I am in the middle of a what can be best described as a hostile USAP takeover and I have to say their business model makes no sense. I say hostile because nobody in my group wants to sell to USAP. But my hospital system has decided that they want USAP to take over all anesthesia departments in all of their hospitals. As best I can tell, USAP is offering free services in some of their money losing anesthesia departments in exchange for more lucrative contracts elsewhere in the hospital system. This sounded a bit like a kickback to me but I leave it to the feds to make that decision if/when USAP is investigated.
I predict that in the long run, USAP stock will tank and if you are involved in a buyout, just assume that the stock portion they pay you will be next to worthless when the time comes when USAP allows you to sell it. Yes, I say allow you to sell it, because they will not let you sell the stock for 5 years or more depending on what you sign. Also keep in mind that you will have to pay taxes on what USAP says they value the stock at and if you take losses after 5 years of holding their stock, my accountant said you cannot write all those losses off against earned income later.
The true value of the USAP stock is very questionable since they determine the value themselves. USAP is private equity and you can't just buy or sell USAP stock on the NYSE. This could be a problem when you want to sell your USAP stock if you can't find anyone willing to buy it. The executives I talked to claim that being private equity is a good thing because it reduces the regulation they have to comply with. I saw this as a bad thing, because some regulation is designed to protect employee/stock holders (think Enron). Without USAP stock being traded on the NYSE or other exchange, the value is whatever they say it is. I have run into this with other private equity companies where there are 50-100 different methods to determine the value of a privately held company stock. You just hire the right stock valuator and tell them "make it look as valuable as possible" and voila, your stock price just keeps climbing. During my discussion with USAP administration they actually compared the value and stability of their stock to Apple! I am not kidding, they think USAP stock is as stable and valuable as the biggest company in the world. Moodys of course disagrees giving USAP the marginal bond rating of B1.
I was on a partnership track in my current group, so I was not offered a full buyout. What I was offered was immediate "partnership" and a "gift" of $150K of stock. But I was assuming I would end up paying 50-75K in taxes on this "gift" which I believed would be worthless in five years when I would be allowed to cash it out. The other problem was the non-compete clause. In my state and in other states like Florida, USAP requires you to sign a 15 mile radius non-compete clause for every facility they have in your state. In my state, USAP has so many contracts, that it meant I would have to leave the state or not work for years if I wanted to leave USAP (even if I just tried them out for a month or two). I talked to some attorneys who assured me that the USAP non-compete clause was not legal or enforceable, but USAP would not take it out of the contract. USAP also claimed that they "almost never enforce" the non-compete clause. So I again asked them to take it out if they don't enforce it. USAP would not. So I gave 60 days notice prior to the hostile USAP takeover and was hired by a different true private group with no plans sell their practice.
The other problem with USAP is you don't have a guaranteed salary. When I worked for Mednax and TeamHealth, I had a fixed guaranteed salary with benefits. When I was working for TeamHealth, one of my ASCs had a pipe break and a flood. The ASC shut down and revenue for the practice plummeted for 2-3 months. But my salary stayed the same. With USAP, it is all based on production and you actually get dinged for using CRNAs (a more efficient model). Since our group uses a lot of CRNAs, our salaries were going to go down quite significantly with a USAP takeover. USAP takes 21+% of everything you earn off the top. So USAP takes no risk and profits whether you make 100K a year or 900K a year. I don't want to ever work for an AMC ever again but if I had to, USAP would be my last choice.
From the perspective of USAP, I was offered a pretty "sweet deal." There was another doc like me on a partnership track who was offered the same deal but both of us turned it down and are leaving the practice. This brings me to my final point which is that USAP has a serious recruiting problem. First of all, their recruiting department is incompetent and they don't return phone calls or e-mails even to highly qualified candidates. So USAP relies on expensive recruiting firms to aggressively hunt down the stupid and uninformed. Even Mednax and TeamHealth don't use recruiting firms.
For new recruits to USAP, I was told they offer the following: a reduced salary for 2 years followed by "partnership." My opinion is that what they call "partnership" is really false advertising. After two years of earning a below market salary, your salary bumps up to close to market (although it is still significantly less than what you would make in a private group doing the same amount of work). You are required to pay USAP 100K after this two year period to become "partner" and in exchange they give you $150K in stock. So you do not have parity, no say in how the group is run and you certainly don't own your group like in a traditional partnership. What they call "partner" is really that you become an employee with a forced stock purchase. In addition to the forced stock purchase, you have this horrendous non-compete clause. So if you sell to USAP, keep in mind that it is difficult to recruit quality anesthesiologists as your partners retire or just leave the practice. Expect to take less vacation, more call and have a lower salary.
All I can say, if you are considering a voluntary sale of your practice to USAP, I think it is a terrible idea. My group was forced to sell and nobody is happy. Two docs and a CRNA are already gone with a likely mass exodus of CRNAs to follow. USAP is so disorganized, they have not presented any of the CRNAs with an employment agreement yet, despite the fact that USAP claims the takeover is imminent. If you are a new grad or an experienced anesthesiologist looking for a new practice, I would avoid USAP based on the non-compete clause alone. If you left USAP and tried to stay and practice in your home state, my guess is that USAP would sue you to scare your other "partners" from leaving. You would win your court case, but trust me (as someone who has been in litigation with an AMC) they will drag it out for years and make you pay 6 figures in legal fees. I have heard people say some private groups are malignant and aren't fair to their partnership track docs. I have to say, in my experience, private groups have been far more fair honest and upfront than any AMC I have ever dealt with.
I would like to close on a positive note. 50% of the practices out there are still private physician owned groups. AMCs are failing because their business model is flawed and financial experts strongly recommend short selling these companies to make a profit. I have noticed a trend where hospital systems are now getting tired of the empty promises from AMCs and are now starting to kick them out of their hospital (like in Charlotte NC). In the 1990s there was a bizarre trend of hospitals buying up physician practices. When this financial model collapsed, these groups went back to physician owned and run groups. Research shows that the best care is delivered by small to medium sized physician owned groups, not multi billion dollar corporations. And I think hospital administrators, at least in some cases are figuring it out. Maybe I am optimistic but I think the AMC trend will pass too and we will eventually revery back to smaller physician owned anesthesia groups.
