Old doctors used to beg new graduates to take over their practice in the 1990s. They offered free rent for a year, all office supplies, 3000 patient charts, a devoted staff and a great parking spot. Some even threw in ownership in a medical building.
They begged new docs to care for patients they had grown to love like family.
But everyone knew that accepting a ‘free practice’ meant slavery. Sorting out complex patients for 80-100 hours per week just to make payments on student debts and mortgages was not worth it.
Middle aged doctors used to sneer in envy. They had paid $200-300 thousand for their practice just 10 years prior. They had assumed that after 20-plus years of student living, massive debts and delayed family life they would accept huge practice debts just to start billing. House, car, student loans….what was a few hundred thousand of practice debt to take on in your early 30s? They had no clue about money.
It all changed in the 1990s.
Governments turned family doctors into a scarce resource. The glut of doctors predicted by the Barer-Stoddart report turned out terribly wrong. Government closed medical school spots and created massive doctor shortages. On top of that, slashed fees though the social contract years in the 1990s forced doctors to seek work in emergency departments, hospitals, walk-in clinics – anywhere but in practice. It left nearly 2 million Ontarians without a family doc.
Pressured by voters and flush with cash from federal health transfers, Ontario poured money into Family Practice starting in 2004. Government opened medical training spots. Doctors could finally make a case to open practices. Students started ranking family practice as their first choice again. Over 1 million unattached patients found doctors by 2012.
But it ended quickly.
Premier Wynne blocked entry into family practice this spring and cut fees at the same time. She created an artificial shortage of places to work. She turned a patient roster into a commodity again but for all the wrong reasons.
Family Practice For Sale
“As I have read many of the comments going back and forth I felt compelled to provide some insight. I work for a management consulting firm in midtown Toronto, Cirrus Consulting Group, that specializes in everything being discussed here. We work with individuals and groups, both in FHG’s/FHO’s/FHT’s and FFS to ensure that their practice is running efficiently and effectively. We often find that family physician in Ontario are not paying close enough attention to their ‘business’. We work closely with the physicians and their staff to make sure that they are being paid appropriately for the care they are providing. As a boutique firm, we are able to provide hands on attention to all our clients with in person meetings and access to our team of experts at all times.
I would encourage all of you that are practicing family medicine in Ontario, regardless of your payment model, to check out our website and get in touch with either myself or another member of our team to speak about your situation and ways in which Cirrus can assist you.
To get into a little more detail about the topics above – we are currently seeing a significant amount of interest for the purchase and sale of family practices in Ontario. As it was mentioned, there is value now for a roster of patients and a spot in a FHO, whereas before, anyone could join so it didn’t make any sense to purchase. As for value, purchasing physicians are guaranteed income for the first 6 months after taking over and in our experience, this relates to the average sale price of about $150-200K, even though I would expect the sale price to be higher with such demand.
Overall, Cirrus can help with all aspects of your practice from the start of your career with income projections and setup, to the end of your career with practice valuations and retirement. I look forward to speaking with many of you and your colleagues about your individual situations and how Cirrus can help optimize your practice.
Practices take work to build and have intrinsic value. But their current value rests on the wrong reasons.
Practices should be valuable because doctors had to work to build them. Practices should not have value because governments ration spots to practice. Ontario has it backwards…while patients wait with little choice in who they get to see.
Government cannot manage healthcare by itself. Selling spots in family practice is only the beginning. Patients will soon find they have to hang on to their family doctors for dear life or risk not finding a replacement.
Politicians should be held accountable for their decisions, not just at election time. Let’s hope Premier Wynne and Minister Hoskins start working with doctors instead of against them soon.
photo credit: www.cirusconsultinggroup.com