.

I went to a dinner that the PE group was hosting with several of the podiatrists who had joined. A lot of the podiatrists there essentially said this was their ticket out ie. they were in their uppers 50s or older looking for their paycheck out before they left (because presumably no young podiatrist is going to buy their practice). How nice of the future generation of DPMs to come along and buy these old pods practices and work with PE to boot.

Final thing. The ophthamology forum talks about how in some cases doctors who were making $800K are essentially receiving - pick a number, a million bucks up front to then forever be paid $500K or something like that. The numbers are variable. I'm not bound to them. The heart of them though is that you receive a "lump sum of front" but you experience a forever decline in your income. At 4X EBITA, receiving who knows - a few hundred grand up front doesn't necessarily seem worth the forever loss of control etc.