Should You Sell or Not Sell your Medical Practice to a Hospital or Big Group? Here is what you can get yourself into if you sell. Also how do you get out of it if you already did!
Here is the scenario. You as a physician sold your practice (the whole kit and caboodle) to a hospital or big group and after a while you realize that, you have become their grunt and basically you have no say in anything. Surprise!
1. The bigining.
The acquisition of a medical practice is a stepwise process. At the beginning you feel liberated of the hassles of running a practice in these days of increasing regulations especially with the billing and diminishing returns. At the beginning, the hospital or group administration listens to you and accommodate to your routines and requests. You feel like a king. All those things you want are there for the asking!! You just go to the office and see patients with no worries about anything else. You feel you made out like a bandit with the chunk of money they pay you. But wait. Not so fast.
2. Slowly all “their pegs”, and you are one of them, are falling into place.
While you are a happy camper producing money for them and thinking this is paradise, they continue to buy other doctor’s practices that are key for their “big plan” . Which big plan? One they have told you nothing about. Not only do they hire other doctors and buy other practices, but they also hire other practitioners, the so-called mid-levels PA, ARNP. Initially they offer to send these practitioners to your office to help you. Great! You can now go on vacation and these other practitioners cover for you. Before you joined the hospital or group, when you went of vacation your income would drop. But now it’s different, because they pay you a good salary and the rest is their problem. So far you are saying, “these people are so nice”, but remember it is all part of the big plan. As time goes by, they control (own) more and more practices around and continue to hire more practitioners both physicians and otherwise. Suddenly referrals start coming to you that never came to you before, simply because the owner of that other practice, now acquired by the hospital or group, used to refer to someone else. But now he was asked to refer to you and you are also be asked to refer to him. Fantastic! Both of you are happy! For now! “How nice are these people”, you continue to think!
3. The final PEG.
Unknown to you, they are also making deals with insurance companies and mutually creating insurance product that are being presented to the community. They are presented as the best thing there ever was and also cheaper than other insurances. But these policies are limited, to be used with that particular Hospital group of physicians or physician group. If asked, the administration will say “but we are trying to help our docs and the community”! Additionally these insurance products are not only offered to the public in general, but also the hospital or physician group that hired you adopts these insurance products for their employees! They may even offer it to you cheaper than what you are paying for whatever policy you have. You continue to say “how nice are these people”! All the while and unknown to you, they are manipulating you behind your back a little bit at a time.
4. Unhappiness makes its appearance in your practice.
After two or three years or even more in this “happy place”, these “nice people” start asking you to change little things in the way you practice. Gently they will ask you not to order this or that test or perform this or that procedure because it is so expensive and before you order it, this or that requirement needs to be met. Like for example cataract surgery is OK, but only if the patient is so blind that he/she is bumping the walls. Or the patient that comes to your office with the typical lumbar radiculopathy with positive straight leg raising test etc., but before you can order an MRI to make a definitive diagnosis you need to put the patient thru six week a physical therapy. As a physician, suddenly you start not liking these “nice people” you now work for”. You were trained to do the best for your patients. But remember this is not your practice anymore. This is a practice now owned and run by business people with the only intent of making money so the bosses can have great salaries and a golden parachute at retirement time. You have seen on the news stories of CEO’s or company president getting multi million dollars retirement bonus. Where does all that money come from? It is all in the “big plan” they never told you about, and to accomplish it they have to screw everybody around them and the unsuspecting costumers they do business with, you included. You are just a peon and replaceable with a stroke of a pen.
5. Your Rat Race has begun and you discover who the real boss is.
As time goes by they slowly but surely ask more of you. Suddenly you are told that you are taking too long with the patients and you need to see more patient per hour because you need to make more money. They want you to run a revolving door kind of practice where you don’t have time to properly address the patient’s problems. The rat race has begun for you! One day your trusted secretary that you had for years is not good enough for them and they replace him or her without asking you, with one you had no input in hiring. So now this person, who has no allegiance to you is going to do things in “your office” not like you want done, but like the hospital wants. Suddenly your secretary is basically now your boss!! Remember they sign their paycheck! Demands keep piling on you regularly and changes happen almost daily. Your hours may be changed, you may be asked to cover for other doc, your EMR that you have had for years and that you are familiar with is suddenly changed to another one without asking. Your lovely practice has suddenly become a nightmare and you hate going there every day.
6. You discover the rabbit hole you got yourself into and you want out.
You slowly realize that these people you thought of as “so nice” are not so nice anymore. You are their peon and they are letting you know you are not the boss. You will get to the point where you want out. When that moment comes, you will start analyzing things and planning an exit. You will discover the rabbit hole you got yourself into but you want out anyway. You think that all it takes is just opening by yourself in another location and you will be in business again quickly. Think again. Lets analyze later what your new plans will entail if you put it into action.
7. Somehow they discover your plan. You get to meet the executioner!
First of all, the day the hospital finds out about your plan to become independent again, you will be called to administration for a meeting. When you get to the meeting you will find all the top brass and the hospital attorney waiting for you. They will simply tell you that things are not working out, that you are not making them enough money to cover expense or whatever and you will be fired on the spot. And you may be even asked to hand over the keys of the office on the spot and not later in the day or tomorrow. Don’t worry about your patients, they will have someone taking care of them and your patient wont even know what happened to you except that you are not there anymore. You think this can’t happen? Think again! It is happening all over and I personally know physicians relatives of mine to whom it has happened.
8. You are now out of the job. So now what?
You suddenly find yourself now with no income, no office, no equipment, no malpractice insurance and no staff. Remember you sold them everything for what you thought was a big chunk of money, so it is theirs! Even the keys to enter what was your office! After many years in practice, you are now out in the street without a job. Weren’t those people nice to you? You are not ready to retire just yet, and you do not have a “golden parachute”.
So what exactly are you facing to be able to reopen at another location? Well, a lot is going to depend on what the contract of the sale of your practice to the hospital or physician group included. Remember that those “friendly guys” that started talking to you about acquiring your practice, had a plan from the very beginning even if they did not tell you anything about the plan. They just concentrated on enticing you to sell to them and that is why you at that time saw them as “such nice people”. However, remember that in all contracts “the devil is in the detail”.
If they acquired not only your physical office and equipment but also the tax ID number of your practice, and your provider numbers with Medicare and all other insurance companies, you are in quite a bind. If they acquired your practice tax number and the above mentioned provider numbers, you basically have to start from zero just like when you came out of medical school. If in addition to the practice tax ID number and your provider number they also added a none-compete clause, you are in for additional challenges and limitations, as well as possibly legal expenses if you choose to fight it. Regardless, obtaining a new tax ID number for your practice and reapplying to be a participating provider with those insurance companies you participated with before, it is going to take about six month and that is if they don’t respond to your reapplication saying that “the panel is full”. As you can now hopefully see, selling your practice that cost you years to create to these “nice people” was not such a good idea.
9. What are your options now?
Well you may be asking yourself what are your options? Basically you have three options:
a. Restart your practice as a cash only practice, a concierge type of practice. This is an option but remember not many of your long time patients are going to be able to afford it and will either stay with your “previous friendly employer”, or go to someone else that participates with his/her insurance.
b. Find another employer that will take you in, and add you to his/her group.
c. Start your own private practice all over again. It won’t be cheap but it can be done. This is the option that will allow you to regain your independence and be your own boss again. It is going to take time, easily four to six month. There are companies out there that can help you through the process of acquiring a new tax ID number for your practice and new provider numbers to use with the insurance companies.
10. Is there help for physicians in this situation out there?
You are not the first physician wanting out of the situation you were enticed into and some companies out there have already helped several physician transition back into private practice. Additionally these companies can help you and guide you in the steps that need to happen in your new office to optimize the revenue cycle and maximize your income.
11. Advise for those that have not sold yet.
So what are the take home messages for those of you reading this article? My advice is very simple. If you are not yet ready to retire, do not sell! You may get yourself into a rabbit hole you won’t like. Remember they (the hospital or the group you are joining) are “so nice” but they have a plan, of which you are only a peon, and they will use you and be nice to you until you have served their purpose.
If you are at the end of your rope and are overwhelmed with your private practice, there is help out there. If after reading this you still want to sell to a hospital or large physician group, make sure you read the fine print in the contract and make sure you design for yourself your golden parachute so that they think about it twice before firing or abusing you.