1. With new doctors graduating with $200-300k of debt, how were you able to pay your bills and still live?
My response is obviously not from personal experience, however, from what I’ve seen, the student debt usually has very favorable terms so that initially, the payments are low, maybe interest only with reasonable interest rates and the minimum payments increase over time, in theory, as the doctor’s compensation does.
2. What happens with the equity earned if the new doctor and the owner doctor decide to part ways before the partnership is finalized?
This is where you need to be careful and make sure you have good representation. You can have the agreement call for some type of severance payment to the associate as payment for their "equity" they left behind. Payout can be anywhere from 12-36 months usually.
3. If the practice has debt is that amount deducted from the previous year's collections when determining a buy-in price?
No, debt should be a direct, dollar-for-dollar reduction in the agreed upon "value" of the assets being purchased. If the transition is a part stock part earnings shift method, then the debt should have been factored into the equation, lowering the potential buy-in figure.
4. How many active patients, new patients/month, etc. should there be in order to support the number of partners? I.E. 2k/doctor, 20 patients/month?
Generally I believe active patients should be approximately 1,000 per doctor, for every 1,000 patients I think I recall reading that new patients should be approximately 30% (or 25ish new patients per month)
Any other advice/info would be much appreciated.
Hope that helps.
This post first appeared on NewDocs.
Send your questions to Tim Lott, CPA, CVA at tlott@dentalcpas.com
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