This is great. I mean, this is exactly why we're putting this together. And I know that a lot more people will benefit from this talk and will hear about it. So we'll jump into it. So yeah, rumors and lies about private practice. I think it came right out of what we just heard. I came out of UC San Diego, which is obviously a pretty academic training program. And I was fortunate enough to have met a lot of attendings or, you know, private practice surgeons outside of the university who showed me a side of orthopedics and hand surgery that I was never exposed to in my training program. And even my attendings, who, out of, you know, their best interest, were trying to guide me and give me information about the world out there beyond training, simply gave me wrong information. The things I heard during residency were just flat-out lies. Not intentional, but they just didn't know. And one of the things that I've really enjoyed doing since I've been in private practice and I love private practice is educating those residents and fellows to say, hey, there's another world out there, and you might not be getting the best information. So these talks, I'm really excited. I haven't heard any of them other than mine. So we're going to start with David Ratliff, who then has to go to another talk. That's going to be The Truth Depends on Where You Stand, discussing some geographic differences in practice. And he has a very interesting practice I'm excited to hear more about. Greg Bird is going to talk about fake news about running a business, as it relates to case mix and vacation as well. I'll talk a little bit about salary, buy-in, benefits, pension, and overhead. And then Brent Bamberger is going to bring it all together with, you know, how to get answers when you're interviewing practices. So we'll get started. So, I got involved with this with last year talking to Orin at the Business of Hand Surgery Committee about just getting to know each other a little bit and finding, I work in New Jersey and Orin's in California, and just finding out, you know, similarities and some of the interesting differences between the way the market is in each of our practices. And I find that super interesting and sort of exploring that. So are there differences and do we care? So after fellowship, I was in Buffalo in a private practice in a pretty well-defined market. Everything was very stable. I ended up moving to New Jersey, which is a lot more variation and a lot more volatile. So, you know, with those differences, it is useful to know what's happening in other parts of the country and what's going on. And so when Orin talked to me about looking into some of these regional differences, as I said, I was excited about learning about it. However, the more I got into it, the more I realized that there's not a lot of hard, accurate data on things that I thought there would be, and that could be because of a lot of it can be survey-related and people's unwillingness to either do the surveys or answer them, proprietary info, and things like out-of-network. There's very fluid nature of contracts with people going into an in-network and then out-of-network. So in general, where are the hand surgeons? AOS 2018 census showed highest density of orthopedic surgeons, Montana, Vermont, Wyoming, Alaska, South Dakota, and then about half as much density in Mississippi, Texas, Nevada, Arkansas, Oklahoma. But in general, where are the hand surgeons? So there's an interesting study out of the United Kingdom where they tried to determine what's the optimal density of hand surgeons, and doing the best they could with their methodology, they came to the answer that one hand surgeon per 125,000 population is correct. So that's all we have to go on, so you can extrapolate that to the U.S. and argue about the benefits of that, but in general, if you do examine that, this pretty good study here from Barron in 2018 showed that there was about 16 states with less than one per 125,000, 511 right out there, 24 with more, and then D.C. was the outlier with well over two. So at Washington, D.C., 2.47 per 125,000 population, and again, it gets into the weeds of catchment areas and such, but again, this is sort of just examining where the hand surgeons are, and you can see there's a really big difference in the density of hand surgeons based on their review of the hand society. In terms of call, 10 years ago, talking to some of my colleagues and friends, there really wasn't any good information on what hand surgeons were doing for call, but over the last 10 years, there's been, the ASSH did a good survey, which was very informative, but didn't include any sort of regional differences, which is kind of what we're looking at here, and then this study from last year did include that. So looking at call in a survey that I think 600 surgeons ended up being included from the ASSH, call responsibilities were pretty comparable regardless of the region, but the satisfaction was highest in the Midwest and lower satisfaction on the East Coast, and areas with lowest satisfaction tended to provide no compensation for call. So this is from that paper, and if you look, median pay, all these red are the zero median pay for call, and everywhere west of the Mississippi is greater than zero for median pay, and this is, in general, lower satisfaction, and this has sort of been my general experience. When I was in New York, there was no pay for hand call, but there was pay for ortho call, and then in New Jersey, it's been similar. However, over the last year, as some of the out-of-network stuff has gone away, which we can talk about in a little bit, the pay per day has started. So as surgeons have taken less call, the hospitals have come back to us and offered something. You can argue about whether it's worth it to you, but one hospital offered us $250 per day, plus $250 every time you go in, another one offered us pay per click. Every time you hear from the ER, whether it's a text or a phone call, you get to bill them $250, and that's a little bit of a different model from, let's say, I'm talking to some of my colleagues, West Coast, it can be $1,500, $2,000 per call, but again, the wide variety in geographic approach to call. So with out-of-network, I mention that because I am in an out-of-network private practice, which is a whole different animal to academics and even to in-network private practice. So a lot of the data on this comes from academic centers that are looking to prove what horrible people we are, but in general, out-of-network is a pretty common thing, and looking at, these are not out-of-network hand surgeons. These are ED patients who went to the ER and had a surprise bill from anyone, and that could be for DME or ER doc or anesthesia or anything. So significant differences in Alaska, California, Maryland, and then much lower, Illinois, North Dakota, Idaho. So in general, how many out-of-network hand surgeons are there? And again, there's no real good data. This paper from Stanford last year wasn't really looking at the percentage of out-of-network hand surgeons. They excluded them, but based on their 60 million covered persons representing 18% of the United States population, they excluded anything that had an out-of-network hand surgeon, which was 4% of the episode. So that's your kind of best assessment that I could find for how many hand surgeons in the U.S. are out-of-network. And so do these relate to each other? As I said, anecdotally, as it gets harder to be paid for out-of-network, hospitals have had much greater difficulty in my region filling the call schedule, and as plastic surgeons and orthopedic surgeons have backed off call, the pay-for-call is a response to that. So with limited actual out-of-network data, what are people saying? Well, again, in the Northeast, it's very pocket-specific. In northern New Jersey, out-of-network is extremely common, and it's sort of, if everybody's out-of-network, it's a lot easier. But if you're the only one there, it makes it a little harder. Mid-Atlantic, some of my colleagues have told me that payers have more leverage, whereas in the Pacific, more regions where hospitals are controlling the market. Out-of-network, some areas outside of the cities in the South, and one of my colleagues in Texas was talking about some practices exploring Medicare opt-out, but remaining in with commercial payers. So again, as much as I would love to give you lots of specifics, it doesn't seem to exist. So surgery centers is something that Oren and I had talked about, which is, again, I think super interesting in the regional differences for the ways that surgery centers are managed and paid for. So again, lots of different models for surgery centers, and it does tend to be a black box with minimal good data. How many hand surgeons are owners at surgery centers? How much did they pay for their shares? You know, it really doesn't exist. And the most interesting thing is that in talking to my colleagues, again, sort of surveying them for this talk, a lot of people think, okay, well, yes, my shares were three times the beta because that's what it costs. But in actuality, Stark law, anti-kickback statutes state that everything has to be at fair market value. What's fair market value? Well, that's completely arbitrary. What's fair in your market might not be fair in another market. So again, you can get shares in mid-Atlantic at one of the people I talked to for $6,000. One of my friends in L.A. said it's a quarter of a million dollars just to get his foot in the door. So again, major regional differences, but in terms of really mapping it out, it does get hard. Traditional buy-in, three to five times a beta, but again, that's not the laws. That tends to be a common finding where you can end up spending $150,000, $200,000. But again, in my area, they're offering B shares where you don't own a share per se. If the surgery center sells, you don't get the profits from the sale. But if you give them $10,000 or $15,000, they'll start giving you $2,500 to $10,000 per month right out of the bat for the B shares for these profitable centers. And that's what fair market value is there. And so again, it's interesting, the differences in trying to sort out what's fair market value where you are. So again, regional trends, as I discussed. So in preparation for this, I talked to maybe about 20 of my colleagues around the country, just sort of surveying them on each of these topics. And I love being in private practice, and we all tend to be a little bit exaggerated. And some of them said, one of my colleagues from the tri-state area said, the sky is falling. My friend in LA said, it's post-apocalyptic. And one of my friends in the Pacific Northwest said, dire financial situation. But we all love the fight, and we all love building something. I started my practice two years ago, and it's really been very rewarding. So again, complaining about the fight is part of it, but we all do enjoy it. One of the trends that I've seen is everybody around the country seems to be kind of mentioning the private equity pressure. And that's a whole other ICL. But it is out there, and people are aware. And a lot of people talking about buyer's remorse from their colleagues or those people that have done private equity. And in the West, it does seem to be more interesting where a lot more docs are making more from their ancillaries than they are from their surgery. And again, it did seem that all in all, people are happy and enjoying the struggle. But we're all in private practice and enjoying the fight. Thank you. That was absolutely perfect. Just because I know you have to go, if there are any questions, we can just take them now for David. But I would just say, I mean, that talk is exactly what I needed to hear and never heard in training. Because obviously, you only have one view in training, and often your attendings only have that view, too. And so, you know, you don't even need to get into the details. But just to know that there are places in this country where some people are in solo practice, or everyone's in employed practice, or call pays, or call doesn't pay, is just kind of reassuring and empowering, because I remember going out into the job world. I met solo practitioners, and my head was spinning, because I was told that's impossible. And yet, here was someone in front of me telling me that it's extremely possible, and not just that, but rewarding. So I do have to run to another ICL, so sorry about that. But if anybody has any personal questions for me, you can, at the end, you guys can give them my phone number. All right, well, good morning. It's a little later than it was when we first started, but still pretty early for a Saturday. Thanks for having me. All right, so talking about fake news, about running a business, kind of private practice. So disclosures, I'm in private practice, so obviously a little biased. But I think it's important to kind of step back and just look at life as a surgeon, and like it or not, you are a leader. And you have to lead your clinic, you have to lead the operating room, and assume that. And I think a lot of times, people that have gone into more employed positions are like, I don't want to be a leader, I just want to show up and go to work. And the reality is, is that the path that we've all chosen, really not the best option. And so again, only you can really control your own destiny. And I think part of that's because nobody really knows what you want more than you do. And you really have to help drive that. And that's one of, I think, the benefits of private practice, is you can do that. Whereas oftentimes, in the more employed models, you really don't have that level of control. And I think one thing, and this is just, I think, in terms of dealing with people, is that perfection is expected of us, but not of those around you. And so a lot of times I've seen, and I'm a managing partner for our group, somebody's going off on somebody because on their 60 patient schedule, there was one that was incorrect. And I think part of this, and this gets into it, is what are the expectations in outlining that? And realistically, probably a 5% to 10% error rate in a schedule is still pretty good. I mean, that's A's in school, but that's 1 in 20 to 1 in 10. And so I think you sometimes have to temper that and kind of back off a little bit. And it's going to say, OK, what's realistic? And I think the other thing, and we'll get into this a little bit more, but money doesn't grow on trees. And if you're going to have somebody else solve your problems, there's a cost for that. And so you could drive that error rate in scheduling down to 1% or 2%, but the amount of money you're going to have to spend in staffing to scrub that schedule probably isn't worth it. So money, maybe I'm, I don't know, does anybody know this plant or tree on the right? Do you guys know what that's called? It's a money tree. I didn't know those existed. Unfortunately, this one doesn't print the kind of money you can actually spend. It's, I guess, a common house gift that confers luck and well-being. So having never received one, I don't know what that says about my friends. But anyways, I thought that was kind of interesting. So I think one of the rumors, lies, fake news is that private practice is all about the money. And it's not. I think it's about control and about control of your life. Now, it is somewhat about the money, and I can't be centered in saying that it's not. And I think I can remember back, you know, I've been in practice for 11 years now when I was just starting. And people would stand up there, you know, 10, 15 years in and say it's not about the money, it's about patient care. And I was like, yeah, you know, that's nice to say, but I'm in debt, been working for 10 years. I got buddies that have been out working and, you know, I'm not getting the benefits of compounding interest. So it is about the money. But, you know, as you're in it for longer, and I think now that I've gained some perspective, it doesn't necessarily make you happy. And when you look at quality of life, once you kind of have the roof over your head and can drive to and from work, it's the more you make doesn't necessarily make it happier. And I think that when you're in it, but what does is the ability to control your environment, your schedule. And I think that's the real benefit of private practice. And I'd be interested to hear from some of the audience, but that's too many people end up leaving is because they get frustrated by that. So and I think that it's not so much about the money, but it's about feeling valued and compensated for your work. And I think one of the, you know, the kind of the moral insult in some of these things is and burnout. One of the phrase I've also heard is, is it's knowing what's the right path, but the inability to do it. Right. And in private practice, you can take those barriers down. You can take those walls down and really help to make that happen in your practice. I think another part of this, and, you know, David talked a little bit earlier, I know Orin's going to do more, but really ancillary is some passive income. You know, like it or not, we're all blue collar workers. I mean, if you don't have a scalpel in your hand, you're not sitting in a chair, seeing a patient, you're not making money. And that can be difficult sometimes. And in private practice, we'll talk later with vacations. I mean, you know, the cost of the vacation is is really minimal. It's that loss of revenue that's expensive. And, you know, when you're sometimes generating five or ten thousand dollars a day, I mean, you know, that's that's a huge hit if you take five, ten days off. And I think that's one of the things that people don't always think about. But again, you can make that. So ancillaries provide this opportunity for passive income so that when you're not there, your partners that are still working the rent on the building, you can still actually have some money and help to kind of move into that passive income. So we're not quite as much blue collar workers. And again, I talked about this earlier, but, you know, you can do it yourself or you can pay someone to do it. And I think that's the other part of this is is that you start looking at this kind of risk benefit analysis and say, OK, how much does this cost to pay an administrator to do it versus if I get involved and do it myself? And I think that's one of the real benefits of private practice is you have that ability. So private practice, it's not for everybody. And that's OK. You know, and we all have different desires, different paths, different forces. And I think sometimes you in private practice sit up here and say this is the best path. Everybody should do it is what you got to do. And it's not. And I think that's the first part is. And that's why I think a lot of you are here is to try to figure out, you know, is this what I want? And I think it's it's hard because even in private practice, there's a lot of different types of groups. There's a lot of different models. Right. There's the solo person, the two man, two person group. There's, you know, more of a medium musculoskeletal and there's large multispecialty. And they all have some some benefits and some disadvantages. You know, when you're hand upper extremity only, the call pool stuff's not really an issue. Case mix isn't an issue. And you can work together. But you do have some limitations in terms of the power you have for leveraging contracts and negotiations as you get larger. And you have to diversify. You know, you sometimes can have some benefits and economies of scale. But now you've got issues of, you know, the joints guy saying, well, you know, my case makes ten, 15 grand. The surgery center in your carpal tunnel makes a couple of hundred. So I think I should get more. Right. So as you seem so much more diversification, it can become more problematic. And, you know, really, there is no perfect practice. And it's really what works best for you. And that kind of gets this whole thing of kind of leading on of, you know, if you're not at the table, you're on the menu. And so I think private practice helps to make sure that you're at the table and not on the menu. And a lot of hospitals will not always include physicians in those decisions. And if they do, sometimes they'll have these kind of, you know, fake committees that will be there like, oh, we want to listen to your input. But I was involved in one of our hospitals on implants. And there was, you know, six of us. We spent for, you know, a couple of hours for a couple of months, did a vote. They didn't. We're going to redo the vote because they didn't get the answer they wanted. Right. So a lot of times you have these kind of facades of involvement, but it's really not the case. So what are some of those issues of private practice? Well, there's some income variability. Right. I was talking with Steve Shin and, you know, he was currently in Job and went to Cedars-Sinai. And he said one of the things he likes is every two weeks I get the same check. Right. So in private practice, you know, after the overhead gets paid, then you get paid. And so sometimes everything is great. But if it's a month where you get, you know, three paychecks instead of two, it's going to be less. And so I think for some people they can handle that. But other people, that's just the more they can handle. You know, in the current model, fee for service, if you're fast, you can make more. Right. And if you're a little slower, probably a little less. But as things change and as, you know, we've talked a little about, you know, ACOs, value based. That might not be the case. And again, in private practice, you can accommodate and adjust if you're employed, probably not as much. And I think this is another thing that I've kind of learned over the past decade is. And it's hard for us, but I think you really have to learn to lean into your strengths and not into your weaknesses. And I think that. All through our training, our upbringing, you're really taught if you're weak in an area, you've got to focus on that and improve that and strengthen that. And I think it's important to figure out where your strengths are and lean into those and let some things go. And I've had some partners that, you know, are generalists and they were doing hips and knees and everything else. And and they one of the guys just focuses on the knee now. And it was it was scary for him, but he loves it. He's happy. He's great at it. His practice is more thriving than ever before. And so I think that's one of the other key things. And again, in private practice, you have that ability to really modify and adjust that. Whereas if you're in a larger system, you do not. So a lot of private practice is control. So, you know, these are things that you don't necessarily think about. But, you know, if I want to take the morning off, I can do that. I don't have to ask an administrator for PTO. If I want to have a certain number of patients or modify the payer mix, I can I can change that around and move those things. Whereas, again, a lot of other situations, you're not afforded those benefits and the case mix. So I think a lot of people will complain about getting dumped on. Well, the reality is, is that if you're working, you're making money and you sometimes have to embrace the suck. And at the end of the day, we're about helping people, right? This is about patient care. And so I don't really view those things as getting dumped. I view it as caring for the community. And I think a lot of that is a mindset, which is important. And we talk about vacations. Right. So you take more, you make less. You don't take as many. You make more. And again, you are your own boss. And that's where we've got this this captain is because you're the captain of your ship. And that's, I think, a unique thing. That's a lot of the reasons why I went into medicine was because I wanted to be able to be in control. And I think it's an important thing to recognize and embrace. And, you know, again, it's not that bad. And you can have people to help you if you feel as though you don't have those abilities or that qualities. But I think we all do. So, again, kind of on that control thing. So most private practice, there's a partnership and there's kind of a courting phase, which can be anywhere from, you know, one to three or four years. And then you get married. And I think it's important to look at it like that. And a lot of people want to accelerate that partnership track and have it be six months or a year and get frustrated if they hear it's going differently. But again, I think any time you're in a marriage or a relationship, you really have to look at it from both sides and appreciate on the other side of that. But part of the reason there is this courting phase is, again, it's a marriage and you don't want a bad marriage. You don't want to be married to somebody that is not a good fit because it's expensive and it's difficult and it's a problem. And so, you know, the main goal of this is to prevent you from going to the happy couple with the hearts to the turn the back, arms crossed, not talking, sleeping in separate bedrooms. And just like civil marriage, business partnerships are expensive to dissolve as well. And it's not it's expensive for both parties. And I think this is something else which is sometimes difficult to appreciate. But, you know, as a surgeon, there's a referral practice, there's a referral network and there's the revenue generated. And on average, I would say that if you change practices, you probably cost us about a million dollars. And that seems like a large number. But when you start looking at the ramp down phase associated leaving a practice, the ramping up phase of starting a new one, the intrinsic referral network that's built in, the trust in that community, as well as the delayed and deferred buy-in to a private practice in those ancillaries, a million could honestly be an underestimate of what that expense is. So it's something which you want to think pretty carefully and long and hard about and make sure that it's a good decision. And again, it's scary right now when you're looking at a new practice, but it's important to think about. I think one of the other things that you hear from one of my actual mentors was that once you're a partner, the deal is less likely to change. Oftentimes, you know, the chairman changes, a new CEO, hospital leadership changes, and what you came on with is not what it stays as. And so I think that's another thing you've got to recognize is once you're a partner, again, it's less likely to change. You've got more control. But again, you've always got options to leave. But again, it's going to be painful and expensive. Hiring and firing, you want to be involved. You spend a lot of time with your staff, right? Sometimes more than with your spouses and your kids. Hopefully not, but sometimes that's the case. And so are you a captain of the passenger? And I think one of the key things here is to just to set consistent expectations, communicate, and be curious and inquisitive when problems arise. My staff hates it, and they know whenever I say so. I'm confused because that implies that something's gone wrong, and I'm not accusing anybody. I'm not saying you screwed up. I'm just saying explain to me what I'm seeing here and how this works. And I found it to be pretty effective in resolving the problem, but yet not being too accusatory and creating too many defensive posturing. But that said, firing should not be a surprise, right? If you have those expectations and you're doing this constant feedback, a good scenario is someone's apologizing, they couldn't meet those expectations, and it's kind of like, all right, this isn't working. And, you know, again, it can be very rewarding to work and build with your staff. And I've had the joy of having my first MA now runs our clinic. My scribe is the executive assistant to our COO. One of my initial scribes is now an MA that runs my clinic. And so you can help to build and build leadership in these people and have them around you and grow in the organization. And so that can be very rewarding as well. So again, marketing and branding. So it takes a lot of time to take your clinic, go out, meet with providers. And if you're in private practice, you reap those rewards, those benefits, you can control the message and increase your value. If it's for a hospital system or for an academic institution, you're not and you're plug and play, you're a cog in the wheel. And so I think that's another thing you have to think about is, you know, you have a value and don't underestimate that value. And I kind of view private practices as defending the freedom and the income of physicians. You know, if we all go the way of private equity, employed models, that's the reason that people can make what they do and live the life that they have is because there is an alternative and there is leverage. And so if that goes away, we all suffer. And so I think it's just an important thing to think about. Thank you. I love those kinds of talks. I felt like that was more philosophy than anything else, which is fantastic. All right, so mine will be a little bit different. It's a little bit more kind of nuts and bolts and things I wish I'd heard when I was a resident and a fellow. And the other thing I'll say is I have a number of talks on HandP that relate to each of these topics. So if you want to learn more about salary and practice or how buy-ins are calculated, you can go on HandP, and I think I have one talk for each of these. So you're just going to see a couple of slides here. So the first thing that surprised me when I was talking to practices based on what I'd heard in training is recognizing that income streams are so variable. And this kind of goes along with David's talk, too. This is variable based on region, but also just subregion and local factors. So this would be, I think, a fairly representative pyramid of income in my area, where about 50% of the income, and I'm on the West Coast, by the way, so 50% of income may come from your professional fees, seeing patients in the office and operating on them. And then a fairly significant amount can come from call. As David mentioned, West Coast call rates are very high. And then there's ancillary income, whether it's building ownership, DME, and surgery centers. But there are definitely practices that look a little bit more like this, where the vast majority of income comes from ancillaries. And actually, your professional fees or your doctor fees are much less. And then there are, of course, practice models, employed models, where 99% of your income is just your salary, and there's no opportunity to make more. So recognizing that this is normal. This is all normal. There's not one right or wrong way. But again, when I was interviewing, I remember I met a place, and they said, well, we get most of our income from ancillaries. And I was thinking, like, are these guys legal? Like, what? That doesn't even make sense to me. But it totally makes sense. And it's legal. And this is just how the market works. The other thing that was kind of eye-opening, and maybe everyone here already knows this, is how overhead worked. And I remember, I was always told it was a percent. You know, if you're in practice, your overhead should be under 50%. And some practices are 60%. And a really lean practice might be 35%. And so I figured, okay, well, every month, you make some money, you know, the height of this bar, and the overhead is 60%, and then you just take the 40%. So if you work 25% more, then you make 25% more. And I was told that's how it worked. But that's not at all how it works in true private practice. I only say true private practice, because some private practices use a percent model, because it's just easier that way. But this is the reality of how it works. Your overhead doesn't change very much month to month. It's not like you hire more staff when you have a busy month, or fire them when things are a little bit slow. And so when you look at the math, it can be very beneficial, because a 25% increase in collections, working, you know, 25% harder, is a 50% increase in income. And that goes to what we just heard from Greg. You know, you're more efficient, you can be faster, and you cannot just do better, but you can do much better, not linearly better. And so that was something I didn't know as a trainee, and is reality. Overhead is what ultimately guides your success in private practice, because it's all about overhead. And although, you know, the employed administrative overhead is unfelt, you obviously feel it in whether it's, you know, you're in an RVU-based model, or you just get a fixed salary. But it's the single greatest tension point in groups, really of any size, from my observation, is when you can't control your overhead. And like I said, it's not always called that, right? Sometimes it's your RVU rate, or sometimes it's your administrative cost, but ultimately it's the overhead. And I don't need to get into the details, but, you know, basically these are some of my numbers in terms of, like, how my overhead breaks down. Because no one ever showed me this in private practice, no one ever gave me some real numbers, because I don't think in percentages, and I don't think in RVUs, I think in dollars. So just to tell you, my overhead is about $42,000 a month. That's what it costs for me to run my practice. So anything I make above that number, I get to keep, and thankfully I've never made below that number, but if I did, that would be a problem. And this is just how it breaks down, you know, there are direct expenses, like my flight and registration for this meeting, and there are my PA expenses. It's part-time, don't worry, we don't pay PAs so little in California. You know, some single expensive items, like Xyaflex, if I use that, that comes out of my pot just because, you know, my partner doesn't need to eat that cost for the 60 days until we get paid on it. There are some separate billing fees, because I work at the hospital, my partner doesn't. Of course, I have rent, payroll taxes, some miscellaneous expenses, my health benefits, if I have a car, which I don't, but, I mean, I have a car, but through the practice. You know, and that's how my kind of personal expenses break out, and then we have kind of a formula for our shared office overhead, because some component of it is fixed, which is the 40%, and then some component of it is variable, and so you get to choose how you define that variable component. Is it going to be based on billing, is it going to be based on collection, is it going to be based on the days you work in the office, and, you know, when you break it all down, like there's my total overhead, $42,000, it can be anywhere from 38 to 47, but that's the average, and that's an important number. So, you know, when you're interviewing at practices, they'll tell you, oh, our overhead is about 35%, but what does that mean? Does that mean I collect 150 and my overhead's 50? Does it mean I collect 60 and my overhead's 20? I think it's really important to understand how this all breaks down. And then I just show the actual numbers, so this is my first two years, or I think year and a half, in practice as a partner, and so you can see each month what my overhead is, obviously it's a bouncing number, and then what I take home in the green bar, and then the blue line shows percent overhead. So this is why, when you talk about percent, overhead as a percent, it can be deceiving. When I started as a partner, my overhead percent was over 50% because I wasn't collecting very much, but, you know, within a year and a half, my collections went up, and so my percent overhead dropped down below 25%. Now I was working really hard there, that's like a year and a half into practice, and I was taking a lot of call, and that has since reversed, and that speaks, again, to Greg's point about flexibility. What I love about private practice is that my practice in just six years has changed. I've had kids, I've pulled back, I've worked more, we had COVID, so many variables, but, you know, I like to show these numbers because I think it's really reflective of reality. There's a lot of change happening, but thankfully that change is always good, and if you really break it down, you know, my collections went up by 16%, which is a rough value for how much I'm working, and yet my income went up 33%, and then, you know, the next four months was a 45% increase in collections, but 105% increase in income. The other thing is recognizing that, as an employee, even those first two years, sometimes your salary is less important than your bonus structure, so when I first started, my salary was 240, so I came out of fellowship thinking I'm going to make $240,000, maybe a little bit more, but my bonus the first year was almost $100,000, and my bonus the second year was over $200,000, so sometimes it's the bonus compensation for your employment model that is more important than whatever that base salary is. We could spend a whole talk on the buy-in and what a buy-in means for a practice, and this kind of speaks to a little bit of what David was talking about with ASCs, you know, sometimes a share is $150,000, and sometimes a share is $5,000. I've observed the same with bonuses, so, I'm sorry, with buy-ins, but I can just tell you how we modeled it, and we didn't just come up with this. We had a practice consultant who's national, she's very well known, and this is how I learned a buy-in should be, but there's a lot of variability, so, you know, you're buying assets in a practice. That's just the computers, and the EMR, and the Floro machines, I mean, those have a value, and then there's accounts receivable, so you're transitioning from an employee where all the money you made for the practice was theirs to a partner, and there's this gray zone of money you've billed for but hasn't yet been paid for, so you have to pay for that money because you're about to get it, but it wasn't yours yesterday, so there's a cost to that, and then goodwill, and this is where you see a ton of variability, because you hear people say, well, goodwill is worth nothing, there's no such thing as goodwill, that's not true at all. Goodwill, broadly speaking, is the ability to walk into work on a Monday and have patients show up, and whether that means having a staff, having referral networks, having an EMR that works, having a billing system, it's the cost of having to build it all for yourself, and when you've been in a practice as an employee for a couple of years, and patients are coming in, and people know your name, what's the cost of staying there versus opening shop across the street and building it up on your own? And as we just heard, that could be a million dollars, I mean, that could be a ton of money to try and just start it from scratch and make all the mistakes, so in my practice, it's well worth a couple hundred thousand to not have to do that, and that's the value of goodwill. And then there's surgery centers, we just heard, the buy-in could be anywhere, I put three to 10x, mine was about two and a half x, and what do you get for it all? You get 50%, 50% equity ownership, so if we do sell the practice, you do bring in a partner, if you do sell to PE, which is not on our radar, that's ownership, that's equity for you. And then, of course, how do you pay for it, well, the idea of sweat equity, I was told by my accountant, is really not a thing, but there can be some component of pre-tax income that can go towards it, a lot of it's post-tax, and in my case, I took a loan from my dad, but banks will loan you money, partners will loan you money, and that's how it tends to work out. The last thing I want to talk about is, like, retirement, so in California, a lot of people are employed, Kaiser is obviously a huge employer, and Kaiser is often referred to as the gold standard of benefits, in terms of their health benefits and their pension, and so I've often been asked, you know, how do you value that pension? So the bottom line is, the pension is worth about 12 to 15% of your salary, if you're comparing apples to apples, so a Kaiser job that pays $500,000 a year, just on financial terms, might be worth about 550 or 560 in a private job, just financially, and I try to break that down here, so it's wordy and complicated, and if you don't care, just take a nap right now, but basically, the Kaiser pension, the way it works is you get 2% per year for the first 20 years, and then 1% per year thereafter, so if you start at 35 years old with a salary of 440, and you work until you're 65, that's 30 years of work, so the 2% for 20, and then 1% for 10, means that your pension will be 50% of your salary once you retire, so 220 a year, and then some detail, payments start around 60 to 65 years, and they increase 8% each year you defer, it's payments until death, or death of spouse, I think, it's actually different in different regions in California, there's a lump sum payment for some amount above the IRS limit, and then you have some 401k contribution, so those are kind of the details, but bottom line is, you know, I think as a fellow, when you're going into practice, you're thinking, oh my gosh, I'm going to make 440, that's a little bit less than my friends in private practice, but when I retire, I'm going to get this pension of 220, so can you do that in private practice, well, you can, so if you like reading about finances, maybe you've heard about something called the 4% rule, the idea that you can withdraw about 4% of your retirement nest egg annually, and it will kind of live until you die, or at least until you die, so you can go to a million calculators online, and if you look at the assumptions on the left, if you start at age 35, and you plan to retire at 65, and you start with zero money, and you contribute $4,500 a month, and you assume an annual return of 7%, then after your 30 years, you will have about $5.5 million, and 4% of that is 220, look at that, you get the exact same result, but you actually have $5.5 million, and if you die and your spouse dies, your estate actually still has that money, so to me, it's far more than 220, but the bottom line is you can get there, you can make those same numbers, so I just like to give the numbers, so the answer is 12 to 15% is the value of that, so those are some of the numbers I wanted to share, things I didn't know as a resident, and we'll have the last talk here, and then we'll take some questions after. Alright, so we're going to, it's interesting, listening to these talks, and going through and putting this thing together, and looking at interviewing, I'm going back to Greg's philosophical talks. A lot of this stuff has been just over the school of Harnock's over 30 years, and going through private practice, but if you look at finance and investments, and you talk to someone about, you know, what's your goal, is your goal to have all this money when you're done and hand it off to some institution, is your goal to make sure your kids go to good schools, and then they don't get anything, is your goal to die with, you know, poor, it's all philosophy, it's completely philosophy, and you have to be quite happy in where you are, and a lot of this is going to go back to philosophical versus numbers, and it goes completely against everything we learn at the Hand Society, as far as here's the data, here's the stuff, that's why we have people like Oren, so what practice, why can I talk up here, we have 21 surgeons, 7 hand surgeons, 20 mid-levels, I started 30 years in practice with a 3-man group, and was the first hand surgeon, all these other things are where income comes from, and where you need to ask questions of where income comes from, now we have a CEO that you pay for, a CFO, managers, we have a board, which is actually a bunch of doctors sitting in a room, so we're evolving and making a better board, therapy, MR, DME, we have two in-office, or in-hospital surgery centers, so we are working with hospitals, we do a lot of, I do a lot of in-office surgery, we have co-management agreements with hospitals, these are all other places where you can get income, and there are other places where you have to ask questions of all the individual points, I had a great conversation with a former resident that's up in Michigan, who she wants to buy into practice, so this was very opportune, so why do you want to buy in, what do you want to do, it's all philosophical, we have a community residency program, and one hand fell, so disclosure, not an MBA, don't have an MBA, not an accountant, I love to read a lot, and get involved, and listen a lot, and you listen from lots of different occupations, you've got to get a feel, this is what, what are you asking questions, how good is the practice, this isn't, I need to know exactly the dollars and cents, you can calculate those things out, but what is the feel of the practice, and the feel of the practice is when you have problems, when things are good, they're very good, it's like having a stream where you don't know that there's buried refrigerators underneath the stream, because there's plenty of water, but when the water goes down, it doesn't look so good, you've got some refrigerators and some old trucks sitting in there, so how are you going to be able to weather those COVID storms, so you need to look at the feel of the practice, I think this is the biggest thing, are you an entrepreneur, are you willing to take risk, because that's what this is, private practice is being an entrepreneur, being able to control, and you've got to be able to take risk, because if you're not willing to take risk, or that's not your mantra, then it's not worth asking the dollars and cents questions to all these people, so are you dependent, there's a lot of negotiation that goes on, I'm fiercely independent, I'm co-dependent, I'm not dependent, we're all working together, and in our situation, we are co-dependent with some hospitals, have some joint ventures with them, have some co-management agreements, when you get big, like Rothman or Ortho Carolina, they're not as, you know, are they private practice, they're this new little entity, that's basically not the true private practice, as far as I'm concerned, they have a whole nother control, because they build up, and hospitals have to come negotiate with them, so relationships, I learned a lot from my daughter-in-law, they farm 26,000 acres, they know taxes better than any person I've ever seen, they have more LLC's than I can count, but they're not far off, their margins are just small, I mean, farmers margins are so tiny, you have to look at every single thing, so do they own some of their land, okay, do they own the surgery center, they own about 4,000 acres, but they farm 26,000, so you can work in the hospital, the equipment, you know, they have a whole nother company that owns their equipment, they've got to have seed, they figure out ways of getting good seed that's going to come out to give them a good crop, exactly the same that happens with good patients to move things forward, you can look at a lot of these different industries around and there's lots of comparisons, so when you're asking these questions of the companies, you just use your own experiences to work things out. Buy in, buy out, you just heard the buy in, buy out, if you're going to be in a private practice and you're asking questions, one of the best people to talk to is who just left, whether they retired or after a period of time they left, and you don't want a lot of drama, you've heard the conversations earlier about the divorces, no, I just want to leave, I'm going to go from Washington State to Colorado, so how do you get me out, how do you buy out, this is what I paid in, this is what I paid out, it's more asking the goodbye questions than it is the get in questions when you're coming in, how do you get out of a contract, I also over the years tell someone, if you've got a very, very thick contract, throw it away, I mean there's too much garbage, just got to keep it simple on a lot of these things, there's only a few things that you need to look at, and it is what's the money coming in, and what's the money when I have to get out of this. So the books, as I said, last partner to retire, who left, why did they leave, those are the questions and those to me are where you find out a lot of data, and you're going to get some disgruntled people every once in a while depending on how big and how long the practice has been there, but the more you keep it simple, the better it is, again, think buy in, buy out. So what are the entities that we just heard from Oren, is this, what kind of accounting is this on a cash basis, and the cash basis is what was talked earlier, 100,000 comes in but it costs us 60,000 so you walk away with 40,000, are they keeping money within the corporation for the rainy day fund, I mean those are simple questions to ask people, and it goes into the buy out, or the buy in, so if you're figuring out you're buying into some money that's been sitting there for something, it doesn't matter, we want to do this project, we want to build this equipment, or buy this equipment, you can do it that way. Is it an eat what you kill model, you know, what patients are you going to, are you getting patients that will be part of the practice, do you have to generate your own, is there a new office that you're working on, are you going to be on call, and what call is and how much you're getting paid, we had a great talk earlier, 250 an incident, I'm thinking about moving there, that's a pretty good deal. OR time, are you going to have to work at 3 o'clock in the morning, are you going to get 7 o'clock time, you realize that, at least in our experiences, we want everyone to be successful, if we didn't want everybody to be successful, I'd be selling out to a private equity tomorrow and walk away. You have to go into a practice of is this a legacy type practice, are you going to try to maintain, or are they just there to make money off of you. What is the overhead structure, great, great conversation, we have about the same, you got shared overhead, you use an office, you pay for an office, you use a CEO, you pay for a CEO, but there's variable, if you are going to bring in 60, 70 patients a day, you're using more resources than somebody brings in 10, so how does that work, are you going to do that based on collections, are you going to do that based on billings, that's two different ways of doing things, one would encourage someone not to take the Medicaid population, the other one would be, I'm going to try to find the best payers we have, so you have to ask how that overhead is being calculated. Vacation, exactly what's been said before, when you leave, can you make money, when you sleep, can you make money, so that should be your goal, and you see 70, 30, you see 50, 50, I think 60, 40 is a nice way to do it, where it's 60% of what you're off your back, because you are a widget worker, as was said before, we're blue collar workers, so we need that other 40%, how can that work, and when do you get into it, and then if you're going to take a course, you pay for it, I mean I'll go to more courses, mostly to learn, and just to network, other guys won't do that, they'll get online and do it. So what are our ancillaries, DME, great foot and ankle surgeon in Columbus, used to say here it is, you pay for your five boots, and if you sell your boots, you get all the money for it, well we share it, I don't use as much DME as my sports medicine partners and general ortho partners, so we kind of work it out, there's not much money in it, it's just inventory, and that just kind of goes out, MRI, did you buy it, did you depreciate it, how much does it cost, how many texts do you have, are you paying rent on the thing, when are you buying a new one, MRIs are all over the place, can you run it 24-7, hospitals have pushed the dollars and cents up so high it's been ridiculous, so it's just another avenue of revenue, therapy, we're going back and forth to whether companies come in, so is this a company that runs it for you and just pays rent, or is this a, you own the therapist which you have to deal with more and more employees, is it just a budget neutral so you can do better patient care so the therapist is with you, and you have to ask those questions of how it's coming through, and if they want you in the practice they're going to tell you what they can tell you, but again you're taking a risk, surgery center, is it a buy-in, you have to look at the question of is it pre-tax versus post-tax dollars, money, paying cash out versus time, a lot of our buy-ins are all time, if you want to do it, we'll do internal loans or you just have time so we can do things that are pre-tax, and when do you get it, when are you allowed to get into a surgery center which that's the holy grail in a lot of practices. Real estate, large groups, Florida Ortho Institute does not own real estate, so I know that from training there, I was real surprised, we own all of our real estate, and if you're going to buy into that real estate after a period of time, what's the mortgage, do you have to do a down payment like a house and then pay it off, can you get an internal loan which is how we do it, and then how much equity is in that building, one of the difficulties with physicians is once you retire and you have this building, who wants it, nobody really wants that building unless there are more physicians, so philosophically we try to pull as much equity out as we can and then the buy-in is less for the next person, we went from a buy-in of potentially 1.5 million to 250 because we pulled the equity out with the owners of the real estate, so there's just different ways to think about that, it sounds great, yeah I'm going to own some buildings, but if they cost too much or if they're not that way, it's all the mystical fair market value. So co-management agreements, what do these mean, they're all over the place, what's your responsibility, what meetings do you go to, what control do you have to do, are you going to get that money right away going to the hospital, this is where the dependency with the hospitals are there, are you co-dependent, what relationships, the meetings that you heard about that you have at noon or at, you know, right in the middle of the OR time, and they say well we had a meeting, you didn't show up, so you have to look at, you know, what is your relationships with the current institutions that you're going to be involved with. So honestly it's more philosophical when you go in and ask somebody, you know, are you an entrepreneur, are you willing to take risks, do you trust the people that you're going into practice with, you've got to trust the history, you can always find out someone who's knows someone around there, this person left, this person stayed, it's personalities, so I mean it's all the big words, it's not just complete dollars and cents, it's the relationships, like I said with the farmers, they have to know the people that sell which seed, which place, where they're going to haul it, what are they going to do with it, it's not far off, and how dependent or co-dependent are you on some of the institutions, thank you. Oh, I really enjoyed hearing all those talks and I hope you did as well, we have a few minutes for questions, so you can either speak up or use the microphone. Yeah, I mean, everyone hears about that, and I can only share my opinion, which is very similar to yours, and I think you've heard from a lot of us. We value our independence. I value my independence in practice and my flexibility so much that I am so appreciative that my partner, who I suppose could have sold out to PE before I started, although it wasn't such a trend then, that wasn't his interest either, and I've really kind of come to see the light, and it's not my interest as well. Obviously, market forces change, and I can understand why people do it, and it's quite possible that in other regions and in other markets, you have no choice or you feel like you have no choice but to pursue that avenue because it's just so hard to run your practice, but I'm totally in Greg's boat. I just think private practice is the only thing, just the presence of private practice is what keeps the rest of orthopedics or medicine what they are, and so much as we can stay independent, we will do everything we can because of all the downsides you mentioned, and my personal opinion on PE that's not that sophisticated is just we're definitely in a transition period right now where you've seen all these buyouts, and there's this promise of the second bite, and we don't really know where it's all gonna go, so I'm not gonna make any predictions, but I'm just gonna say the book is not closed on that, so we'll save judgment. And it's a real fear, and I have colleagues, because I'm six years out now, who went into a practice as an employee, and they asked questions, are you going to be bought out? Is there a PE on the horizon? And they said no, and yet it happened anyway. So you can try so hard to get that answer, and keep asking, keep asking, keep asking, and you might still not get the right answer, which is unfortunate. And I think, you know, one of the things as you're looking at a practice is what is the age demographic of that group, right? And private equity, it's, you know, we live in a world of delayed gratification, but it's immediate gratification. So you're getting a bunch of money up front, and they normally then decrease what they pay by about 30% on average over kind of the duration. So if you've got five or ten years left to practice, windfall. So if you have a group that you're looking at that has a bunch of older partners, I would be very cautious to enter that without some kind of guarantee that if they are going to sell it to PE, you get a percentage of that, because I have a lot of friends that join a group, they're two, three, four years strung along, get sold, and they got nothing, right? And then you're stuck with, as an employed physician or surgeon, not making as much as you could have made. And I think the other thing is, you know, we talked about this philosophical component is, you know, what do you want to do? And do you want to be in a community and start there and end there? Or do you want to bounce around? We talked about it's expensive to bounce around. But the whole model for private equity is to buy it, build it, flip it. And it's about a between a three to eight year run. So if you work 30 years, I mean, that's between, you know, between six to 10 sales, six and 10 different owners, management structure, everything else. I don't know many people that want to be working in that environment. So I really think that PE is a unique trend right now, where kind of the people that started these orthopedic practices have their clinics or surgery centers are getting old when retiring cash out. But I don't think that's a sustainable model. And especially when you look to the future of health care, which is really a push from CMS for value-based care, accountable care organizations, and sharing risk, trying to leverage the market to get as much out as possible is not where the future is when we're already sitting at 20% GDP of health care spend. So, I mean, I'm obviously not a huge PE fan, partly because I've got another 20 years left in my career, but also just because, you know, again, it takes away that choice and that voice. And I think that it really is, you know, a buyout for the old and on the backs of the young. I think that... So I'm going to pick... Well, I think a lot of that's also just a function of have that has that good position themselves Well to pay those people appropriately and if not, then that's another impetus Yeah, I'm a real estate topic top of that a and B shares It's definitely philosophical. That's why they started. What do you want to do? You know, do you want a legacy? It's gonna happen Do you want to make sure your kids never work and their trust fund kids or do you want to make sure they go to? Good schools and they develop their own thing. This is the same thing to me. It's just different kids I'm sorry. I'm the old one Well, that's obviously, I think, a lot of specifics based on your practice and your region, and I know any of us would talk to you afterwards, so please come and find us. But what I can say is that, at least for my practice and those who I talk to, DME and, in our case, PTOT is a fraction. It's insignificant. You always put it in the slides, but compared to ASC ownership, that's like 95% of it for us. And then I think real estate and MRI are somewhere kind of in the middle category. So you're never going to turn your DME into a $100,000 business as a hand surgeon. That's the key as a surgery center, and really the key is joints and spine in a surgery center. That's been the game changer in revenue for surgery centers, because the current contracts right now are between $10,000 to $18,000 profit per total joint. So that's how you see ancillary numbers of $500,000 to $800,000 a year is through that process. And so if you don't have a surgery center, you're not going to have that upside down triangle. So that's really the key. Sure, well, I mean, you know, so again, I'm pretty large, you know, 17 partners, 24 surgeons, about 100 million revenue a year. And the way you have that argument is with the overhead slide that that Orin showed, right? So the most expensive thing for a surgery center is dark rooms, right? And staffing is a real issue. And so yeah, you can do two total joints in a day and make 20 grand. But that's what, two, three hours for your staff, and they want eight, right? So how do you fill those rooms? And how do you keep it staffed? Well, I can do that for you. And while I'm not making as much, I can fill up the place and fill in the holes, right? And so that's that argument, just like Medicaid in a full clinic, right? When you've got empties, you put them in, you can fill them with commercials, that's what you do. So the argument is, is that you can fill in the holes and make sure that the staff are getting their hours and that you're covering the overhead so that it's pure profit, as opposed to eating into that, and just keep that place busy and functional instead of having dark hours. And I've seen some surgery centers that have not been able to do that, and so then they're stuck with either losing their staff or paying them for full days and having them work two or three. It's expenses and resources. I mean, those guys are going to use higher resources, as I said, and you can cut most of the hand surgeries down to $20, $10 for your, really, cost per case versus someone else. So that's the argument. I think it's also one of the podcasts we did for HANP was talking about how it's a team with Chuck Cassidy, and you've got role players. And I think that's another part of this, is that to be successful, we have to all work together and be rolling in the same direction. And if it is a group where they're saying, well, wait a second, I think I should get more, probably not a group you want to join, because if they're already having that conversation out of the gates, it's only going to perpetuate, and I wouldn't put the ring on. Don't say I do at the altar. Is there another question over here? I think it has to do with your region, but we had less problems when we were six versus 20. I mean, 20 is, you can't, I don't know which bottle of wine we're going to have for dinner. I mean, there's too many people ordering things, and we're really in a little bit of a problem, because we either have to get to 30 and be able to get all the infrastructure we need, because the expenses start going up, and really look at value added, or partner with other groups to get value added things. So I think if you're in a certain region, and you're about six, and it's all just upper extremity, about six works well, I think. I mean, I think a lot of that's a function of what you're trying to control, right? If that's your voice, then a smaller group, you're going to have a lot louder voice. But if it's market share, and kind of insulating your practice, and making sure that you can compete, then it's going to be a larger group, because the more market share you have, like Brent was talking about with OrthoCaroline and these other groups, you've got to come to them, right? And they've got a lot of leverage and power. But if you've got one group of 25, or five groups of five, guess which one has better contracts? And I think that's the real question, and when you look at the future, I think that that's probably what PE is, because they can get us larger, and negotiate for better contracts. Well, the alternative option is to try to join together, and do that on your own. And so in Seattle, there's a group called Pro Alliance, that was formed by an orthopedic surgeon with that purpose. And there's, I think, 15 groups that are underneath that umbrella. And they all have kind of the same tax IDs for contract negotiation. Now, they've had their problems, because they diversified, right? And so then you've got issues of urologists, and OB guides, and orthopedic surgeons, and the insurance company says, well, we can either give a 5% increase to the orthopedic surgeons, or 2% to everybody, right? Well, the ortho-founded group is like, well, we want the five, but that doesn't necessarily benefit the group as much. And I think that's where you've got to be a little more careful. But again, a lot of that is, what are you trying to accomplish? And what's your market, as Brennan said? And I'll just say, because I'm the small practice representative here, it's just me and one partner. In my area, I've seen so many groups that have gone from five, to eight, to 10, and now they've merged to 35. And yet, there's a lot of flux in those practices, and I know their numbers. And it's nothing, nothing like the solo and two-person groups in my area, that although we don't have the leverage, and we don't get great contracts, the amount of control we have, and the way we're able to run a lean practice, in my area, the small practitioners are doing so much better than the larger groups. And again, that's just market forces. Yeah. Well, thank you all for coming. I know many of us will always take questions, and like I said, there's a lot more content like this on HandP, and hopefully this will be on HandP as well. So please let the SSH leadership know that if you like these types of talks, I know we love to give them, and we feel so strongly about this stuff that we always love the support. So thank you. Thank you.

private practice

orthopedics

hand surgery

education

control

income streams

overhead

partnerships

financial aspects

ancillary services

challenges