Guest guest Posted February 13, 2012 Report Share Posted February 13, 2012 Then If you buid at $125/sq foot a 1000 sqft IMP office would be 125000 plus 60,000 for land would be $185000. Assuming ratios still hold then 269340*1.85=$498279 over 30 years for 1000 sqft office. $185 per square foot to build and buy land. Per square foot this would be $16.60/sqft/year. Building is cheaper than renting unless you can get triple net less than $16.60/SQFT PER YEAR. THIS NUMBER DROPS IF YOU CAN BUY LAND FOR LESS THAN $60,000 AND BUILD FOR LESS THAN $125/SQUARE FOOT. KEVIN Any IMPS own the office they practice in today. Any establish not-for-profit entity to own land, building, and practice? and I will need a new space within 2 years. Curently we are renting from the hospital for $15/sqft all includes except internet and phone. No taxes. Most office space will be commercial grade at hospital office building for $18.50 plus $6.50 triple net or $25/sq foot. Smallest space 1200 but owners want us to take 1800 sqft which will run $30,000 to $45,000 per year. Rent is an expense. No equity is built up by renting. I have calculated that interest and taxes are always an expense for owner of rental property. Land can never be depreciated. Building can be depreciated over 40 years or 1/40 per year. Fixtures can be depreciated from 3-7-20 years depending carpets furniture and cabinets. If cabinets are not permantent they can be depreciated in the year placed in service with 179 deduction up to 100-250K in recent years. I have calculated $1000 of practice revenue will pay $560 in principal and $440 in taxes. Principal repayment on a 20-30 year loan is low in the first years but accelerates making true cost of ownership very difficult to calculate. Property taxes are 7.3-8.5% of assessed value which is usually 1/3 the purchase price. So here goes. Per $100,000 BORROWED PROPERTY TAX = 2500/YEAR INTEREST 4% 30 YEAR = ABOUT 2%/YEAR AVERAGED STRAIGHT LINE = $2000 PRINCIPAL REPAYMENT 1/30 /YEAR = $3333 SINCE 1/3 VALUE IS LAND ONLY 2/3 CAN BE DEPRECIATED OVER 30 YEAR LOAN OR $75000/40 OR $1875 PER YEAR LEAVING (3333-1875=1458) TAXABLE SO ((1458/560)*1000)=2603 TOTAL = 2500+2000+1875+2603 = 8978 30 YEARS later = $269340/100000 BORROWED AT 4% > Hi Greg!>>>> I remember your name - welcome back to posting and glad you are ready to> make the leap.>>>> I'll give my 2 cents on your questions:>>>> 1. With fewer pts, you'll have fewer of these to do. If you don't> charge a NCBF to include your time for this task, then bring the pt in for> an Office Visit so they can sit there while you do it. I often do it with> the pt sitting there during the OV that we decide to do the study, and it> often helps to have the pt there to help answer questions.>> 2. Depends on the region and the insurance it seems. In those> instances where the pts are penalized for you being their doc, I 'share' the> pt with a doc that is on the insurance's panel. I let the pt know this up> front (if I am aware of it), and encourage them to see a doc I know well who> is on the panel. Then I communicate with that doc and tell them what the pt> needs. Often the other doc is happy that I have done the legwork for them> and will do the referral/auth. Sometimes they want to see the pt as well.> But I have also been able to call in to the PAR line for the insurance co> and get it approved, even though I am not a provider (but used to be). That> has happened with Kaiser twice in the last 4 months.>>>>>> Eads, MD>> Pinnacle Family Medicine>> Colorado Springs, CO>> www.PinnacleFamilyMedicine.com>>>>>>>> From: > [mailto: ] On Behalf Of gregandamyhinson> Sent: Tuesday, February 07, 2012 8:13 PM> To: > Subject: Time to Jump>>>>> > I joined this group 8 years ago, and this is probably my first post in 6.> Yet, reading through some of the recent messages, I still recognize a lot of> the names. Like old friends.>> My story is a familiar one. When I joined, I had a small, solo practice in a> high-need area. I was trying to live by many of the IMP principles, but I> lost control. Ultimately, my practice grew, and grew, took on a partner,> that didn't work out, on the brink of poverty, joined a large> multi-specialty group and allowed my 1 Dr, 1 MA, and 1 receptionist practice> grow to a 2 Dr, 2 NP, 2 RN, 2 MA, 1 receptionist, and 1 manager (and we> still outsource billing). And it's out of control. We have a several week> waiting list and are directing many patients to the ER during office hours.> And I am having trouble finishing my notes in a timely manner, and my> employers are screaming about red ink.>> So...>> It's time to jump. I cannot do this anymore.>> I actually just came to this conclusion on Monday. Lots of decisions yet to> be even thought of! Direct pay or membership or traditional insurance? Keep> billing in-house or outsource? Finding a location.>> The big questions are to come. But, for now, a couple of little nagging ones> that have me wondering about the upcoming business plan...>> 1) We now have a full-time medical assistant who simply handles prior> authorizations and pre-approvals. Maybe this is somehow unique to my> location, but has this hassle effected the IMPs in a bad way? I watch her on> hold for 20 minutes to get someone to approve the MRI I want to order. How> does this work in a low-overhead, no-help practice?>> 2) If I were to go to a cash practice, and I am not listed as the PCP for> all of the local HMO practices, and these patients need services like PT or> radiology, would they be left responsible for these bills because I was the> doctor that ordered them? I know now that my family practice often gets> calls from patients that I have not seen for a particular problem needing> our office to get pre-approval for something like PT that was ordered by a> local ortho. (Drives me crazy!)>> Thanks for your help!>>>> -- Pratt Quote Link to comment Share on other sites More sharing options...
Guest guest Posted February 13, 2012 Report Share Posted February 13, 2012 We ran the numbers here and decided that we could not afford to buy. Condos in our area are not turn-key, thus costing about $100/ft for tenant improvements plus the cost of the space, plus condo fees. around here are going for $36/ft (triple net). The cost to own was close to $40. So we are moving to a new rental space - smaller and in a better location than our current one. We are moving from 1500 feet to 1000 feet in a building that is all primary care (current building is mostly dentists). Is the spot you are planning to own going to be still a good place to have your practice when you retire? Hospitals move (or are built), neighborhoods change, and do you want to be a landlord when you retire? (Some do, some don't). And do you want to be tied to real estate if you decide that you slow down your practice, or change practice styles, etc? There is more to think about than just cost.... Pratt Then If you buid at $125/sq foot a 1000 sqft IMP office would be 125000 plus 60,000 for land would be $185000. Assuming ratios still hold then 269340*1.85=$498279 over 30 years for 1000 sqft office. $185 per square foot to build and buy land. Per square foot this would be $16.60/sqft/year. Building is cheaper than renting unless you can get triple net less than $16.60/SQFT PER YEAR. THIS NUMBER DROPS IF YOU CAN BUY LAND FOR LESS THAN $60,000 AND BUILD FOR LESS THAN $125/SQUARE FOOT. KEVIN Any IMPS own the office they practice in today. Any establish not-for-profit entity to own land, building, and practice? and I will need a new space within 2 years. Curently we are renting from the hospital for $15/sqft all includes except internet and phone. No taxes. Most office space will be commercial grade at hospital office building for $18.50 plus $6.50 triple net or $25/sq foot. Smallest space 1200 but owners want us to take 1800 sqft which will run $30,000 to $45,000 per year. Rent is an expense. No equity is built up by renting. I have calculated that interest and taxes are always an expense for owner of rental property. Land can never be depreciated. Building can be depreciated over 40 years or 1/40 per year. Fixtures can be depreciated from 3-7-20 years depending carpets furniture and cabinets. If cabinets are not permantent they can be depreciated in the year placed in service with 179 deduction up to 100-250K in recent years. I have calculated $1000 of practice revenue will pay $560 in principal and $440 in taxes. Principal repayment on a 20-30 year loan is low in the first years but accelerates making true cost of ownership very difficult to calculate. Property taxes are 7.3-8.5% of assessed value which is usually 1/3 the purchase price. So here goes. Per $100,000 BORROWED PROPERTY TAX = 2500/YEAR INTEREST 4% 30 YEAR = ABOUT 2%/YEAR AVERAGED STRAIGHT LINE = $2000 PRINCIPAL REPAYMENT 1/30 /YEAR = $3333 SINCE 1/3 VALUE IS LAND ONLY 2/3 CAN BE DEPRECIATED OVER 30 YEAR LOAN OR $75000/40 OR $1875 PER YEAR LEAVING (3333-1875=1458) TAXABLE SO ((1458/560)*1000)=2603 TOTAL = 2500+2000+1875+2603 = 8978 30 YEARS later = $269340/100000 BORROWED AT 4% > Hi Greg!>>>> I remember your name - welcome back to posting and glad you are ready to> make the leap.>>>> I'll give my 2 cents on your questions: >>>> 1. With fewer pts, you'll have fewer of these to do. If you don't> charge a NCBF to include your time for this task, then bring the pt in for> an Office Visit so they can sit there while you do it. I often do it with > the pt sitting there during the OV that we decide to do the study, and it> often helps to have the pt there to help answer questions.>> 2. Depends on the region and the insurance it seems. In those > instances where the pts are penalized for you being their doc, I 'share' the> pt with a doc that is on the insurance's panel. I let the pt know this up> front (if I am aware of it), and encourage them to see a doc I know well who> is on the panel. Then I communicate with that doc and tell them what the pt > needs. Often the other doc is happy that I have done the legwork for them> and will do the referral/auth. Sometimes they want to see the pt as well.> But I have also been able to call in to the PAR line for the insurance co > and get it approved, even though I am not a provider (but used to be). That> has happened with Kaiser twice in the last 4 months.>>>>>> Eads, MD>> Pinnacle Family Medicine >> Colorado Springs, CO>> www.PinnacleFamilyMedicine.com> >>>>>>> From: > [mailto: ] On Behalf Of gregandamyhinson > Sent: Tuesday, February 07, 2012 8:13 PM> To: > Subject: Time to Jump>>>>> > I joined this group 8 years ago, and this is probably my first post in 6.> Yet, reading through some of the recent messages, I still recognize a lot of> the names. Like old friends. >> My story is a familiar one. When I joined, I had a small, solo practice in a> high-need area. I was trying to live by many of the IMP principles, but I> lost control. Ultimately, my practice grew, and grew, took on a partner, > that didn't work out, on the brink of poverty, joined a large> multi-specialty group and allowed my 1 Dr, 1 MA, and 1 receptionist practice> grow to a 2 Dr, 2 NP, 2 RN, 2 MA, 1 receptionist, and 1 manager (and we > still outsource billing). And it's out of control. We have a several week> waiting list and are directing many patients to the ER during office hours.> And I am having trouble finishing my notes in a timely manner, and my> employers are screaming about red ink.>> So...>> It's time to jump. I cannot do this anymore.>> I actually just came to this conclusion on Monday. Lots of decisions yet to > be even thought of! Direct pay or membership or traditional insurance? Keep> billing in-house or outsource? Finding a location.>> The big questions are to come. But, for now, a couple of little nagging ones > that have me wondering about the upcoming business plan...>> 1) We now have a full-time medical assistant who simply handles prior> authorizations and pre-approvals. Maybe this is somehow unique to my > location, but has this hassle effected the IMPs in a bad way? I watch her on> hold for 20 minutes to get someone to approve the MRI I want to order. How> does this work in a low-overhead, no-help practice? >> 2) If I were to go to a cash practice, and I am not listed as the PCP for> all of the local HMO practices, and these patients need services like PT or> radiology, would they be left responsible for these bills because I was the> doctor that ordered them? I know now that my family practice often gets > calls from patients that I have not seen for a particular problem needing> our office to get pre-approval for something like PT that was ordered by a> local ortho. (Drives me crazy!)>> Thanks for your help! >>>> -- Pratt Quote Link to comment Share on other sites More sharing options...
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