Setting up a Private Practice through a hospital system

[finalpsychyear]

So I was given a few options to set up a private practice with the assistance of the hospital (20-30 pcp in their main building I believe) . Their current child/adult psych doctor is full and part time and does not take any new patients.

Following options presented to me and remember I would start just 1 day a week in the beginning. There is no income being paid to me in any scenario which I prefer.

1. Rent space near the hospital within walking distance and would have nothing to do with the hospital but they would happily refer patients but you would be responsible for everything but the rent cost would be prorated to just 1 day and a previous provider in the past used this space owned by some other 3rd party.

2. Rent Space out of hospital outpatient space that the current psych uses and they would provide the staffing free of charge and rent free of charge but they would collect the facility fee for the outpatient visit and I would take the professional fee.

3. Rent space out of the same hospital outpatient space but pay them straight rent for 1 day out of the week but i would be responsible for all the staffing on my own and if i did tms this would create less headaches maybe?


I do see TMS as a huge possiblity in this set up/area but i am worried if i had the machine in option 2 they would try and collect the technical component even if i owned the equipment but it sounds good to have free rent and free staffing.

Thoughts?

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[finalpsychyear]

any input I will take. Thanks

 

[splik]

bear in mind that professional fees are lower if you work at a facility (i.e. if both facility and pro fees are bill, the pro fees are lower than if you were just in your own practice). so you should take that into account in your calculations. but to confuse things further, facilities often have greater ability to negotiate higher rates with insurance companies. they should be able to provide you the information about this in each scenario

 

[finalpsychyear]

bear in mind that professional fees are lower if you work at a facility (i.e. if both facility and pro fees are bill, the pro fees are lower than if you were just in your own practice). so you should take that into account in your calculations. but to confuse things further, facilities often have greater ability to negotiate higher rates with insurance companies. they should be able to provide you the information about this in each scenario

Your post was incredibly helpful. I just realized that is what the medicare cpt lookup tool compares. For example a 99213 in my area goes for 70 but then drops to 55 if it is in a facility.

Also, if i did TMS and owned the equipment would the hospital try and bill for this as well or would this be better off in a setting that i was renting ?

Thank you so much for this information. It was extremely helpful.

 

[dl2dp2]

Depends on what type of person you are and what your eventual goal might be. I dislike managing staff, but think that it is a very valuable experience if you want to eventually run a much larger practice. I prefer control over my income stream and can take some variation/risk, but others prefer little variation.

If I were you I'd start with 1. People tell you stories, and until rubber hits the road, they are just stories. There are a few weak points as someone who runs a practice I see immediately. 1) How fast will the referrals really come? 2) What's the payer mix of the referrals? 3) the staff they refer, how good are they? 4) is the rent market? 5) under what management template do they expect (i.e. is there % billing the hospital would charge for referrals?), to what degree would the hospital interfere with your management decisions (i.e. drop panels later, drop Medicare, vs. add panels, etc.). Remember, nothing is free. If the hospital provides staffing, they want something back.

In my opinion, the "easiest" and "safest" way forward is to rent an office and start taking referrals only, smooth out the payer/billing pipeline, get a better sense of overhead, and THEN worry about staff. Once you take on staff, the overhead IMMEDIATELY blows up. As a psychiatrist, you should be able to take on a 0.25 FTE (i.e. 50-100 patients) easily without staff support, and once you get there, things become much clearer. Regardless, the most important thing is to get started, start seeing patients, start billing, start working out the kinks. The other downside of taking on staff is often this process drags for 6 months. That's clearly loss revenue.

 

[finalpsychyear]

Depends on what type of person you are and what your eventual goal might be. I dislike managing staff, but think that it is a very valuable experience if you want to eventually run a much larger practice. I prefer control over my income stream and can take some variation/risk, but others prefer little variation.

If I were you I'd start with 1. People tell you stories, and until rubber hits the road, they are just stories. There are a few weak points as someone who runs a practice I see immediately. 1) How fast will the referrals really come? 2) What's the payer mix of the referrals? 3) the staff they refer, how good are they? 4) is the rent market? 5) under what management template do they expect (i.e. is there % billing the hospital would charge for referrals?), to what degree would the hospital interfere with your management decisions (i.e. drop panels later, drop Medicare, vs. add panels, etc.). Remember, nothing is free. If the hospital provides staffing, they want something back.

In my opinion, the "easiest" and "safest" way forward is to rent an office and start taking referrals only, smooth out the payer/billing pipeline, get a better sense of overhead, and THEN worry about staff. Once you take on staff, the overhead IMMEDIATELY blows up. As a psychiatrist, you should be able to take on a 0.25 FTE (i.e. 50-100 patients) easily without staff support, and once you get there, things become much clearer. Regardless, the most important thing is to get started, start seeing patients, start billing, start working out the kinks. The other downside of taking on staff is often this process drags for 6 months. That's clearly loss revenue.

Appreciate the input. I don't trust hospitals. The space walk-able distance seems like the best fit with no hospital involvement or renting from the hospital for 1 day directly. Once you start getting free staff and space things are never quite that simple or come with many strings. In those 2 scenario I would only pay rent and be responsible for my own staffing which is very easy. I can always "switch" to the staffing for free model that the hospital provides but my feeling is once you start that it will have all sorts of non compete etc in it. This is only to supplement my income at the end of the day so 1 day a week or maybe even half a day to start with is a really low risk as i know the need is very high in the area.

 

[dl2dp2]

Appreciate the input. I don't trust hospitals. The space walk-able distance seems like the best fit with no hospital involvement or renting from the hospital for 1 day directly. Once you start getting free staff and space things are never quite that simple or come with many strings. In those 2 scenario I would only pay rent and be responsible for my own staffing which is very easy. I can always "switch" to the staffing for free model that the hospital provides but my feeling is once you start that it will have all sorts of non compete etc in it. This is only to supplement my income at the end of the day so 1 day a week or maybe even half a day to start with is a really low risk as i know the need is very high in the area.

Smart. You'll be fine. Details will vary a lot as time go on, but you have the gestalt down. Go forth and prosper.

 

[whopper]

Get a TMS machine. Pump in about six figures for one.

Then have a grand opening party. At the party little Joe, "Tank," and Billy-Bob your fraternity brothers, will play with the machine pretending they're on Star Trek while sitting on it, then drink too much and puke all over the machine.

An advantage of being with or close to a hospital system is you'll fill up way way faster, can make some nice social connection with other physicians. If you are part of that system, however, lack of control over things and disputes over compensation. (E.g. you're bringing in 4x more than what you're being paid) could come up.

 

[nexus73]

Is there an option to be employed, with a base salary and/or RVUs? Work in the hospital owned space with their staff and save the headache. Assure there's no non-compete. Once you've built up a reputation and doctors are aware they can refer to you, and when you feel ready, leave the hospital and open your private practice next door. If the current psychiatrist is full, the hospital system should be glad to have you on board, without trying to impose too many restrictions.

 

[finalpsychyear]

Is there an option to be employed, with a base salary and/or RVUs? Work in the hospital owned space with their staff and save the headache. Assure there's no non-compete. Once you've built up a reputation and doctors are aware they can refer to you, and when you feel ready, leave the hospital and open your private practice next door. If the current psychiatrist is full, the hospital system should be glad to have you on board, without trying to impose too many restrictions.

No employment option. They def want one but won't put the $$ into it but the demand is there as I know another pain doc who works there and says he has tons of pts to send me ( not medicaid). I think the situation would be simplest to rent space 1 day a week "offsite" where the hospital has no power and I could obviously store the machine. If i rent the hospital office the other doc uses it is literally 1 room and kinda compact and where would i even store the equipment.. I have recently found out in the area that i have moved from for insurance psych the wait is 4-8 months easily and there are a handful of cash psych docs with 2 week waiting lists.

 

[finalpsychyear]

Get a TMS machine. Pump in about six figures for one.

Then have a grand opening party. At the party little Joe, "Tank," and Billy-Bob your fraternity brothers, will play with the machine pretending they're on Star Trek while sitting on it, then drink too much and puke all over the machine.

An advantage of being with or close to a hospital system is you'll fill up way way faster, can make some nice social connection with other physicians. If you are part of that system, however, lack of control over things and disputes over compensation. (E.g. you're bringing in 4x more than what you're being paid) could come up.

I am only looking to fill 1 day a week maybe 2 days down the road as i have other work that i do. Being in good connections with the hospital is always a bonus but having them as a major referral source and not being employed is priceless..?

 

[TexasPhysician]

No employment option. They def want one but won't put the $$ into it but the demand is there as I know another pain doc who works there and says he has tons of pts to send me ( not medicaid). I think the situation would be simplest to rent space 1 day a week "offsite" where the hospital has no power and I could obviously store the machine. If i rent the hospital office the other doc uses it is literally 1 room and kinda compact and where would i even store the equipment.. I have recently found out in the area that i have moved from for insurance psych the wait is 4-8 months easily and there are a handful of cash psych docs with 2 week waiting lists.

If you only plan to have 1-2 days of clinic filled, I’d be very hesitant to invest in TMS. You need to keep that machine purring constantly to be worth it.

 

[whopper]

TMS could cause you to have a huge loss at least temporarily. TexasPhysician is right. Further there are next generation TMS machines coming down the pipleline. So then a question is, should you get one, an expensive one, if the next generation one might literally come out just several months later?

I faced that same question myself. At my practice we have enough patients to make TMS cost-effective. We, however, decided not to get one for the same reason above. We don't want to buy a machine then the next better one is out very quickly afterwards.

What we decided to do was partner up with another TMS business and that business put their machine in a building across the street. I'm planning on starting TMS there in the coming weeks to months.

 

[finalpsychyear]

TMS could cause you to have a huge loss at least temporarily. TexasPhysician is right. Further there are next generation TMS machines coming down the pipleline. So then a question is, should you get one, an expensive one, if the next generation one might literally come out just several months later?

I faced that same question myself. At my practice we have enough patients to make TMS cost-effective. We, however, decided not to get one for the same reason above. We don't want to buy a machine then the next better one is out very quickly afterwards.

What we decided to do was partner up with another TMS business and that business put their machine in a building across the street. I'm planning on starting TMS there in the coming weeks to months.

What next generation machine? The ones i am looking at have the ability to do 3 min, 19, or 37.5 the 3 min is new and only in the newer machines. Am I missing something that is about to be released?

 

[Armadillos]

What next generation machine? The ones i am looking at have the ability to do 3 min, 19, or 37.5 the 3 min is new and only in the newer machines. Am I missing something that is about to be released?

Not an expert on this but I think 1 or two companies are close to an FDA indication for smoking cessation which could be massive revenue stream once insurance picks it up. Also when looking at machines make sure you find out what your going to be paying for consumable things or replacement parts.

My understanding is neuronetics/neurostar devices are the most heavily advertised but make you pay for a consumable piece every treatment that makes them a complete scam compared to the less heavily advertised companies.

 

[whopper]

What next generation machine?

Someone I know is working on an MRI that offers individualized targeting of where to fire the pulse that's much better than the current models with higher efficacy.

There's also work improved theta-burst machines that aren't with the current batch of TMS machines. On this specific thing I don't know much about it. What's going on, and this is what convinced me not to buy a TMS machine, is the head guy in my practice is a psych heavy-weight in academia and knows and regularly talks to some of the top people in the field. He told me about it and told me for this reason it wasn't a good idea to buy a new one now.

(That head guy by the way got out of academia realizing he'd make a heck of a lot more money in private practice).

These new developments could be years down the road and could be hardware based that might not be achievable with the current machines. Maybe they will be achievable. One of those things where I don't know. Also newer machines could be years down the road or months. I don't know but a 6 figure investment makes you highly wary.

 

[finalpsychyear]

Someone I know is working on an MRI that offers individualized targeting of where to fire the pulse that's much better than the current models with higher efficacy.

There's also work improved theta-burst machines that aren't with the current batch of TMS machines. On this specific thing I don't know much about it. What's going on, and this is what convinced me not to buy a TMS machine, is the head guy in my practice is a psych heavy-weight in academia and knows and regularly talks to some of the top people in the field. He told me about it and told me for this reason it wasn't a good idea to buy a new one now.

(That head guy by the way got out of academia realizing he'd make a heck of a lot more money in private practice).

These new developments could be years down the road and could be hardware based that might not be achievable with the current machines. Maybe they will be achievable. One of those things where I don't know. Also newer machines could be years down the road or months. I don't know but a 6 figure investment makes you highly wary.

Thanks. I greatly appreciate your comments. The last question I have. If you were going to buy medical equipment even if it were 50k and you had that in the bank would you use it or get a business loan regardless? I am new to finance and have always been taught to stay out of debt so that has always been my line of thinking but i hear it can be advantageous to get a business loan and write off the interest and lease payments on medical equipment but i assume you could do that as well if you flat out wrote a check for 50k equipment for your business as well except it would be a 50k deduction in the year you purchased it?

My friend told me he was going to do " lease to own" of 50k in medical equipment and payback through a bank over 5 years and the total interest was 6k. Sounds too good to be true and then also you don't have to give your 50k savings in your bank to towards the purchase. I am naive to this topic due to how i was raised with the moto to never be in debt and use your debit card instead of credit card when possible except when certain rewards cards can be used.