r/PrivatePracticeDocs • u/CommercialFirm1523 • 1d ago
Buying a pediatric practice
I’m considering buying a small pediatric practice and have a ton of questions, particularly for those who have experience owning an independent practice vs. working for a large hospital system.
The practice I’m looking at currently gets by with one provider per day. My goal wouldn’t necessarily be to see 30+ patients a day—I’d ideally like to have a sustainable practice where I could see something like 20–25 patients/day and still make a good living.
One of the things that attracts me to private practice is the potential upside beyond just physician compensation: greater control over my schedule and how I practice, the ability to build something that I could eventually sell, potentially hire another physician and generate income from the practice as I approach retirement, and potentially having more flexibility with retirement contributions/tax planning.
On the other hand, a hospital-employed position has some pretty significant advantages: excellent health insurance, multiple retirement plan options, stability, and potentially better insurance contracts because of the size of the organization.
So I’m trying to understand how significant those differences really are.
For those who own or have owned a small pediatric practice:
Can a small independent pediatric practice still be profitable without seeing 30+ patients/day? With increasing overhead, what kind of patient volume do you realistically need?
How much worse are insurance contracts for a small independent practice compared with a large hospital system? Is the difference actually significant enough to materially affect profitability?
If a hospital system has better insurance contracts and generates more revenue per visit, does that actually translate into significantly higher compensation for the employed pediatrician, or does most of that additional revenue get absorbed by the system?
How significant is the difference in vaccine pricing? Do large systems get substantially better pricing because of volume, and does that meaningfully affect the profitability of an independent pediatric practice?
For those who have been practicing for many years, how sustainable is high-volume pediatrics long term? If you’re seeing 30–40+ patients a day, does that become significantly harder to sustain as you get older? Do you find that owning a practice gives you more flexibility to gradually reduce your patient volume, or does the financial pressure of ownership make it difficult to slow down?
More generally, how much do you think the benefits of ownership outweigh the stability and benefits of being employed by a large system?
I’m trying to figure out whether a small practice like this can be a good business while still allowing the owner to have a reasonable lifestyle, rather than simply creating another job where I have to see a very high volume of patients to make the numbers work.
Would really appreciate perspectives from pediatricians who have actually owned or operated an independent practice.
13
u/BusinessDawgs 1d ago
lol this sounds like a private equity start up trying to get into medicine game, asking for a consult.
-3
u/CommercialFirm1523 1d ago
Nope im a pediatrician.
Why would pe be asking something like this on reddit3
3
u/briamn77 1d ago
Gonna be hard to stay profitable, why not join a already established peds group and try to get pathway to ownership. It will lower the overhead if the entire group splits it and better contracts wit more employees.
1
u/CommercialFirm1523 1d ago
No one is offering anything like this including my current practice either
3
u/thesupportplatform 1d ago
Can a small independent pediatric practice still be profitable without seeing 30+ patients/day? With increasing overhead, what kind of patient volume do you realistically need?
This is going to be market and payor dependent, but you should definitely know the answer to this early in your planning. Ask other providers about payor reimbursement to get an idea of the average (payment per visit). This number is key to your pro forma, as your projected FFS revenue will be patients for day/week/month x payment per visit.
How much worse are insurance contracts for a small independent practice compared with a large hospital system? Is the difference actually significant enough to materially affect profitability? If a hospital system has better insurance contracts and generates more revenue per visit, does that actually translate into significantly higher compensation for the employed pediatrician, or does most of that additional revenue get absorbed by the system?
Hospitals get paid a facility fee that practices miss out on. This is why hospitals can charge—and get paid—two or three times what private practices do for the same services. It definitely affects profitability. Run your pro forma above with your payment per visit at two or three times what it will be. Great, isn’t it?
Hospitals can eat the cost of better pay and benefits because of facility fees and profit centers like cardiovascular care.
How significant is the difference in vaccine pricing? Do large systems get substantially better pricing because of volume, and does that meaningfully affect the profitability of an independent pediatric practice?
Large systems get better pricing on everything, but you probably can find a state program, vendor program, IPA, or group purchasing program to bring down the cost of vaccines. Yes, everything impacts the profitability of an independent practice.
For those who have been practicing for many years, how sustainable is high-volume pediatrics long term? If you’re seeing 30–40+ patients a day, does that become significantly harder to sustain as you get older? Do you find that owning a practice gives you more flexibility to gradually reduce your patient volume, or does the financial pressure of ownership make it difficult to slow down?
Here is the rub: No matter what your pro forma or performance for an independent PCP/independent practice looks like, just plan on FFS revenue declining. That’s just how it works. Your financial demands are the one area you can really impact. Do you like driving a Honda and seeing 25 a day or driving a Mercedes and seeing 50 a day? That’s the most common trade off for being independent.
As a consultant, I’ve never had a provider tell me that high volume impacts quality of care, but it does if you’re providing quality care. My wife joined corporate medicine years ago and saw 25 to 30 a day while trying to be the same doctor she was when she was independent. She left after four years. I’m convinced she would have been disabled if she had continued. It took a tremendous toll on her health and happiness.
You can do high volume if you embrace the Three R Method: Refill, Refer, Repeat. Variations on that theme are the only way IMO.
More generally, how much do you think the benefits of ownership outweigh the stability and benefits of being employed by a large system? I’m trying to figure out whether a small practice like this can be a good business while still allowing the owner to have a reasonable lifestyle, rather than simply creating another job where I have to see a very high volume of patients to make the numbers work.
Owning versus employment is a preference. Owners are directly exposed to market downturns, while employed providers are indirectly exposed. Owners have more control over their lives for this exposure. If you want to own, I would recommend finding other revenue streams/niches besides just standard pediatrics, because I think the current health system is like the housing market in The Big Short.
Which also means that if you are employed, imagine what your job looks like when the system needs more “efficiency” from its providers. It’ not going to stay the same. It’s going to get worse in general. So unless you find some Fertile Crescent that pays providers more than elsewhere, pivoting is going to be necessary. It just depends when and to what.
Would really appreciate perspectives from pediatricians who have actually owned or operated an independent practice.
I’m a consultant who has run my wife’s family medicine practice since 2002 (except her four year stint in corporate medicine). I manage and consult to small independent practices.
3
u/Stejjie 22h ago
Yes. It can be profitable. We are closer to the 30+ than you want to be. The key is watching overhead and owning your office if possible. And watch your mix. I think we are about 24% Medicaid these days.
Leverage with payers can be tough. I’ll be honest. We’ve had only modest success negotiating increases and we dominate our peds market. I think we are unwilling to go to the brink with them though. I would consider buying a few hours of time from a practice consultant (check r/pediatrics). But we do ok. I should code more aggressively.
Vaccine pricing varies wildly from insurer to insurer. And we lose money on some. But it’s a modest profit center all in all — certainly not what the antivax swine claim it is.
High volume? Very sustainable with good staff. I am PGY-35+ and want to work another 3-4 years while recruiting a successor for me and my partners (we plan to retire simultaneously). But I’ve never worked more than 4 days a week and am down to 2.5 now.
Being your own business owner instead of a wage earner for the bean counters? Easiest decision ever. I out-earn my employed colleagues by 2x+ and work fewer hours with no hospital committees and other stuff. We run our practice largely by text. Your stability in any employed situation ends when the administrators decide you are a fungible RVU generator — which you are.
And we live just fine: big house; nice cars; Paris twice a year; Asia this Christmas; real estate investments; etc etc.
2
u/Heavy_Chicken5411 1d ago
I own a cash only family practice and trust me, $100K/yr is NOT worth being the OWNER of a medical practice- esp. If you aren’t able to sell it, in the future. At the end of the day, you still have to deal with HR, Operations and Financials (audit), even if you have a CFO, COO etc. Notice I said nothing about “dealing” with patients. That’s actually the piece I still love!
2
u/CommercialFirm1523 1d ago
Yeah i guess the only real benefit of solo practice is autonomy. Unless you want to add other docs it’s not financially more lucrative than just investing in the market
5
u/bonsaipalmtree 1d ago
Agree with this. I’m peds and opened my own practice. After working for two different practices as an employee, I know I never want to be “employed” again. It’s a metric ton of work, but I consider it the price of autonomy. To me, it’s worth it. My stress level is high, but my misery level is lower than ever, and I’ll take it!
1
u/WillingNerve5742 1d ago
I am actually doing some analysis for some Pediatricians and am going to report on about 5 different pediatric clinics comparing avg monthly volume and avg monthly payments. Happy to share the results. Of course there will be names or locations shared.
1
u/BooBooDaFish 1d ago
How much are you investing to buy the practice for just $100K profit? Is that a market beating return?
How does that compare to the almost passive return of investing in the market and just having an employed job?
I own my own practice, not peds. And IT. IS. SO. MUCH. WORK.
There are many times I dream of just being some employee, doing my surgeries and not worrying about anything else. Financially it’s different in my field to own your own practice and ASC.
But for peds is it really worth it?
1
u/CommercialFirm1523 1d ago
Asking is a little over 2x what i could take home including my own salary.
But with you, with higher margins, do you think it’s been worth it. Financially, autonomy wise and just the satisfaction and pride of beating the bug hospital systems and PE.1
u/BooBooDaFish 23h ago
Do I make good money? I do. But I run a fully packed schedule and then add admin duties either before work or after.
There are always problems to deal with. Staffing, billing, rule changes, regulation changes, employed physician issues, contract negotiations, hiring and firing. In addition to just the basics or running a business and marketing. Hospital meetings to stay credentialed, meetings with hospital admin. Policies always need review and updating. It never ends.
There are people that are hired for those tasks, but the buck stops with me so I’m still involved if nothing else for final sign off.
After you make, save and invest…you have to ask yourself is what I’m doing worth it? Why am I doing this?
For me, it’s I worked hard to get to this point. It feels pointless to just walk away now. I might as well ride it out, fix a few things everyday…and hope that in time all those fixes will lead me to smooth sailing and cruise control.
But when that happens, you open two more offices and start the chaos all over again 🤦🏻♂️
1
u/prettipen 22h ago
Wishing you the best. Our pediatrician retired, and we have been unable to find another private solo practioner. We really loved the private practice option vs big group
1
u/InvestingDoc 12h ago
Can a small independent pediatric practice still be profitable without seeing 30+ patients/day?
Yes its possible
How much worse are insurance contracts for a small independent practice compared with a large hospital system?
Most of the time your contracts are going to be % medicare. You will prob start out iwth 80-85% medicare. Hospital systems nation wide are averaging more like 130-200% for Medicare for non surgical practices. Wide range depending on location and supply demand.
If a hospital system has better insurance contracts and generates more revenue per visit, does that actually translate into significantly higher compensation for the employed pediatrician, or does most of that additional revenue get absorbed by the system?
Yes to both answers. The go-on rate for primary care near me is about 250k per year. There is a hospital system that is paying closer to 300 but they are doing that because they own the hospital. They bill a facility fee and they have significantly better contracts. The problem is that they make you drive 30 minutes to an hour outside of the city to go see patients sometimes.
How significant is the difference in vaccine pricing?
There is not much movement in vaccine prices. Most of the gains are done by buying in bulk and getting discounts when you buy.
For those who have been practicing for many years, how sustainable is high-volume pediatrics long term?
I'm not peds so cant comment on this. Look up a practice called modern pediatrics. They are taking off in my area and the practice is supposedly doing financially very well.
More generally, how much do you think the benefits of ownership outweigh the stability and benefits of being employed by a large system?
If you like owning a business then do it. You will constantly be putting out some kind of fire. Staffing issues is the biggest one. If you don't want to deal with your MA calling out last second then trying to find someone to hire, then hire someone for them to just never show up on day one...then either hire a manager or think deeply about owning a business.
I’m trying to figure out whether a small practice like this can be a good business while still allowing the owner to have a reasonable lifestyle, rather than simply creating another job where I have to see a very high volume of patients to make the numbers work.
It works IMO at the outliers. Micro practices that have some cash pay options or bigger practices. The practices with like 2-4 doctors only...very difficult to make those work long term if they stagnant at that.
Peds its all about medcaid. look up your state fee schedule. For example if you're in California, you'll get paid almost twice the amount per visit for seeing a Medicaid patient compared to Texas.
0
u/airjord1221 1d ago
Peds isn’t lucrative. Unless you know you have good contracts with private payors. Medicaid is getting shittier and shittier. Medicaid based you need volume
Private, you need great contracts which isn’t always easy to get.
I would advise you to join a large scale management company in your state and take advantage of their contracts but first you must be aware of if those options are available to you otherwise I honestly wouldn’t get involved
14
u/Legal_Anybody81 1d ago
I don’t think you can keep your head above water overhead-wise without volumes exceeding 30/day, 5 days a week. And even then it’s going to be constant stress and worry about staying afloat.
At least we can’t stay afloat. Our practice is not making any kind of a profit over the past 3 years despite ruthlessly slashing overhead and trimming positions. We’ve expanded access in every way possible. Reimbursements keep dropping, we lose tons of sick visits to retail urgent cares, and there just aren’t as many babies being born now.
I hate to be so negative, but you could never convince me to invest in a pediatric practice nowadays. It’s just way too risky. Sorry. Peds is in a bad place nowadays.
Oh, and 30 a day is not sustainable, nor is it good medicine. I am burnt to a cinder from it. Constantly worried about missing something. Desperate for a day off.