I'm currently in the trials and tribulations of looking for a practice to join. I have interviewed with several groups and a few seem to harp on the opportunities to invest in physician owned dialysis units in the future, ie. get in on the ground floor. Since these are groups with 4-5 partners, assuming they do a 60/40 investment with a corporate chain, I would stand to have a vested interest in 6-8% of any new unit that opens up while I'm there.

Aside from getting everything in writing of course, what kind of return can one expect from this kind of investment? Is it a yearly dividend or merely profit in the form of equity? If so how much? ie. how good of an opportunity is this compared to say mutual funds and smart investing?

Is it worth doing this with the cutbacks?

Would I be better off joining another group who sends patients to a not for profit HD unit if they are offering a salary that is 25% higher and have split medical director fees within the group(I understand these are about to be cut as well!)

With the stabilization of the patients entering ESRD now, will there be need for these new dialysis units these people are harping on, or will I simply be filling their existing units they are in the process of building and thus their pockets by sending my patients to them?

Help me out, they don't teach us this in fellowship! Thanks

The ship hasn't sailed, but it has developed quite a few leaks for a privately owned, independent ESRD provider. There's no doubt, that due to volume purchasing power, the chains have a definate advantage for financial success, when compared to an independent.

The cost of EPO for independent small providers is the killer. Before 1996, Medicare reimbursed providers $11 per 1000 units. After 1996, this dropped to $10 per 1000 units. For 2005, it was taken down to $9.76 and for 2006, it's down to $9.30 per 1000 units.

Strictly looking at the costs of EPO, with all the cuts you see, above, Amgen raise the price of EPO by 4.9%, this year. I don't forsee this trend stopping in coming years.

The truth is that every facility needs to have as high of percentage of patients with commercial insurance, possible. Without these commercial patients, all the costs cutting and dialyzer reprocessing in the world will mean nothing. It's a sad fact that commercial insurance patients carry dialysis providers. Gone are the days when you could be a "Good Joe" who would take all comers. The fact is, you have to get paid so that you can pay your bills and your staff.

In spite of the cuts in drug reimbursement and all the other problems we are facing, you can still make a living if you maintain a well managed dialysis reprocessing program, keep your staffing costs as low as possible (maintaining safe levels of staffing) and micro-manage every penny that's spent in the facility. Even more important is the billing and collections staff you hire. You can have all the billing in the world, but if you don't collect the cash, it means nothing. Billing people are greatly undervalued and underappreciated in the industry.

The bottom line is that this is a tough business and it's going to get tougher in the coming years. If you think you are going to get rich overnight, forget it. You'll struggle along in the beginning, but if you have a good manager, you'll get by. If you have enough commercial patients and your geographic area (according to CMS) is right, you can do better than get by. You might even make some substancial money. There are alot of important veriables you need to look at before you commit your dollars and your time. Ask to look at the financials from the accountant befor you jump into the fire.

Sincerely,

Joe Atkins aka Dialysis Joe

Joe,I think after all the verbage you finally hit the nail on the head..Location Location Location...In Shelby County Ohio.I imagine it is hard to (make a decent living) in a chronic Dialysis clinic, but in major cities it is not as hard as you would have folks to believe... The Patients keep coming ,keep coming, and keep coming