Salary and Cost of business (or financial burden) of PA owned practices

[RPS13]

Hello everyone,

I am a PA student who is currently working on a class presentation regarding PA owned practices.

I decided to choose the topic of salary and cost of business/financial burden of a PA owned practice, as I have a large interest/small background in entrepreneurship/business/investing, and would like to hear first hand experiences from PA's who are currently running their own PA owned practice!

I have a few questions that I was hoping everybody involved could help me with. You may answer any questions you feel comfortable with, or have the time to answer as I am sure you are very busy.

1. What is the approximate gross and net profit that you have been earning for the past 5-10 years as a PA owned practice, and please state if you are the sole stakeholder, or if there are additional stakeholders in the business as that would clear up any outlier numbers.

 

2. What is the approximate overhead that is typically spent for your practice (please also include the state where the practice is located), and how much money is allocated to each (does not have to be super detailed, eg. billers, MA's, rent/utilities, malpractice insurance, physician costs, licensing, office manager).

 

3. What insurance do you typically accept? How many of patients are cash payers?

 

4. Any additional tips/information that you would like to add or for students in the class to know? Any resources that you recommend me to look in to regarding the above information?

 

I'd like to thank everyone in advance who took the time to read this and enlighten me with your answers.

I am in the process of Googling and scouring the forums for this information, but with little luck, and feel that there is no better information than that coming straight from the people who participate in this business. I look forward to seeing your replies!

Edited June 30, 2019 by RPS13
Added one more question

[PsychiatricPA]

Interesting topic. What did you find out? sorry you didn't get any help around here

[jmj11]

I see that you didn't have any responders here. I owned a practice for 5 years, and it has been three years since we closed so I will give some general comments. 

My mentor told me (a PA who had owned a successful practice for 10 years), and I didn't listen, but I should have, to do my business plan the best I could and then cut in half my expected income and double my expected expenses.

The hard lessons I learned were (and this does not correspond to your numbered questions);

1) Insurance companies drove me crazy and constantly looked for reasons to not pay us. It is a false notion to believe that if you just bill correctly you will get paid. For example, our business building did not have a mail box so we had to use a PO Box. It took six months to find out that no insurance company will pay for a visit that was seen in a practice that uses a PO Box (it is in their very, very fine print). We lost 65 K right up front and it could not be re-billed. I had to go to war with my landlord over this (he didn't want mail boxes in the building) which took a huge amount of energy and distraction.

2) Unless you are really lucky, personnel will disappoint you. I had five did different billers over 5 years, each one starting out doing a fantastic job and then doing a lousy job. 

3) While suing injust insurance companies (who withhold payments for no reason) would make a good Hallmark movie, in reality, they are bullies. You can sue them, but it would cost you about 250K and you may get very little in return even if you win.

4) I had about 10% cash paying patients, most from Vancouver, BC. I loved them, because cash made it so easy.

5) I strongly recommend that you run a very frugal practice (based on what my mentor told me) until you are clearly doing well. My software because very expensive and failed us horribly. Between Kaiser rejecting payments (and it was ultimately based on the fact that I was a PA who owned the practice) and the software contract (which failed to bill correctly) I choose to close my doors although I was overwhelmed with demand. My fear, going into this, that there would not be enough demand but that fear was not realized.

 

[anilinka]

On 10/1/2019 at 2:25 PM, jmj11 said:

I see that you didn't have any responders here. I owned a practice for 5 years, and it has been three years since we closed so I will give some general comments. 

My mentor told me (a PA who had owned a successful practice for 10 years), and I didn't listen, but I should have, to do my business plan the best I could and then cut in half my expected income and double my expected expenses.

The hard lessons I learned were (and this does not correspond to your numbered questions);

1) Insurance companies drove me crazy and constantly looked for reasons to not pay us. It is a false notion to believe that if you just bill correctly you will get paid. For example, our business building did not have a mail box so we had to use a PO Box. It took six months to find out that no insurance company will pay for a visit that was seen in a practice that uses a PO Box (it is in their very, very fine print). We lost 65 K right up front and it could not be re-billed. I had to go to war with my landlord over this (he didn't want mail boxes in the building) which took a huge amount of energy and distraction.

2) Unless you are really lucky, personnel will disappoint you. I had five did different billers over 5 years, each one starting out doing a fantastic job and then doing a lousy job. 

3) While suing injust insurance companies (who withhold payments for no reason) would make a good Hallmark movie, in reality, they are bullies. You can sue them, but it would cost you about 250K and you may get very little in return even if you win.

4) I had about 10% cash paying patients, most from Vancouver, BC. I loved them, because cash made it so easy.

5) I strongly recommend that you run a very frugal practice (based on what my mentor told me) until you are clearly doing well. My software because very expensive and failed us horribly. Between Kaiser rejecting payments (and it was ultimately based on the fact that I was a PA who owned the practice) and the software contract (which failed to bill correctly) I choose to close my doors although I was overwhelmed with demand. My fear, going into this, that there would not be enough demand but that fear was not realized.

 

Thank you for sharing! Very valuable information here for anyone considering owning a practice.

[ventana]

On 6/29/2019 at 9:58 PM, RPS13 said:

 

1. What is the approximate gross and net profit that you have been earning for the past 5-10 years as a PA owned practice, and please state if you are the sole stakeholder, or if there are additional stakeholders in the business as that would clear up any outlier numbers.

house call practice, myself on one 1/2 time LPN

best was about 200k a year - pay $100k with full bennies

 

On 6/29/2019 at 9:58 PM, RPS13 said:

2. What is the approximate overhead that is typically spent for your practice (please also include the state where the practice is located), and how much money is allocated to each (does not have to be super detailed, eg. billers, MA's, rent/utilities, malpractice insurance, physician costs, licensing, office manager).

MASS

supervision 5%

Billing co 5%

rent - we owned the bldg - house call practice - tiny one office $150/m, internet/phone $120/m

malpractice - mine about $2000/yr - doc had his own

On 6/29/2019 at 9:58 PM, RPS13 said:

 

3. What insurance do you typically accept? How many of patients are cash payers?

single payer - medicare only

On 6/29/2019 at 9:58 PM, RPS13 said:

 

4. Any additional tips/information that you would like to add or for students in the class to know? Any resources that you recommend me to look in to regarding the above information?

very hard to do unless very well versed in business and medicine

 

80 hr weeks wore my down - and we started a family - went to work for the state (sold my soul) hourly rate more then doubled but could not control my own fate.....  unsure which is better

 

[Willc]

It does not seem there is much action on this thread. The insight from the few is very insightful. I have only been able to find open sources of info from PAs who seem to own Medical Spas. RPS13 - have you found any other resources out there regarding this topic?