Is a doctor's practice one of the safest and most profitable businesses?

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Derivative
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Is a doctor's practice one of the safest and most profitable businesses?

Post by Derivative » Wed Oct 18, 2017 11:12 am

Why do doctors make so much money and is running a healthcare practice is much more profitable than many other businesses? Would you guys say running a healthcare business/practice is safer and more profitable than other businesses (e.g. food, real estate, gym, tax/accounting, etc., etc.)?

Do doctors make so much money because insurance companies pay much more for each procedure and because of the constant and high demands of people for healthcare services? I am thinking that if a doctor can see 20+ different patients a day, then the demand is higher than many other industries? Are there many ways for a doctor's practice to fail if a doctor does everything correct and is a good/average clinician? I do not see that many compared to other industries/businesses. What are your thoughts?

So for doctors, high/constant demand (no matter the economic climate) + high payments from insurance companies per visit/procedure + high margin = one of the safest and most profitable businesses? Am I missing anything else here?

Is it possible for a solo practice doctor to ever make less than 200k a year if they are a good/average clinician and do everything right and work average hours?
Last edited by Derivative on Wed Oct 18, 2017 11:16 am, edited 1 time in total.

awval999
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Re: Is a doctor's practice one of the safest and most profitable businesses?

Post by awval999 » Wed Oct 18, 2017 11:16 am

Oh man.

Can't wait for the responses on this.

"So for doctors, high/constant demand (no matter the economic climate) + high payments from insurance companies per visit/procedure + high margin = one of the safest and most profitable businesses? Am I missing anything else here?"

Just for starters, this entire quote is wrong.

Insurance reimbursement dwindling. Margin? Come on. Let's start with extremely high overhead. That's why the majority of private practices are being bought out by health systems.

Derivative
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Re: Is a doctor's practice one of the safest and most profitable businesses?

Post by Derivative » Wed Oct 18, 2017 11:18 am

awval999 wrote:
Wed Oct 18, 2017 11:16 am
Oh man.

Can't wait for the responses on this.

"So for doctors, high/constant demand (no matter the economic climate) + high payments from insurance companies per visit/procedure + high margin = one of the safest and most profitable businesses? Am I missing anything else here?"

Just for starters, this entire quote is wrong.

Insurance reimbursement dwindling. Margin? Come on. Let's start with extremely high overhead. That's why the majority of private practices are being bought out by health systems.
How is there an extremely high overhead? What about dental practices?

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Re: Is a doctor's practice one of the safest and most profitable businesses?

Post by Blueskies123 » Wed Oct 18, 2017 11:22 am

Before or after the divorce?
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Re: Is a doctor's practice one of the safest and most profitable businesses?

Post by flamesabers » Wed Oct 18, 2017 11:23 am

OP,

Are you considering going into medicine or investing in a doctor's practice as a business partner? If not, I don't see how this topic is actionable.

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Re: Is a doctor's practice one of the safest and most profitable businesses?

Post by KlangFool » Wed Oct 18, 2017 11:26 am

OP,

If you get a chance, read the book, "The Millionaire Next Door". The most profitable small businesses are junkyards and pawn shops.

KlangFool

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Re: Is a doctor's practice one of the safest and most profitable businesses?

Post by nisiprius » Wed Oct 18, 2017 11:30 am

I'm not a doctor. But two examples from within my circle of medical acquaintances may show why I doubt that a doctor's career or income is particularly "safe."

1) A urologist who was a star in a community hospital who did prostatectomies. That form of surgery has been revolutionized by so-called "robotic" instruments. His hospital doesn't have one. I'm not completely sure what his range of career options was. In the event, he decided to offer a different kind of procedure called brachytherapy. The point is: boom, technology change, and suddenly his previous skill is worth much less than before.

2) Similarly, an optometrist; in my state, when he trained and was licensed, optometrists were not allowed to dilate eyes. Now, that has changed, and the newer and younger optometrists do it. He would have to spend time and money to get trained and licensed. He chose not to do so, and lives with whatever the impact on his practice is of competing with others.

I'd add, too, that in investing, one of the easy ways to deceive yourself is to jump to a conclusion, or allow someone to convince you, that "people will always need X" and therefore the stock of a company that provides X is automatically a good investment.
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Re: Is a doctor's practice one of the safest and most profitable businesses?

Post by Derivative » Wed Oct 18, 2017 11:31 am

KlangFool wrote:
Wed Oct 18, 2017 11:26 am
OP,

If you get a chance, read the book, "The Millionaire Next Door". The most profitable small businesses are junkyards and pawn shops.

KlangFool
Read it already and reading it is one of the reasons for my post. It says the most profitable businesses are coal mining # 1 and then office of physicians #2.

I think if I put the question, what is the safest and most profitable business, people who have worse things to say about almost every other industry except tax?
Last edited by Derivative on Wed Oct 18, 2017 11:34 am, edited 1 time in total.

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Re: Is a doctor's practice one of the safest and most profitable businesses?

Post by KlangFool » Wed Oct 18, 2017 11:33 am

Derivative wrote:
Wed Oct 18, 2017 11:31 am
KlangFool wrote:
Wed Oct 18, 2017 11:26 am
OP,

If you get a chance, read the book, "The Millionaire Next Door". The most profitable small businesses are junkyards and pawn shops.

KlangFool
Read it already and reading it is one of the reasons for my post. It says the most profitable businesses are coal mining # 1 and then office of physicians #2
Derivative,

You must be joking. Or, you are reading the wrong book. Please tell me which page say this? I have the book right next to me.

KlangFool

Derivative
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Re: Is a doctor's practice one of the safest and most profitable businesses?

Post by Derivative » Wed Oct 18, 2017 11:35 am

KlangFool wrote:
Wed Oct 18, 2017 11:33 am
Derivative wrote:
Wed Oct 18, 2017 11:31 am
KlangFool wrote:
Wed Oct 18, 2017 11:26 am
OP,

If you get a chance, read the book, "The Millionaire Next Door". The most profitable small businesses are junkyards and pawn shops.

KlangFool
Read it already and reading it is one of the reasons for my post. It says the most profitable businesses are coal mining # 1 and then office of physicians #2
Derivative,

You must be joking. Or, you are reading the wrong book. Please tell me which page say this? I have the book right next to me.

KlangFool
No, Table 8-2 "Top Ten Most Profitable Sole-Proprietorship Businesses" page 236.

1. Coal Mining
2. Offices of Physicians
3. Offices of Osteopathic Physicians
4. Offices of Dentists
5. Offices of Optometrists
6. Bowling Centers
7. Offices of Chiropractors
8. Drug Stores
9. Veterinarian Services
10. Legal Services

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Re: Is a doctor's practice one of the safest and most profitable businesses?

Post by goodenyou » Wed Oct 18, 2017 11:40 am

Derivative wrote:
Wed Oct 18, 2017 11:35 am
KlangFool wrote:
Wed Oct 18, 2017 11:33 am
Derivative wrote:
Wed Oct 18, 2017 11:31 am
KlangFool wrote:
Wed Oct 18, 2017 11:26 am
OP,

If you get a chance, read the book, "The Millionaire Next Door". The most profitable small businesses are junkyards and pawn shops.

KlangFool
Read it already and reading it is one of the reasons for my post. It says the most profitable businesses are coal mining # 1 and then office of physicians #2
Derivative,

You must be joking. Or, you are reading the wrong book. Please tell me which page say this? I have the book right next to me.

KlangFool
No, Table 8-2 "Top Ten Most Profitable Sole-Proprietorship Businesses" page 236.

1. Coal Mining
2. Offices of Physicians
3. Offices of Osteopathic Physicians
4. Offices of Dentists
5. Offices of Optometrists
6. Bowling Centers
7. Offices of Chiropractors
8. Drug Stores
9. Veterinarian Services
10. Legal Services
From 1992? 25 years ago. I think things have changed.
Last edited by goodenyou on Wed Oct 18, 2017 11:46 am, edited 1 time in total.
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Re: Is a doctor's practice one of the safest and most profitable businesses?

Post by RosieQ » Wed Oct 18, 2017 11:45 am

I think some physician offices can be very profitable but they are few and far between. Dermatology and plastic surgery clinics, maybe ortho, GI or a few others with an outpatient surgery center that do lots of procedures and can lease space to other providers when not running at full capacity can make millions of dollars per year. Primary care and most other face to face specialties are finding it harder and harder to survive. Even the specialties listed above are often having a hard time and it seems to be the very business oriented MD who can combine clinical skill and business acumen that makes it work.

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Re: Is a doctor's practice one of the safest and most profitable businesses?

Post by KlangFool » Wed Oct 18, 2017 11:48 am

Derivative wrote:
Wed Oct 18, 2017 11:35 am
KlangFool wrote:
Wed Oct 18, 2017 11:33 am
Derivative wrote:
Wed Oct 18, 2017 11:31 am
KlangFool wrote:
Wed Oct 18, 2017 11:26 am
OP,

If you get a chance, read the book, "The Millionaire Next Door". The most profitable small businesses are junkyards and pawn shops.

KlangFool
Read it already and reading it is one of the reasons for my post. It says the most profitable businesses are coal mining # 1 and then office of physicians #2
Derivative,

You must be joking. Or, you are reading the wrong book. Please tell me which page say this? I have the book right next to me.

KlangFool
No, Table 8-2 "Top Ten Most Profitable Sole-Proprietorship Businesses" page 236.

1. Coal Mining
2. Offices of Physicians
3. Offices of Osteopathic Physicians
4. Offices of Dentists
5. Offices of Optometrists
6. Bowling Centers
7. Offices of Chiropractors
8. Drug Stores
9. Veterinarian Services
10. Legal Services
1) That table is based on net income. Aka survival bias.

2) Please read page 235. Second Paragraph.

<<How will you vote? Notice that coal mining, on the average, produced a higher net income..... what proportion made any net income...Only about one in three (34.2 percent)>>

3) Please read page 237 for "Dull-Normal" business. Table 8-3 is what you need.

KlangFool

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Re: Is a doctor's practice one of the safest and most profitable businesses?

Post by flamesabers » Wed Oct 18, 2017 11:51 am

Derivative wrote:
Wed Oct 18, 2017 11:35 am
No, Table 8-2 "Top Ten Most Profitable Sole-Proprietorship Businesses" page 236.

1. Coal Mining
2. Offices of Physicians
3. Offices of Osteopathic Physicians
4. Offices of Dentists
5. Offices of Optometrists
6. Bowling Centers
7. Offices of Chiropractors
8. Drug Stores
9. Veterinarian Services
10. Legal Services
Are you looking to start up a doctor's practice?

I think something to keep in mind when looking at such statistics is the issue of survival bias.

p0nyboy
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Re: Is a doctor's practice one of the safest and most profitable businesses?

Post by p0nyboy » Wed Oct 18, 2017 12:01 pm

I know a few doctors...they always tell me how much more difficult it is to start your own practice (family doctor.) Those small family doctor places are being eaten up by walk in clinics such the cvs minute clinic...and the big one that will kill everything is the urgent care places that are sprouting up like weeds. We just had 2 open within a month of each other...and they're side by side!

Derivative
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Re: Is a doctor's practice one of the safest and most profitable businesses?

Post by Derivative » Wed Oct 18, 2017 12:04 pm

flamesabers wrote:
Wed Oct 18, 2017 11:51 am
Derivative wrote:
Wed Oct 18, 2017 11:35 am
No, Table 8-2 "Top Ten Most Profitable Sole-Proprietorship Businesses" page 236.

1. Coal Mining
2. Offices of Physicians
3. Offices of Osteopathic Physicians
4. Offices of Dentists
5. Offices of Optometrists
6. Bowling Centers
7. Offices of Chiropractors
8. Drug Stores
9. Veterinarian Services
10. Legal Services
Are you looking to start up a doctor's practice?

I think something to keep in mind when looking at such statistics is the issue of survival bias.
I would like to start an ortho surgery or pain management practice. I am very interested in these businesses.

EnjoyIt
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Re: Is a doctor's practice one of the safest and most profitable businesses?

Post by EnjoyIt » Wed Oct 18, 2017 12:12 pm

Physicians have the potential to make a very significant income with the right practice and in the right location. Yes it can be very profitable but the time commitment and overhead costs are extremely high. And yes, a physician will likely always be needed and therefor the profession is very safe unless you are a horrible physician and find yourself loosing your license.

If you are looking to go into medicine just for the money I recommend that you don't. You will be miserable your entire career.

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Re: Is a doctor's practice one of the safest and most profitable businesses?

Post by daveydoo » Wed Oct 18, 2017 12:14 pm

Derivative wrote:
Wed Oct 18, 2017 11:35 am

1. Coal Mining
:oops: Shoulda gone to coal-mining school.

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Re: Is a doctor's practice one of the safest and most profitable businesses?

Post by Teague » Wed Oct 18, 2017 12:14 pm

I'll assume you don't have a medical degree yet.

If the current state of things changes (AAMC, Congress, other factors) and more medical schools open up, you may find the situation very different by the time you start to practice. Presuming you get into medical school in the first place.

Just ask an attorney if there are enough lawyers already.

If you're looking for a safe and profitable business as your main goal, there are certainly better ways to do that.
Semper Augustus

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Re: Is a doctor's practice one of the safest and most profitable businesses?

Post by daveydoo » Wed Oct 18, 2017 12:19 pm

Derivative wrote:
Wed Oct 18, 2017 11:12 am

Is it possible for a solo practice doctor to ever make less than 200k a year if they are a good/average clinician and do everything right and work average hours?
Gross? For sure! Net? Absolutely! You can even go bankrupt.

Plus, my understanding is that the payor and regulatory landscape is a baffling and ever-evolving nightmare (as you may have seen on the news for the past year).

Also, a true "solo practice" MD would work 24 h a day, 365 days a year so there may be a bit of a lifestyle issue there, too :D .

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Re: Is a doctor's practice one of the safest and most profitable businesses?

Post by daveydoo » Wed Oct 18, 2017 12:29 pm

Derivative wrote:
Wed Oct 18, 2017 11:12 am
I am thinking that if a doctor can see 20+ different patients a day, then the demand is higher than many other industries?
This is a very simplified view. A bus driver can take care of hundreds of customers a day, as can a checker at the supermarket. There will always be a steady stream of business for these careers, but that needn't imply that they're ripe for investment.

I've heard it said that if one goes into medicine to get rich, one will be disappointed. But it is one of the few fields where hard work and altruism can lead to significant financial rewards. But you can't decide between ortho and a pain practice? This sounds like it is being driven by income opportunity alone as they are almost diametrically opposite in their approach. Then again, I guess that's what this forum is all about :D .

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Re: Is a doctor's practice one of the safest and most profitable businesses?

Post by dm200 » Wed Oct 18, 2017 12:30 pm

Derivative wrote:
Wed Oct 18, 2017 11:12 am
Why do doctors make so much money and is running a healthcare practice is much more profitable than many other businesses? Would you guys say running a healthcare business/practice is safer and more profitable than other businesses (e.g. food, real estate, gym, tax/accounting, etc., etc.)?
Do doctors make so much money because insurance companies pay much more for each procedure and because of the constant and high demands of people for healthcare services? I am thinking that if a doctor can see 20+ different patients a day, then the demand is higher than many other industries? Are there many ways for a doctor's practice to fail if a doctor does everything correct and is a good/average clinician? I do not see that many compared to other industries/businesses. What are your thoughts?
So for doctors, high/constant demand (no matter the economic climate) + high payments from insurance companies per visit/procedure + high margin = one of the safest and most profitable businesses? Am I missing anything else here?
Is it possible for a solo practice doctor to ever make less than 200k a year if they are a good/average clinician and do everything right and work average hours?
Not in the medical profession or business, but I would be sure there are many incorrect or misleading things here.

From a patient's point of view, when I was in previous medical insurance and plans, in almost every Physician's office (small practices 1-5 physicians), it was obviious that there were clearly more folks doing administration work than medical. Somebody (either the Physician or designee or associate) MUST run and operate the business aspects of the office/practice. The Physician can be the greatest one in the large area and would do very poorly financially without the business aspects to attract patients (for whom fees can be collected), file and maintain suficient affiliations with insurance companes, medicare, medicaid, etc., promote relationships that bring patients in the door and treat them so they come back. Even something as "simple" as calling, emailing, texting patients to remind them of upcoming appointments can have large financial consequences. These days, my guess is that 10-25% of patients would forget appointments and be "no shows: without such reminders. THAT is a lot of lost revenue.

My guess is also, that there are significant business (as opposed to medical) aspects of getting and maintaining admitting priviliges for hospitals.

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dm200
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Re: Is a doctor's practice one of the safest and most profitable businesses?

Post by dm200 » Wed Oct 18, 2017 12:34 pm

Similarly, an optometrist; in my state, when he trained and was licensed, optometrists were not allowed to dilate eyes. Now, that has changed, and the newer and younger optometrists do it. He would have to spend time and money to get trained and licensed. He chose not to do so, and lives with whatever the impact on his practice is of competing with others.
This was my memory of the simplest way to know whether you saw an Optometrist or Ophthalmologist - dilation or not. For a possible condition being watched (for 30 years no change), I need to see an Ophthalmologist every year or two. Here, Optometrists can dilate pupils - and it has, apparently been that way for a long time.

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Re: Is a doctor's practice one of the safest and most profitable businesses?

Post by NJDMD » Wed Oct 18, 2017 12:53 pm

Derivative wrote:
Wed Oct 18, 2017 11:18 am
awval999 wrote:
Wed Oct 18, 2017 11:16 am
Oh man.

Can't wait for the responses on this.

"So for doctors, high/constant demand (no matter the economic climate) + high payments from insurance companies per visit/procedure + high margin = one of the safest and most profitable businesses? Am I missing anything else here?"

Just for starters, this entire quote is wrong.

Insurance reimbursement dwindling. Margin? Come on. Let's start with extremely high overhead. That's why the majority of private practices are being bought out by health systems.
How is there an extremely high overhead? What about dental practices?
Average overhead of a dental practice is around 60%.

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Re: Is a doctor's practice one of the safest and most profitable businesses?

Post by smitcat » Wed Oct 18, 2017 12:53 pm

Here is a few data points to read if you are half serious about this venture....

https://www.medscape.com/features/slide ... rth#page=1

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Re: Is a doctor's practice one of the safest and most profitable businesses?

Post by Derivative » Wed Oct 18, 2017 12:57 pm

Teague wrote:
Wed Oct 18, 2017 12:14 pm
I'll assume you don't have a medical degree yet.

If the current state of things changes (AAMC, Congress, other factors) and more medical schools open up, you may find the situation very different by the time you start to practice. Presuming you get into medical school in the first place.

Just ask an attorney if there are enough lawyers already.

If you're looking for a safe and profitable business as your main goal, there are certainly better ways to do that.
What business is safer and more profitable than physicians? Dentists and optometrists?

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Re: Is a doctor's practice one of the safest and most profitable businesses?

Post by obgraham » Wed Oct 18, 2017 12:59 pm

I know a lot of docs who are hardly making a go of it these days, and many more who've sold out to hospitals simply so they can take home a paycheck. Now I agree there are plenty of others making a ton.

Medicine is an odd type of business model. In private practice the doc gets paid on a "per service" basis. That gives him/her the ability to ratchet up his earnings simply by doing more "services", i.e. by seeing more patients, working longer hours, and taking less time off.

Unlike the corporate world, I believe there are very few doctors who work a 40 hour week, and take home a pile of money for a 40 year career.

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Re: Is a doctor's practice one of the safest and most profitable businesses?

Post by dm200 » Wed Oct 18, 2017 2:03 pm

obgraham wrote:
Wed Oct 18, 2017 12:59 pm
I know a lot of docs who are hardly making a go of it these days, and many more who've sold out to hospitals simply so they can take home a paycheck. Now I agree there are plenty of others making a ton.
Medicine is an odd type of business model. In private practice the doc gets paid on a "per service" basis. That gives him/her the ability to ratchet up his earnings simply by doing more "services", i.e. by seeing more patients, working longer hours, and taking less time off.
Unlike the corporate world, I believe there are very few doctors who work a 40 hour week, and take home a pile of money for a 40 year career.

Why is that aspect "odd"? Folks who pick tomatoes or apples (as I remember my youth on the farm) get paid more for picking more tomatoes or apples. Folks who install internet systems get paid for installing more -- and so on.

I would be quite sure that those who take home a paycheck must have to, to one degree or another, justify a higher paycheck by doing more billable things.

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Re: Is a doctor's practice one of the safest and most profitable businesses?

Post by goodenyou » Wed Oct 18, 2017 2:51 pm

dm200 wrote:
Wed Oct 18, 2017 2:03 pm
obgraham wrote:
Wed Oct 18, 2017 12:59 pm
I know a lot of docs who are hardly making a go of it these days, and many more who've sold out to hospitals simply so they can take home a paycheck. Now I agree there are plenty of others making a ton.
Medicine is an odd type of business model. In private practice the doc gets paid on a "per service" basis. That gives him/her the ability to ratchet up his earnings simply by doing more "services", i.e. by seeing more patients, working longer hours, and taking less time off.
Unlike the corporate world, I believe there are very few doctors who work a 40 hour week, and take home a pile of money for a 40 year career.

Why is that aspect "odd"? Folks who pick tomatoes or apples (as I remember my youth on the farm) get paid more for picking more tomatoes or apples. Folks who install internet systems get paid for installing more -- and so on.

I would be quite sure that those who take home a paycheck must have to, to one degree or another, justify a higher paycheck by doing more billable things.
We want doctors to work more and get paid the same (or less). After all, don't we all want more for less?
"Ignorance more frequently begets confidence than does knowledge" | "The best years you have left are the ones you have right now"

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Re: Is a doctor's practice one of the safest and most profitable businesses?

Post by MedSaver » Wed Oct 18, 2017 3:01 pm

I think there are some misperceptions about modern medical practice on both sides in this thread.

Yes, being in private practice (PP) tends to be more work for less pay than it used to be, particularly with respect to primary care. However, there are still many groups sharing overhead and call and they are making it work. There are fewer and fewer solo practices because patients want to see their doctor in a timely manner and most docs don't want to be on call every night.

There are almost no doctors who are unemployed. But some are UNDERemployed. And some work hours they dislike or with people they dislike, etc. Most doctors think they make too little but the reality is that "low income" for a doctor is a pre-tax income of around 120k/yr. Most make more than that. A rule of thumb is the doctors with longer training (neurosurgeons) get paid more than those with less training (family/peds/psych). Proceduralists also earn more on avg.

The problem is doctors aren't generally great with money and want the large house, fancy car, etc. They have also been led to believe that if they sacrificed this amount of time they "deserve" these things and they deserve them now. Delayed gratification can only be delayed for so long after all.

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Re: Is a doctor's practice one of the safest and most profitable businesses?

Post by nisiprius » Wed Oct 18, 2017 3:02 pm

Goldenyou says I've got this completely wrong, see below.

Another point, which I can't speak to from personal experience, is that doctors, veterinarians, etc. can and do sell their practices. Indeed, the business model for a sole-proprietorship practice pretty much assumes that you can sell the practice at the end, otherwise it isn't a very good business at all. So if you are curious, try to find out what you can about what doctors say about selling practices.

This gets into real-estate-like risks, if the practice is in an area with a certain social class and income level, and the neighborhood changes before the doctor sells the practice.
Last edited by nisiprius on Wed Oct 18, 2017 7:13 pm, edited 1 time in total.
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Re: Is a doctor's practice one of the safest and most profitable businesses?

Post by staythecourse » Wed Oct 18, 2017 3:11 pm

Apologize for not reading other's comment in case I am repeat.

I'm a solo doc running my own practice in a large metro city and find it pretty easy to make a profit. I think a lot of it has to do with keeping overhead low, am in a procedural field, and work fast.

To answer the question more broadly though it is a bit hard in general as medicine is different since i is so highly regulated. As inflation increases year after year our payments usually are stagnant or decrease each year. That means real returns per encounter less by definition. Unlike, most business models the owner (provider) can NOT just pass on any increased in cost to the consumer (patient). Doctors have been better by either seeing more patients (is and will likely to continue to be a volume business). The unfortunate thing is that is usually at the patients expense as that means seeing 5 patients per hours vs. 4, for example.

I will say though my personal belief is the low hanging fruit is either offer ancillary services and/ or cash based services to augment the revenue stream. Also, overall I seem to be the only one to saying overhead seems to be less then it was just 10 years ago. For example, EMR used to cost 10-100k to start and now there are multiple free, cloud based systems with no monthly service fees. Billing services are having to compete so cost for tht has decreased (mine is 5%). Medical assistant costs are not that much, if any, higher then it was several years ago as each year there are more and more grads.

Now the issues are going forward is the higher overhead that seems to be inevitable to deal/ meet quality metric data AND definite slow decreased reimbursements. With the former as a solo guy I have no problem just saying forget about it and I'll take the penalty. Taking a 5-10% cut due to lack of quality metric reporting is worth not paying consults and the time added to deal with having to report them.

I have seen enough docs running practices to learn very quickly that they are often terrible at running a business and not being cost effective. A more Boglehaeds approach of running a doctor office would help.

Good luck.

p.s. Continue to hope there will be a turn around and despite the pros and cons financially doctors will once again be their own bosses. That is the ONLY way to prioritize the ownership of the patient. The relationship should be doctor and patient and NOT doctor, patient, and corporation/ landlord (hospital).
Last edited by staythecourse on Wed Oct 18, 2017 3:13 pm, edited 1 time in total.
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Re: Is a doctor's practice one of the safest and most profitable businesses?

Post by Wakefield1 » Wed Oct 18, 2017 3:11 pm

Just coincidentally I happen to have on order from Amazon a copy of (M.D.) Peter B. Anderson's book "The Familiar Physician:Saving Your Doctor in the Era of Obamacare"
I understand that it has become rather hard for the stand alone small independent practice of one to a few Medical Doctors to compete with the hospital and large business owned model of employed physicians' shops and that a lot of the small practices have sold out- I hope to learn more-
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Re: Is a doctor's practice one of the safest and most profitable businesses?

Post by IMO » Wed Oct 18, 2017 3:16 pm

For an example on dental doctor's practice:

Here's a cut/paste from dentaleconomics.com:

"The average annual overhead for a dental office (not including the dentist’s salary) is $350,000. The average clinician works 33 hours per week for 48 weeks, which is 1,600 hours per year. By taking the $525,000 average annual revenue and dividing it by 1,600 hours, we get $312 an hour to keep the office operating profitably. In other words, if a dental office can net $312 an hour after all expenses, that office should fall into the $525,000 average yearly revenue bracket."

So if you're not the dentist, you'd still have that significant salary overhead eating into your profit or required necessary annual revenue. I'm not sure if that's profitable if your not the dentist?

Actually the site gives a great deal more information that can make the above more profitable.

Personally, I think dental practices are at a more advantage situation than medical practices because dental insurance is way less complicated than medical billing. Additionally it seems there is more transparency on what the actual cost for a patient to get various procedures done, and procedures are typically more reasonable for someone to charge on a credit card vs. medical charges which are not transparent.

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Re: Is a doctor's practice one of the safest and most profitable businesses?

Post by WanderingDoc » Wed Oct 18, 2017 3:30 pm

EnjoyIt wrote:
Wed Oct 18, 2017 12:12 pm
Physicians have the potential to make a very significant income with the right practice and in the right location. Yes it can be very profitable but the time commitment and overhead costs are extremely high. And yes, a physician will likely always be needed and therefor the profession is very safe unless you are a horrible physician and find yourself loosing your license.

If you are looking to go into medicine just for the money I recommend that you don't. You will be miserable your entire career.
Bingo. I have heard from old timers that radiologists in the 80s and 90s made 7 figures per annum in those years money! And they effectively read only x-rays and barium procedures. (U/S, CT, MRI technology was in its infancy). Thats $2M+ in todays money. Now, you'd be lucky to earn $500K busting your butt all day working 60 hrs. per week.

The days of going into medicine for the money are long over.
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Re: Is a doctor's practice one of the safest and most profitable businesses?

Post by sawhorse » Wed Oct 18, 2017 3:42 pm

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Re: Is a doctor's practice one of the safest and most profitable businesses?

Post by Wakefield1 » Wed Oct 18, 2017 3:46 pm

Is initial reading of Echocardiography and creating a report (for the Cardiologist) usually done by technicians who aren't M.D. ?

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Re: Is a doctor's practice one of the safest and most profitable businesses?

Post by goodenyou » Wed Oct 18, 2017 4:07 pm

nisiprius wrote:
Wed Oct 18, 2017 3:02 pm
Another point, which I can't speak to from personal experience, is that doctors, veterinarians, etc. can and do sell their practices. Indeed, the business model for a sole-proprietorship practice pretty much assumes that you can sell the practice at the end, otherwise it isn't a very good business at all. So if you are curious, try to find out what you can about what doctors say about selling practices.

This gets into real-estate-like risks, if the practice is in an area with a certain social class and income level, and the neighborhood changes before the doctor sells the practice.
This is wrong. You cannot “sell” a practice. It has no value, because there are regulations on the prohibition of selling a practice for any value above hard assets. It is construed as a kick-back and buying referrals. You can sell a practice and get hired for what a doctor in reasonably making in your specialty. There is no good will or multiples of revenue. Most “sell” a practice to get out of the headache of running a practice. Patients then get the customer service similar to the local DMV.
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Re: Is a doctor's practice one of the safest and most profitable businesses?

Post by sawhorse » Wed Oct 18, 2017 4:14 pm

WanderingDoc wrote:
Wed Oct 18, 2017 3:30 pm
EnjoyIt wrote:
Wed Oct 18, 2017 12:12 pm
Physicians have the potential to make a very significant income with the right practice and in the right location. Yes it can be very profitable but the time commitment and overhead costs are extremely high. And yes, a physician will likely always be needed and therefor the profession is very safe unless you are a horrible physician and find yourself loosing your license.

If you are looking to go into medicine just for the money I recommend that you don't. You will be miserable your entire career.
Bingo. I have heard from old timers that radiologists in the 80s and 90s made 7 figures per annum in those years money! And they effectively read only x-rays and barium procedures. (U/S, CT, MRI technology was in its infancy). Thats $2M+ in todays money. Now, you'd be lucky to earn $500K busting your butt all day working 60 hrs. per week.

The days of going into medicine for the money are long over.
Earning $500k busting your butt all day working 60 hours per week is a hell of a lot of money. Primary care and psychiatry make much much less.

Most doctors make a lot of money. The rest make good money. They have a lot of student debt however, and running a private practice is difficult as you're essentially running a small business but with more administrative tasks. As a result more doctors are ditching private practice.

For comparison, a 7th year cancer researcher (roughly 13 years out of college) with a biochemistry PhD, who got equally good grades in college in the same classes as doctors, gets $54k at one of the nation's leading cancer research centers albeit usually with little or no student debt and slightly better hours.

A Nobel Prize winner in chemistry whose discoveries are the foundation of a lot of modern medicine made $218k last year at UNC as a professor of biochemistry. An early career hospitalist can make the same amount working an average of 40-45 hours a week.
MedSaver wrote:
Wed Oct 18, 2017 3:01 pm
Most doctors think they make too little but the reality is that "low income" for a doctor is a pre-tax income of around 120k/yr. Most make more than that. A rule of thumb is the doctors with longer training (neurosurgeons) get paid more than those with less training (family/peds/psych). Proceduralists also earn more on avg.

The problem is doctors aren't generally great with money and want the large house, fancy car, etc. They have also been led to believe that if they sacrificed this amount of time they "deserve" these things and they deserve them now. Delayed gratification can only be delayed for so long after all.
Yes yes yes!

There are some exceptions to the more training = more money rule of thumb. Dermatologists are among the highest paid yet work among the fewest hours and have only 3-4 years of post graduate training. Another high paying specialty with a relatively short residency is anesthesia. General surgeons don't make as much relative to those specialties despite a longer and very grueling residency and long hours.
Last edited by sawhorse on Wed Oct 18, 2017 4:36 pm, edited 3 times in total.

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Re: Is a doctor's practice one of the safest and most profitable businesses?

Post by KyleAAA » Wed Oct 18, 2017 4:19 pm

I wouldn't think so. I would think software would be among the most profitable generic lines of business.

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Re: Is a doctor's practice one of the safest and most profitable businesses?

Post by alex_686 » Wed Oct 18, 2017 4:23 pm

Derivative wrote:
Wed Oct 18, 2017 11:35 am
9. Veterinarian Services
This makes me suspect that a Doctor's practice is not the most successful type of businesses. IIRC, when that list was published, veterinarian clinics had to be owned by a veterinarian. A restricted trade. If not a monopoly then a oligopoly. I know that veterinarians can manipulate their practice and balance sheet so their profits are skewed away from personal income - which has a high tax rate - to long term capital gains - which has a lower tax rate. So is it the business or the professional that is generating the high income?

I am not sure if we can answer that question but I bet it skews the results. I suspect that 7 out of the 10 business also skew that way. How many outside the profession can invest in these business?

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Re: Is a doctor's practice one of the safest and most profitable businesses?

Post by Derivative » Wed Oct 18, 2017 4:24 pm

goodenyou wrote:
Wed Oct 18, 2017 4:07 pm
nisiprius wrote:
Wed Oct 18, 2017 3:02 pm
Another point, which I can't speak to from personal experience, is that doctors, veterinarians, etc. can and do sell their practices. Indeed, the business model for a sole-proprietorship practice pretty much assumes that you can sell the practice at the end, otherwise it isn't a very good business at all. So if you are curious, try to find out what you can about what doctors say about selling practices.

This gets into real-estate-like risks, if the practice is in an area with a certain social class and income level, and the neighborhood changes before the doctor sells the practice.
This is wrong. You cannot “sell” a practice. It has no value, because there are regulations on the prohibition of selling a practice for any value above hard assets. It is construed as a kick-back and buying referrals. You can sell a practice and get hired for what a doctor in reasonably making in your specialty. There is no good will or multiples of revenue. Most “sell” a practice to get out of the headache of running a practice. Patients then get the customer service similar to the local DMV.
I am looking not to make a sole-proprietorship business but actually start a ortho/pain management company with multiple doctors. I am sure you can sell that.

I am confused as to why you cannot sell a sole-proprietorship business as a doctor similar to that of a dentist? Where is the law that forbids this?

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Re: Is a doctor's practice one of the safest and most profitable businesses?

Post by Jazztonight » Wed Oct 18, 2017 4:48 pm

dm200 wrote:
Wed Oct 18, 2017 12:34 pm
Similarly, an optometrist; in my state, when he trained and was licensed, optometrists were not allowed to dilate eyes. Now, that has changed, and the newer and younger optometrists do it. He would have to spend time and money to get trained and licensed. He chose not to do so, and lives with whatever the impact on his practice is of competing with others.
This was my memory of the simplest way to know whether you saw an Optometrist or Ophthalmologist - dilation or not. For a possible condition being watched (for 30 years no change), I need to see an Ophthalmologist every year or two. Here, Optometrists can dilate pupils - and it has, apparently been that way for a long time.
Retired optometrist here.

I've known many, many optometrists over a long career, and very few of them would be considered "wealthy." They work hard for their money, now harder than ever before. Competition from chains (I worked for a small vision care chain for 30 years) and low-cost optical places (including on-line retailers operating from China) have made it more difficult for "independent" optometrists to make a lot of money. In fact, on this site alone I constantly see threads asking, "Where I can I get the cheapest glasses?" I rarely see a thread that asks, "Where can I get the best vision care" or "the best quality glasses?"

In truth, in my own lifetime I've witnessed the commoditization of the eyecare field. The "Golden Age" of optometry was during the post WW2 period, and lasted maybe 30 years. When I started in optometry, it was the rare ophthalmologist who had an "optical shoppe" adjacent to the exam rooms. Now it is the rule rather than the exception--procedures like cataract surgery that used to be "cash cows" changed the face of ophthalmology. (Anyone remember the rush to get into the Lasik surgery field?)

I myself had to do what was mentioned in above--go back to school for hundreds of hours of continuing education and take the licensing exams so that I could compete in my own field--first so I could dilate patients and later so I could treat ocular and certain systemic diseases; otherwise I would have quickly become a dinosaur. The scope of optometry and level of care is very high and wide today, with new grads coming out of universities with tremendous knowledge and skills--and tremendous debt!

The cost of starting up a modern optometry office is immense! A lay person cannot imagine the technology involved to just have the basics. Insurance costs are higher than ever because of that wider scope of practice and elevated treatment level.

(For those of you who aren't aware, the years of education of an optometrist are similar to that of a dentist. More and more new grads are opting for residencies in sub-specialties at VA and other hospitals. There's always been mandatory continuing education for license renewal.)

The idea that someone would go into optometry today because it's a lucrative field is laughable. I would say that many students go into health care fields, including optometry, these days because they want to make a difference, and like the idea of patient care and working with the public. While I myself did not think about it that way over 40 years ago, it's what kept me in the field. I managed to pay for my kid's college educations, survive my own divorce :annoyed , and live a very middle-class life.

I still do.
"What does not destroy me, makes me stronger." Nietzsche

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Re: Is a doctor's practice one of the safest and most profitable businesses?

Post by dm200 » Wed Oct 18, 2017 5:31 pm

It seems very common that Optometrists, today, often work in or with Ophthalmology practices. With a former Ophthalmologist, at the same appointment, the Optometrist would do the refractions (to see if my glasses needed updating) and the Ophthalmologist would do the pupil dilation and look at the eye issue being monitored.

With my current plan/provider, if requested/desired (same copay) the Optometrist can also dilate pupils and do an every other year to look at the eye issue - and on alternate years, I see the Ophthalmologist for the pupil dilation and exam.

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Re: Is a doctor's practice one of the safest and most profitable businesses?

Post by cantos » Wed Oct 18, 2017 6:07 pm

We can exclude from "safest" any business that relies on one income producer and makes $0 when the income producer is not around (sickness, death, vacation, etc.).

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Re: Is a doctor's practice one of the safest and most profitable businesses?

Post by jayk238 » Wed Oct 18, 2017 6:09 pm

I wish I responded sooner so more people would read this but a lot of misinformation here:

I am a doctor and I see a lot of comment I disagree with including those from doctors
1. Doctors income- the idea that they make 'enough' or ' a lot' is an absurd statement. Taken alone everyone in America makes 'too much' or 'enough.' While this sounds callous compare us to the billions in poverty in Asia India Africa etc. We are truly lucky in many ways even the poorest considering the safety nets we have (for the most part).
Next, doctors are in a cognitive field that is unique on its own. It is different from dentists, from optometrists, and from engineers. Our work can lead to a patient dying pretty rapidly in fact, or a missed diagnosis leads to earlier death later on. Cognitive function only is as good as its user. Pay us little, stress us more and chances are our ability to perform well declines.
2. This idea of delayed gratification and 'I deserve it' so I will spend a lot on things is not accurate. Doctors do not go about life thinking I want to buy this this and this because Im rich now. No- its because we are conditioned as a group to hate our existence in a relatively short time. Residency is first and foremost one of the most challenging experiences you will encounter. I don't care what google engineer can do with his MIT degree or a dentist giving braces or an optometrist learning how to look at eyes. Standing in front of apatient and deciding whether to intubate on my own in the middle of the night because his sats are dropping -but wait! they dropped yesterday and he didnt need it- but now he's declining more because his fluid status has declined- is one of the most stressful and scary moments I have experienced. Doctors spend money on things because they feel they have not been appreciated. No one gives me a pat on the back, no recognition from the intubated and unconscious patient no satisfaction from the family not present. Only that I get yelled at when small mistakes happen like not getting their meals on time. We buy things because we feel like after all this hard work we are hardly appreciated except for the dollars we receive and we spend it so we can feel like there is some meaning. In effect we trade our time, or life (decade of schooling and training) and our existence for money. I suspect that doctors would be happier with less money if we were given more respect, more time off, and more recognition. None of which happens in a country when NPs, PAs, CRNAs, government and everyone else sees us as money grubbing bad people
3. Finally, medicine is not lucrative. It is only time when machine learning takes over our practices, [OT comment removed by admin LadyGeek]. Is medicine the only field where you can have both cheapness and great products (outcomes) ? Because cheap airplanes and cheap cars (Im not referring to Hondas but rather companies cutting corners- Takata) do not lead to better quality only more accidents.

And I leave you with this.

The outcomes of prostate cancer in the US for survivial in 5 years is 95%. In UK? 49%. Nearly 50% of men will have prostate cancer
The outcomes for patients with an Acute MI is 80%+ in the US depending on rural vs urban center- in the UK? < 60%
There is more data like this but its never EVER presented by NYTimes and others because this data is contradictory to their narrative for a single payer system.

End rant. Yes I know I ranted.

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Re: Is a doctor's practice one of the safest and most profitable businesses?

Post by climber2020 » Wed Oct 18, 2017 6:41 pm

nisiprius wrote:
Wed Oct 18, 2017 3:02 pm
Another point, which I can't speak to from personal experience, is that doctors, veterinarians, etc. can and do sell their practices. Indeed, the business model for a sole-proprietorship practice pretty much assumes that you can sell the practice at the end, otherwise it isn't a very good business at all. So if you are curious, try to find out what you can about what doctors say about selling practices.

This gets into real-estate-like risks, if the practice is in an area with a certain social class and income level, and the neighborhood changes before the doctor sells the practice.
This is a very common problem in current times. The doctors who are now in their 60s and 70s who began practicing medicine at a time when medical practices could be sold for a lot of money are facing a situation where the overall value of the business has declined considerably. There are many physicians in my area that I personally know who have been trying to sell their practices for years - in some cases more than a decade - with no luck. I've read in the not too distant past that some family practice physicians can't even give their practices away for free.

The older doc thinks his practice is worth 2 million bucks. That's what it would [allegedly] have sold for back in 1985. Today it's worth maybe $200,000 at the most if you actually do a proper practice valuation. You would think that practicing medicine for 30+ years (including a time period when doctors were paid a lot more) by itself would provide enough of a nest egg for a luxurious retirement even without taking into account the value of the practice. But for some reason, these guys all seem to continue working instead of accepting a realistic offer and enjoying life on a beach somewhere. I don't understand it at all.

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Re: Is a doctor's practice one of the safest and most profitable businesses?

Post by Jazztonight » Wed Oct 18, 2017 6:43 pm

jayk238 wrote:
Wed Oct 18, 2017 6:09 pm
...Next, doctors are in a cognitive field that is unique on its own. It is different from dentists, from optometrists, and from engineers. Our work can lead to a patient dying pretty rapidly in fact, or a missed diagnosis leads to earlier death later on...

...I don't care what a google engineer can do with his MIT degree or a dentist giving braces or an optometrist learning how to look at eyes...
Well, forgive me, doctor, but you brought it up.

I suppose that my examining the eyes of 40,000 patients during my career (not looking "at" but "in") and seeing tumors, hemorrhages, hypertensive and diabetic retinopathy, detached retinas, etc. didn't lead me and every other licensed optometrist in the US to want to know how to diagnose to avoid an earlier death.

I've talked to dentist friends about their own roles in diagnosing all kinds of tumors as well as systemic diseases.

I know we're off the subject here, but the days of physicians as God is well past. I respect the work you do and hope you will do the same.
"What does not destroy me, makes me stronger." Nietzsche

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Re: Is a doctor's practice one of the safest and most profitable businesses?

Post by mac808 » Wed Oct 18, 2017 7:09 pm

Business is based on supply and demand. There's effectively unlimited demand, from insured patients, for the majority of medical services. Now if your unit economics are terrible, unlimited demand doesn't help you; you'll still go broke. But if you can get the unit economics right, then you can make a LOT of money. That's what I've seen from my own investments in health care, including in physician practices. Physicians also benefit from good job security and flexibility, relative to other white collar professionals. There is relatively less age discrimination in medicine, and they can work 20, 40, or 80 hours a week, at a decent hourly rate ($150/hour and up, depending on specialty).
Last edited by mac808 on Wed Oct 18, 2017 7:11 pm, edited 1 time in total.

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Re: Is a doctor's practice one of the safest and most profitable businesses?

Post by nisiprius » Wed Oct 18, 2017 7:09 pm

goodenyou wrote:
Wed Oct 18, 2017 4:07 pm
nisiprius wrote:
Wed Oct 18, 2017 3:02 pm
Another point, which I can't speak to from personal experience, is that doctors, veterinarians, etc. can and do sell their practices. Indeed, the business model for a sole-proprietorship practice pretty much assumes that you can sell the practice at the end, otherwise it isn't a very good business at all. So if you are curious, try to find out what you can about what doctors say about selling practices.

This gets into real-estate-like risks, if the practice is in an area with a certain social class and income level, and the neighborhood changes before the doctor sells the practice.
This is wrong. You cannot “sell” a practice. It has no value, because there are regulations on the prohibition of selling a practice for any value above hard assets. It is construed as a kick-back and buying referrals. You can sell a practice and get hired for what a doctor in reasonably making in your specialty. There is no good will or multiples of revenue. Most “sell” a practice to get out of the headache of running a practice. Patients then get the customer service similar to the local DMV.
I stand corrected and will note your posting in my previous posting. I'm a little confused at the moment because climber2020 thinks what I said wasn't crazy...
Last edited by nisiprius on Wed Oct 18, 2017 7:11 pm, edited 1 time in total.
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