Sell My Practice

[PA-CtoMD]

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As I mentioned in other posts, I am not able to keep up with the pace of working full-time at my inpatient job (including being on call by phone for admissions, doing ECT) and working at my PP. In addition to this, I also see patients online through an insurance company.

I spent a large amount of money on my office (remodeling, sound proofing, TMS machine, etc). It was a bad decision to do all that. Now, I have a child psychiatrist working for me on Saturdays. and I am in the process of bringing on a psychiatrist full-time. I am completing training in TMS as I have a machine in my office. I will only be doing TMS in my office other than that I will be just overseeing the practice. If employing doctors doesn't work out, is my only option to sell the practice? I would not want to work full-time at my practice. I prefer my inpatient job. Any opinions? Thank you very much!

 

[Shikima]

Be patient and if you need to scale back, do so with being at 1/2 speed. See what NPs and PAs are around to help out and generate revenue for your private practice.

 

[F0nzie]

Might be a hard sell...

 

[PA-CtoMD]

Be patient and if you need to scale back, do so with being at 1/2 speed. See what NPs and PAs are around to help out and generate revenue for your private practice.

This is a really good idea. It would actually be cheaper to hire midlevels. The only other concern that I have is whether or not patients would be willing to see a PA/NP. With this idea, I could do the intakes and have them do everything else including TMS (after I train them). I think they would find TMS to be quite interesting. Afterall, I am the only provider in the state with this machine.

Shikima I really your idea. Thank you for your input!

 

[Shikima]

Anytime... sometimes an encouraging word is what's needed!

 

[PA-CtoMD]

oops double post

 

[PA-CtoMD]

Anytime... sometimes an encouraging word is what's needed!

You gave me more than words! You practically threw me a career lifeline! 🙂

You know as far as TMS goes, I may have to pay them more to do this. I think this is something that I would have to consider.

 

[vistaril]

As I mentioned in other posts, I am not able to keep up with the pace of working full-time at my inpatient job (including being on call by phone for admissions, doing ECT) and working at my PP. In addition to this, I also see patients online through an insurance company.

I spent a large amount of money on my office (remodeling, sound proofing, TMS machine, etc). It was a bad decision to do all that. Now, I have a child psychiatrist working for me on Saturdays. and I am in the process of bringing on a psychiatrist full-time. I am completing training in TMS as I have a machine in my office. I will only be doing TMS in my office other than that I will be just overseeing the practice. If employing doctors doesn't work out, is my only option to sell the practice? I would not want to work full-time at my practice. I prefer my inpatient job. Any opinions? Thank you very much!

I'm confused...this isn't a dental practice you're selling here where the files/patients have inherent value. do you own the building? If so, then you are 'selling' the building and it's furniture/equipment/supplies. Not really a 'practice'. You could be selling the building to an insurance agency firm for example. If you think another psychiatrist is going to come in and pay you a lot over the value of the actual property itself, then I think you're in for a rude awakening.

 

[Shikima]

Atta boy Vistaril, way to tell it!

 

[digitlnoize]

I'm confused...this isn't a dental practice you're selling here where the files/patients have inherent value. do you own the building? If so, then you are 'selling' the building and it's furniture/equipment/supplies. Not really a 'practice'. You could be selling the building to an insurance agency firm for example. If you think another psychiatrist is going to come in and pay you a lot over the value of the actual property itself, then I think you're in for a rude awakening.

It's getting hard even in dentistry. Patients have some loyalty to their doctor, but once a new doc comes in, they're gone. Plus no one wants to drop a couple million on a new practice right out of school.

 

[vistaril]

It's getting hard even in dentistry. Patients have some loyalty to their doctor, but once a new doc comes in, they're gone. Plus no one wants to drop a couple million on a new practice right out of school.

yes, and the price of well run dental practices has gone down but many still sell for into the low 7 figures.

A psych 'practice' has no value in the same way as a dental practice. What may have some value are things like the land/building/office furniture itself if owned, and so the OP should have referred to selling that stuff and not his practice.

 

[PA-CtoMD]

I'm confused...this isn't a dental practice you're selling here where the files/patients have inherent value. do you own the building? If so, then you are 'selling' the building and it's furniture/equipment/supplies. Not really a 'practice'. You could be selling the building to an insurance agency firm for example. If you think another psychiatrist is going to come in and pay you a lot over the value of the actual property itself, then I think you're in for a rude awakening.

No, I don't own the building at all. I know what you mean. You made your point clear with the dentistry example. It may not be worth it: the patients may want to follow me and a new provider can easily open up a practice, and make a name for his/her self. There is an existing need for psychiatrists so a new practice would fill up once the provider gets paneled.

The most realistic thing to do is to continue hiring providers.

 

[eaglepsych]

Just wondering,
Why would anyone "buy" your practice if they know you're closing your shop, and thus there would hypothetically be a need for a new psychiatrist in town anyway? (So it would be easy pickings to start one's own new practice and potentially fill up easier since you'll no longer be practicing). Especially since there's no guarantee that your pt's would stick with the buyer of said practice anyway?

 

[vistaril]

No, I don't own the building at all.

so im confused....what you actually be selling then? The more likely scenario would be you giving someone some furniture/equipment for free if they are nice enough to take over your lease for you(if it still has months of course) and let you out of that without you having to pay a penalty.

As for hiring a psychiatrist and not being actively involved in the day to day practice yourself, I think this is problematic on a number of levels:

1) the margin here is going to be fairly small. If you hire an outpt psychiatrist in what I presume is a typical insurance based outpt practice, you're probably looking at paying them 120/hr if you don't give any benefits or 180k+ a year + bennies(their license, medmal, insurance, etc)....otherwise, why would they go for it? Since this isn't so far off from what the net profit of many outpt practices is per psychiatrist, where is your cut going to come from?

2) If he's working for you and being paid by the hour, he's not as interested in making as much money...why should he?

I'm just not sure what you are bringing to the table here that would involve both an appealing offer for a psychiatrist you'd hire *and* enough margin for you to make it worth it. What are you providing......an office and several hundred current patients from insurance panels? Both of those things are easily gotten commodities that many psychiatrists would prefer to cultivate themselves from scratch.....

 

[PA-CtoMD]

so im confused....what you actually be selling then? The more likely scenario would be you giving someone some furniture/equipment for free if they are nice enough to take over your lease for you(if it still has months of course) and let you out of that without you having to pay a penalty.

As for hiring a psychiatrist and not being actively involved in the day to day practice yourself, I think this is problematic on a number of levels:

1) the margin here is going to be fairly small. If you hire an outpt psychiatrist in what I presume is a typical insurance based outpt practice, you're probably looking at paying them 120/hr if you don't give any benefits or 180k+ a year + bennies(their license, medmal, insurance, etc)....otherwise, why would they go for it? Since this isn't so far off from what the net profit of many outpt practices is per psychiatrist, where is your cut going to come from?

2) If he's working for you and being paid by the hour, he's not as interested in making as much money...why should he?

I'm just not sure what you are bringing to the table here that would involve both an appealing offer for a psychiatrist you'd hire *and* enough margin for you to make it worth it. What are you providing......an office and several hundred current patients from insurance panels? Both of those things are easily gotten commodities that many psychiatrists would prefer to cultivate themselves from scratch.....

As far as hiring docs, I would be providing an office, staff, EMR, patients paneled with insurance companies. We are still negotiating contracts.

 

[vistaril]

As far as hiring docs, I would be providing an office, staff, EMR, patients paneled with insurance companies. We are still negotiating contracts.

I'm curious- what sort of terms or compensation are you thinking of for any psychiatrist you bring on board?

What you're basically telling any psychiatrist looking to do outpatient insurance based work is- "I'm selling you the overhead part of things". So basically if you can provide this stuff cheaper than he would otherwise have to go out and do it himself, it's a good deal for him. If not, I don't see any incentive for someone to take it. Hence why I don't understand how there would be any margins in it for you.

The value here would only potentially be in ways you have managed to gain ground on overhead relative to averages. If you're office costs 20% less than it's fair maret value, for example, that is margin you could probably pocket.

The patients on insurance paneling, unless you have some amazing rates with them, are essentially of neutral value as well.

 

[michaelrack]

What is the profit margin on TMS? The OP may be able to have a viable practice by making only a small profit on the psychiatrists he hires, but getting some referrals from them for TMS (when medically indicated)

 

[F0nzie]

What is the profit margin on TMS? The OP may be able to have a viable practice by making only a small profit on the psychiatrists he hires, but getting some referrals from them for TMS (when medically indicated)

Talking about this reminds of how my dentist wants to take an xray of my jaw at every visit even though my dental hygiene is excellent and I have never had a cavity in my entire life. I don't appreciate getting exposed to unnecessary radiation. Similarly if I were a depressed patient, I wouldn't appreciate putting my head in a magnet if I didn't need it.

I currently have a caseload of about 300 (mix of county and private) and I would refer maybe 1 of them to TMS. That is not paying off a 70k machine or the maintenance. In order to practice ethically and generate a profit, I would need to develop a referral base. With the current data looking weak many psychiatrists will not refer. So unless you have a very sophisticated marketing plan or throw some ketamine into the mix and advertise on the radio you're stuck with a very expensive toy.

 

[michaelrack]

Talking about this reminds of how my dentist wants to take an xray of my jaw at every visit even though my dental hygiene is excellent and I have never had a cavity in my entire life. I don't appreciate getting exposed to unnecessary radiation. Similarly if I were a depressed patient, I wouldn't appreciate putting my head in a magnet if I didn't need it.

I currently have a caseload of about 300 (mix of county and private) and I would refer maybe 1 of them to TMS. That is not paying off a 70k machine or the maintenance. In order to practice ethically and generate a profit, I would need to develop a referral base. With the current data looking weak many psychiatrists will not refer. So unless you have a very sophisticated marketing plan or throw some ketamine into the mix and advertise on the radio you're stuck with a very expensive toy.

thanks for the explanation. It's been a while since I looked in detail at the TMS literature (and I had no idea how much a machine cost); I didn't mean to imply that unnecessary/excessive referrals should be made for TMS

 

[@JackShephard]

Talking about this reminds of how my dentist wants to take an xray of my jaw at every visit even though my dental hygiene is excellent and I have never had a cavity in my entire life. I don't appreciate getting exposed to unnecessary radiation. Similarly if I were a depressed patient, I wouldn't appreciate putting my head in a magnet if I didn't need it.

I hate this too... although I haven't had perfect dental hygiene.

One dentist I quit going to had this 360 (or 180?) scan that billed double.

 

[hamstergang]

What you're basically telling any psychiatrist looking to do outpatient insurance based work is- "I'm selling you the overhead part of things". So basically if you can provide this stuff cheaper than he would otherwise have to go out and do it himself, it's a good deal for him. If not, I don't see any incentive for someone to take it.

Well some would find value in not having to do this all themselves. Some are willing to give up some money to not have to worry about the business aspect of everything.

 

[vistaril]

Well some would find value in not having to do this all themselves. Some are willing to give up some money to not have to worry about the business aspect of everything.

yes, and those people(who aren't interested in worrying about business things) aren't the type you want to depend on to turn your books from red to black. Some guy paid by the hour isn't going to care if he maximizes his bcbc coding or not. And if he is paid on a % of collections(say 68/32-70/30), there isn't going to be much margin at all to work with. If OP has 1 psychiatrist and pays him 70% of collections, then the OP's entire business model is to drive down the overhead such that there is margin. How low can he really get it to....maybe 73/27? I've never heard of an insurance based practice(with rent, staff, etc as this one seems to have) running much lower than mid to high 20s.

oh and they are still going to want to be paid a nice fat salary though if they aren't % of collections. Because they could go to a cmhc and get it somewhere. And the difference between the cmhc and most outpt private clinics is the cmhc is going to have access to extra money to cover those losses that a typical clinic doesn't(local grants for example and bundle billing potential).

It's just not a model that has any margin if things go well. And if things go south you can lose a bit. My guess is the OP is stuck in a bind with a lease he can't get out of immediately and employees he can't ax immediately, and he's trying to minimize potential losses here.

 

[digitlnoize]

Talking about this reminds of how my dentist wants to take an xray of my jaw at every visit even though my dental hygiene is excellent and I have never had a cavity in my entire life. I don't appreciate getting exposed to unnecessary radiation. Similarly if I were a depressed patient, I wouldn't appreciate putting my head in a magnet if I didn't need it.

I currently have a caseload of about 300 (mix of county and private) and I would refer maybe 1 of them to TMS. That is not paying off a 70k machine or the maintenance. In order to practice ethically and generate a profit, I would need to develop a referral base. With the current data looking weak many psychiatrists will not refer. So unless you have a very sophisticated marketing plan or throw some ketamine into the mix and advertise on the radio you're stuck with a very expensive toy.

Sigh. They're not just looking for cavities. They're also looking for bone loss (periodontal disease), abscesses (which can be asymptomatic and painless), fistulas, cancer, cysts, and many other things. Also, just because you've never had a cavity doesn't mean you won't one day, and they can go from nothing to root canal in just a few months. Better to catch them early.

The radiation dose from a bitewing series of dental x-rays is miniscule. 0.038 mSv. For comparison, a CT scan is 10-12 mSv and a coast-to-coast flight is around 0.3 mSv. You get around 3.0 mSv per year from natural background radiation in the US. So, you'd have to 100 dental x-rays to equal 1 year of radiation exposure.

Talk to your dentist. Get your x-rays. The radiation exposure is minimal and your dental health is much more important than most doctors think. S. mutans, one of the main bacteria found in dental plaque, has also been implicated in atherosclerotic plaques, and dental health is directly correlated with cardiovascular health. The benefits gained from your dental health providers keeping your mouth healthy far outweigh the minuscule dose of radiation. This message has been brought to you by my dental hygienist wife who is rolling her eyes at you all.

 

[mgdsh]

Eh there are plenty of dentists that like to overbill. I was going to a dentist a few years back who suggested I come in 3x a year instead of 2. Naturally insurance doesn't cover that so I ended up paying out of pocket for 1 visit a year. I talked to a dentist friend of mine and she said that's overkill and overbilling.

 

[mgdsh]

Speaking of selling practices. I'm considering buying a practice. I know of a doctor locally who is closing up shop. He happens to take insurance and has several hundred patients. I was hoping to buy his practice and convert a fair percentage of his patients to my practice, however I do not take insurance. Is there anything legally wrong with this situation? I'm not directly paying him for referrals but buying his practice outright.

 

[vistaril]

Speaking of selling practices. I'm considering buying a practice. I know of a doctor locally who is closing up shop. He happens to take insurance and has several hundred patients. I was hoping to buy his practice and convert a fair percentage of his patients to my practice, however I do not take insurance. Is there anything legally wrong with this situation? I'm not directly paying him for referrals but buying his practice outright.

there is nothing at all wrong with it. However, how much you should pay for his 'practice' is exactly whatever the building and equipment in the building is worth for you to buy(or rent from him or whatever). No different than if you were an auto insurance company looking for auto space. His patients don't add any extra value at all. I'm assuming he owns the building? If not, there is nothing to buy.

Also, your plan of converting insurance pts from one psych to cash pay patients of yours is going to have a very low 6 month success rate. Very very low. It would almost be easier to just start from scratch and have him send termination letters to those patients so you don't have to deal with it all.

 

[F0nzie]

Speaking of selling practices. I'm considering buying a practice. I know of a doctor locally who is closing up shop. He happens to take insurance and has several hundred patients. I was hoping to buy his practice and convert a fair percentage of his patients to my practice, however I do not take insurance. Is there anything legally wrong with this situation? I'm not directly paying him for referrals but buying his practice outright.

You have no relationship with these patients. My guess is you will never hear from 50% of the patients after you take over and only a small fraction of those remaining will pay out of pocket.

You definitely do not want to be stuck writing closure letters, sending referrals, or bridging meds. You also open yourself up to a huge amount of liability if anything happens during that window.

 

[vistaril]

You have no relationship with these patients. My guess is you will never hear from 50% of the patients after you take over and only a small fraction of those remaining will pay out of pocket.

You definitely do not want to be stuck writing closure letters, sending referrals, or bridging meds. You also open yourself up to a huge amount of liability if anything happens during that window.

100% agree. These people here talking about a 'practice' as if it has some value aside from the building itself are clueless. There are some medical practices where this is the case....optho being probably the best example. It doesn't work that way in mental health.

 

[PA-CtoMD]

Well, I may end up giving up on the outpatient thing when my lease and the renovations are paid up. I could POSSIBLY sell my TMS machine, although many doctors won't be interested because the research is not conclusive. Purchasing a TMS machine was another big mistake that I made.

I better not give out anymore information especially on contract details regarding the doctor that I am trying to hire. I just found out that a patient of mine, a veterinary student, reads SDN frequently. She loves the psychiatry threads because she has an interest in what issues we face. She knows a lot about my office already from the receptionist, and I don't want her to learn anything else.