What surgical specialty has the lowest overhead?

[Doc mu]

Overhead per specialty is a critical factor not talked about enough here imo, it didctates how many hours you neee to work to start making a profit in your specialty group, the cost of opening an ASC...etc

(I have heard contradicting opinions on this, some say it is specialties with local anesthesia as anesthesia is expensive, others say it is specilties that do the procedures in a contracted hospital as the hospital would bill the patient directly, some also said to avoid specialties with procedures in clinic as that would increase overhead by a lot too...)

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[HighPriest]

Overhead is hugely important but it’s an awfully poor metric in isolation. Your overhead might be twice that of another specialty, but if your reimbursement or AR is three times higher, you’re still better off.
Some of it also depends upon where you practice because different states have different requirements. For example: some states mandate an RN for allergy shots, some will let an MA do it. If that’s part of your practice, there’s a big different in overhead from salary. (Obviously that’s just one example).

 

[Doc mu]

Overhead is hugely important but it’s an awfully poor metric in isolation. Your overhead might be twice that of another specialty, but if your reimbursement or AR is three times higher, you’re still better off.
Some of it also depends upon where you practice because different states have different requirements. For example: some states mandate an RN for allergy shots, some will let an MA do it. If that’s part of your practice, there’s a big different in overhead from salary. (Obviously that’s just one example).

I always assumed you can more effectively open up PP with low overhead

 

[Vandalia]

As mentioned, it is a meaningless factor in isolation. Banks exist. Banks make loans.

I will use non-surgical examples since it makes the distinction clearer:

Back in the "good old days" a radiation oncology practice could start up with massive overhead, but due to reimbursements could very quickly make a substantial profit.

On the other hand, a psychiatrist seeing primarily Medicare/Medicaid patients and doing a lot of "talk therapy" would have essentially no overhead but would be barely scraping by; at least by physician standards.

 

[anonperson]

Overhead per specialty is a critical factor not talked about enough here imo, it didctates how many hours you neee to work to start making a profit in your specialty group, the cost of opening an ASC...etc

(I have heard contradicting opinions on this, some say it is specialties with local anesthesia as anesthesia is expensive, others say it is specilties that do the procedures in a contracted hospital as the hospital would bill the patient directly, some also said to avoid specialties with procedures in clinic as that would increase overhead by a lot too...)

The best specialties are ones that bypass insurance companies completely.

No billing headache. You set your own rate. Patient pays upfront. No chasing down patients or insurance companies for reimbursement.

Not beholden to arbitrary reimbursement cuts by politicians etc.

 

[Vandalia]

The best specialties are ones that bypass insurance companies completely.

No billing headache. You set your own rate. Patient pays upfront. No chasing down patients or insurance companies for reimbursement.

Not beholden to arbitrary reimbursement cuts by politicians etc.

The one downside is that those are also practices that are subject to economic downturns.

Most of medicine is immune to the state of the economy. When money is plentiful people might not mind paying cash. When it isn't, that is when they decide to postpone the procedure and/or when they go with insurance. I have known a number of such practices that were riding high during the good times ... then were in or on the verge of bankruptcy when the economy went south.

I am not saying to avoid it, but if they made tombstones for defunct medical practices, on many of them would be the words, "My patients lied to me when they said they would always pay out-of-pocket to see me."

 

[HighPriest]

I always assumed you can more effectively open up PP with low overhead

It definitely helps. But it’s hard to quantify that specialty-to-specialty. If you wanted to say “what’s a high overhead for a general surgeon working PP in Texas?” That’s good data. If you want to compare a urologist to a general surgeon, that’s really hard to do without taking in a lot of additional data beyond just overhead.

 

[HighPriest]

The best specialties are ones that bypass insurance companies completely.

No billing headache. You set your own rate. Patient pays upfront. No chasing down patients or insurance companies for reimbursement.

Not beholden to arbitrary reimbursement cuts by politicians etc.

This is by and large true but it illustrates the point: overhead isn’t everything. Because not working with insurance only effects your overhead so much (you don’t need coders, or to hire a negotiator). What makes it great is your ability to adjust your billing without constraints.

 

[DoctwoB]

As mentioned, it is a meaningless factor in isolation. Banks exist. Banks make loans.

I will use non-surgical examples since it makes the distinction clearer:

Back in the "good old days" a radiation oncology practice could start up with massive overhead, but due to reimbursements could very quickly make a substantial profit.

On the other hand, a psychiatrist seeing primarily Medicare/Medicaid patients and doing a lot of "talk therapy" would have essentially no overhead but would be barely scraping by; at least by physician standards.

This. A "low overhead" surgical practice would be someone who doesn't do office procedures that require equipment. In theory a general surgeon could get by with just some cheap disposables like gauze, staple removers, etc. in their office.

But even then, you need to lease the office (probably with a hefty deposit/up front payment), pay the staff, rent/buy/lease exam tables, etc all while waiting a few months to collect your first billings from insurance since those always lag behind, assuming you were on the ball about getting on insurance plans. So you need startup funds. Now if your a urologist or ENT and you need scopes, ultrasound probes, etc that number will be higher, but the fact remains you need a loan and a business plan either way.

 

[Doc mu]

The best specialties are ones that bypass insurance companies completely.

No billing headache. You set your own rate. Patient pays upfront. No chasing down patients or insurance companies for reimbursement.

Not beholden to arbitrary reimbursement cuts by politicians etc.

That essentially limits you to the highly competitive derm and plastics for cosmetic out of pocket procedures

 

[Doc mu]

This. A "low overhead" surgical practice would be someone who doesn't do office procedures that require equipment. In theory a general surgeon could get by with just some cheap disposables like gauze, staple removers, etc. in their office.

But even then, you need to lease the office (probably with a hefty deposit/up front payment), pay the staff, rent/buy/lease exam tables, etc all while waiting a few months to collect your first billings from insurance since those always lag behind, assuming you were on the ball about getting on insurance plans. So you need startup funds. Now if your a urologist or ENT and you need scopes, ultrasound probes, etc that number will be higher, but the fact remains you need a loan and a business plan either way.

So physicians pay for equipment in their clinic and ASC and the hospital provides the equipment for procedures you do in it?

 

[HighPriest]

So physicians pay for equipment in their clinic and ASC and the hospital provides the equipment for procedures you do in it?

Generally speaking and in private practice, yes. Of course if you buy in yo an ASC, then the ASC pays for the equipment and by proxy you split that cost with the other owners. If you join a multi specialty (or just multi-doc) practice the same may apply in clinic depending upon what your contract looks like. But if you’re solo, you pay for anything you don’t use in the hospital.

 

[bronx43]

The one downside is that those are also practices that are subject to economic downturns.

Most of medicine is immune to the state of the economy. When money is plentiful people might not mind paying cash. When it isn't, that is when they decide to postpone the procedure and/or when they go with insurance. I have known a number of such practices that were riding high during the good times ... then were in or on the verge of bankruptcy when the economy went south.

I am not saying to avoid it, but if they made tombstones for defunct medical practices, on many of them would be the words, "My patients lied to me when they said they would always pay out-of-pocket to see me."

With the cost of care being pushed more and more on the patient, I honestly think that the next downturn will be a bloodbath for medicine. Everything "elective" can be pushed aside. Only cancer and emergencies are things people cannot/will not wait on.

 

[Doc mu]

Generally speaking and in private practice, yes. Of course if you buy in yo an ASC, then the ASC pays for the equipment and by proxy you split that cost with the other owners. If you join a multi specialty (or just multi-doc) practice the same may apply in clinic depending upon what your contract looks like. But if you’re solo, you pay for anything you don’t use in the hospital.

Makes me wonder how many times buying into an ASC is a net-loss rather than a net gain, i know this may sound stupid but how do the people that buy into ASCs or buy their own make money?

 

[HighPriest]

Makes me wonder how many times buying into an ASC is a net-loss rather than a net gain, i know this may sound stupid but how do the people that buy into ASCs or buy their own make money?

The same way anyone does - the ASC turns a profit and you get a share of that.

 

[Doc mu]

The same way anyone does - the ASC turns a profit and you get a share of that.

Yeah but how does the ASC itsself make money in general? owners bill insurance for extra space fees or something along those lines?

 

[HighPriest]

Yeah but how does the ASC itsself make money in general? owners bill insurance for extra space fees or something along those lines?

You bill a facility fee for each procedure.

 

[Pir8DeacDoc]

There are three cost components to every surgery :

1. Surgeon fee- what I get paid by insurance for the cpt codes I did

2. Anesthesia fee - self explanatory

3. Facility fee- what insurance pays the facility for each billed procedure. This is basically the money for use of the instruments, nurses, and other supplies (dressings, gauze, etc).


As an ASC owner you are getting your surgeon fee and also taking whatever profit remains after paying expenses from the facility fee pool of money. Most places I've been anesthesia does their own thing. But you could probably employ them and skim some profit from them too.

 

[Doc mu]

There are three cost components to every surgery :

1. Surgeon fee- what I get paid by insurance for the cpt codes I did

2. Anesthesia fee - self explanatory

3. Facility fee- what insurance pays the facility for each billed procedure. This is basically the money for use of the instruments, nurses, and other supplies (dressings, gauze, etc).


As an ASC owner you are getting your surgeon fee and also taking whatever profit remains after paying expenses from the facility fee pool of money. Most places I've been anesthesia does their own thing. But you could probably employ them and skim some profit from them too.

The facility fee must be very high to be profitable because some instruments cost thousands, I didn't think they were covered honestly

 

[dpmd]

So physicians pay for equipment in their clinic and ASC and the hospital provides the equipment for procedures you do in it?

The ASC and hospital provide equipment for the procedures you do at the ASC or hospital, not anything for your clinic.

 

[dpmd]

The facility fee must be very high to be profitable because some instruments cost thousands, I didn't think they were covered honestly

The facility fees are high, but also the instruments get used by multiple providers and the facility decides what sort of stuff they will buy versus what they won't based on whether or not they can expect to profit off it, not based on your desires or the importance to the patient (though that factors in somewhat if the surgeon is willing to take their cases elsewhere if the item is not provided).

 

[HighPriest]

The ASC buys the equipment. But if you own your own single practice ASC, then you are buying the equipment. It’s just a shell game with regards to pots of money.
The equipment is -usually- used by other specialties or providers but not always. No one else is using a mouthgag or ear instruments outside of ENT.
But DEFINITELY the procedure needs to be profitable. If you’re the odd man out the other ASC owners aren’t going to spend ASC cash on a procedure that will lose cash.

If I can do 12 tonsils a day every time I’m there, even if I’m the only ENT, I’ll pay off that equipment quickly. If you can’t make money doing the case in a private ASC, you shouldn’t do it in a private ASC. That’s what hospitals are for.
Of course, insurers would like you to just eat the cost, but as they offer absolutely nothing in return for your sacrifice, they can go screw themselves.

I realize this post is pedantic, but there’s so much that I do that uses equipment that no one else uses, it’s worth mentioning.

 

[dpmd]

The ASC buys the equipment. But if you own your own single practice ASC, then you are buying the equipment. It’s just a shell game with regards to pots of money.
The equipment is -usually- used by other specialties or providers but not always. No one else is using a mouthgag or ear instruments outside of ENT.
But DEFINITELY the procedure needs to be profitable. If you’re the odd man out the other ASC owners aren’t going to spend ASC cash on a procedure that will lose cash.

If I can do 12 tonsils a day every time I’m there, even if I’m the only ENT, I’ll pay off that equipment quickly. If you can’t make money doing the case in a private ASC, you shouldn’t do it in a private ASC. That’s what hospitals are for.
Of course, insurers would like you to just eat the cost, but as they offer absolutely nothing in return for your sacrifice, they can go screw themselves.

I realize this post is pedantic, but there’s so much that I do that uses equipment that no one else uses, it’s worth mentioning.

Lacrimal probes make excellent fistula probes and I'm sure some of your instruments would come in handy for specific tasks by a different specialist but we would have to see them to know to try them (like the very small retractor I discovered on a craniotomy tray that is perfectly sized for dealing with a small port site incisional hernia).

 

[HighPriest]

Lacrimal probes make excellent fistula probes and I'm sure some of your instruments would come in handy for specific tasks by a different specialist but we would have to see them to know to try them (like the very small retractor I discovered on a craniotomy tray that is perfectly sized for dealing with a small port site incisional hernia).

Many might be, most rarely end up being. As you say, you gotta know it exists to use it in a pinch.

 

[Doc mu]

The ASC buys the equipment. But if you own your own single practice ASC, then you are buying the equipment. It’s just a shell game with regards to pots of money.
The equipment is -usually- used by other specialties or providers but not always. No one else is using a mouthgag or ear instruments outside of ENT.
But DEFINITELY the procedure needs to be profitable. If you’re the odd man out the other ASC owners aren’t going to spend ASC cash on a procedure that will lose cash.

If I can do 12 tonsils a day every time I’m there, even if I’m the only ENT, I’ll pay off that equipment quickly. If you can’t make money doing the case in a private ASC, you shouldn’t do it in a private ASC. That’s what hospitals are for.
Of course, insurers would like you to just eat the cost, but as they offer absolutely nothing in return for your sacrifice, they can go screw themselves.

I realize this post is pedantic, but there’s so much that I do that uses equipment that no one else uses, it’s worth mentioning.

How would the hospital turn a profit from a procedure that loses cash in the ASC?

 

[HighPriest]

How would the hospital turn a profit from a procedure that loses cash in the ASC?

Fortunately that isn’t your concern. Hospital billing schedules are different, they have more insurance negotiating power and many receive state funding to offset some loses.

 

[DoctwoB]

Makes me wonder how many times buying into an ASC is a net-loss rather than a net gain, i know this may sound stupid but how do the people that buy into ASCs or buy their own make money?

An ASC is a business. It can make money or lose money. However the economics of ASCs currently are that if they are well run and busy (most important part) they will make $$$.

The biggest thing is there are a lot of fixed costs, so you need volume of procedures to make money. That's why ASCs want surgeons/proceduralists to buy in, and will usually give them very favorable terms, because not only are they getting another investor in the ASC (diversifying risk) but they are getting another person who will bring cases into their ASC, instead of the ASC across town.

Now ASC's can't legally incentivize you to bring in cases i.e. pay you for bringing in cases. But they can give you distributions of the profits as an owner, knowing that since you doing cases there makes the profits go up you are likely to bring your cases there.

 

[dpmd]

An ASC is a business. It can make money or lose money. However the economics of ASCs currently are that if they are well run and busy (most important part) they will make $$$.

The biggest thing is there are a lot of fixed costs, so you need volume of procedures to make money. That's why ASCs want surgeons/proceduralists to buy in, and will usually give them very favorable terms, because not only are they getting another investor in the ASC (diversifying risk) but they are getting another person who will bring cases into their ASC, instead of the ASC across town.

Now ASC's can't legally incentivize you to bring in cases i.e. pay you for bringing in cases. But they can give you distributions of the profits as an owner, knowing that since you doing cases there makes the profits go up you are likely to bring your cases there.

Even before I became an investor they got my business by providing lunch to surgeons around at lunch time. Which is why I almost never schedule a long day of cases but rather do a few at a time on multiple days ideally starting at 11.

 

[HighPriest]

An ASC is a business. It can make money or lose money. However the economics of ASCs currently are that if they are well run and busy (most important part) they will make $$$.

The biggest thing is there are a lot of fixed costs, so you need volume of procedures to make money. That's why ASCs want surgeons/proceduralists to buy in, and will usually give them very favorable terms, because not only are they getting another investor in the ASC (diversifying risk) but they are getting another person who will bring cases into their ASC, instead of the ASC across town.

Now ASC's can't legally incentivize you to bring in cases i.e. pay you for bringing in cases. But they can give you distributions of the profits as an owner, knowing that since you doing cases there makes the profits go up you are likely to bring your cases there.

And this is extremely important. The ASCs that I’ve seen struggle (and there have been a few) all struggle because they’re in high Medicaid/Medicare areas and they aren’t filling 100% of their block time. I knew an ENT group who didn’t know what they were doing who just assumed that since they were busy when they were in the ASC, and since they billed well, the ASC must be doing well. But it sat empty 2 days/week. And even though you didn’t have to staff it during that time, it generates overhead. When they finally ran their numbers properly, they were losing money about half of the time they were working. Solution? Stop doing low-reimbursement cases in the ASC and make sure there’s no “down” time during working hours. Not to mention issues with appropriate staffing, but that wasn’t their problem.

 

[DoctwoB]

Even before I became an investor they got my business by providing lunch to surgeons around at lunch time. Which is why I almost never schedule a long day of cases but rather do a few at a time on multiple days ideally starting at 11.

Living in an area with a lot of tech companies, it seems crazy to me that there isn't more focus on "cheap" perks like this to retain staff.

Everyone is having a lot of trouble retaining staff (or docs) these days. Most places are raising salaries, but not by enough to make it count and are paying travelers extra to cover the shortcomings. Smart companies figured out a long time ago that providing perks like free/available food, lounges/social areas, parking, backup child care, etc etc. keep people happy for cheaper then it would cost to just pay them more. Plus it keeps your employees on the premises and more productive.

But no, medicine has a culture of Nickle and diming their own employees for food and parking.

 

[wholeheartedly]

Living in an area with a lot of tech companies, it seems crazy to me that there isn't more focus on "cheap" perks like this to retain staff.

Everyone is having a lot of trouble retaining staff (or docs) these days. Most places are raising salaries, but not by enough to make it count and are paying travelers extra to cover the shortcomings. Smart companies figured out a long time ago that providing perks like free/available food, lounges/social areas, parking, backup child care, etc etc. keep people happy for cheaper then it would cost to just pay them more. Plus it keeps your employees on the premises and more productive.

But no, medicine has a culture of Nickle and diming their own employees for food and parking.

That was one thing I did like at the last hospital I worked at. Cheap meals at the cafeteria for what you got. free bagels, english muffins, bread, cream cheese, jam, apples, bananas, & oranges and coffee/tea/etc in the cafeteria. Often leftover desserts from lunch were out for free and afternoon free cookies. free Keurig k cups and coffee makers, loves of white and wheat bread, peanut butter, and jelly for staff every break room. Was really nice if you missed a meal to be able to go grab something.