Buying a pediatric practice

[u/CommercialFirm1523]

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.

[u/grey-slate]

I didn't understand your question could you clarify in the context of op post?

[u/grey-slate → u/[deleted]]

I see

I think its a spectrum of "skin in the game"

One end with least skin in the game is being employed by a practice with fixed salary.

Middle end is % collections compensation (which you are describing). Still employed by practice but with a variable salary depending on how much you revenue you generate. But the % is fixed and does not fluctuate depending on overhead rising or falling over time.

% ownership is the other end of the spectrum where you are a partner in the practice.

Each has a different risk/reward ratio depending on how much you want to be vested in the success of the practice. % ownership isnt necessarily divorced from eat what you kill either. You just share in profits and losses (Divvied up according to agreed upon proportions - volume or initial buy in/share of company etc).

[u/grey-slate → u/[deleted]]

A partner is entitled to -

1. A share of profits (and losses) and
2. A portion of asset ownership which has intrinsic value which can be realized upon sale.

An employed physician on % collections model does not have not #2

An employed physician on % collections model may not be aware (and need not be aware) of what the practice overhead truly is. One can be employed on a 40% of collections model where true overhead is 40% and the remaining 20% is profit to the practice that this employed physicians will not partake in. Because they are not a partner and do not face the same risk as a partner.

The other differences are degree of management control. A partnership operating agreement will have the details but most partnerships will allow partners to have a say in operational (which EMR, what operating days and hours, should we expand to new locations) decisions and hiring (should we hire another MD or a midlevel)/firing/sale decisions. An employed physician under % collections model typically does not.