Ancillary Opportunities

There are lots of potential ancillaries for an orthopedic group. The main two are gonna be MRI and Physical therapy. Uh, you can earn anywhere between $25,000 to maybe a couple $100,000 a year in each, just depends on how big and, and how effective your group is.

Um, durable metal, medical equipment is an ancillary that can produce a couple $1000 of, uh, revenue a year, but it's not gonna be super lucrative anymore. I would say that Amazon is gonna clean all of our clocks on durable medical equipment in the years to come, so I would not, um, anticipate making a lot of money in durable medical equipment in the long term.

High dollar drugs are your viscosupplementation, that's your uh Synvisc, Monovic, Orthovisc, and your Zometa shots. Uh, you can make a reasonable profit. Usually a profit margin for those is about 8%.

Urgent care is all about clinic access and getting patients in the door to try your clinic machine, but you can make money off urgent care, uh, clinics.

And then ASC and hospital ownership, usually the return on investment there is 10 to 30%. You're gonna have a buy-in for those because you're buying uh, an income stream, uh, and, uh, usually if it's a well-run facility, it can make a fair bit of money. Lastly is real estate. Uh, real estate is, uh, tricky, but if you are buying

buying the land that you're also, uh, have your clinic on, then it can make sense to, to own that, uh, real estate. We're gonna give you some numbers on total physician compensation. These numbers from, were from the AAOE, um, and basically, uh, trauma surgeon averages at 680,000 a year, a joint surgeon 6300 a year.

Shoulder surgeons were 660, sports 650, Spine 640. Spine does have a little bit higher upside, so some Spine surgeons kill it, uh, and Other Spine surgeons are modest. Um, hand surgeons were 620, general Ortho 550, and Foot and ankle 520. Um, there is a lot of regional variation in that, but those are the numbers for all comers.

Um, I, I wanted to tell you a little bit about private equity, equity. It's really important that you know what this is. Not a whole lot of orthopedic groups have gone into this, but there are a few, and it has gained, been gaining popularity. Uh, ultimately, it means a private equity firm is gonna buy a percentage of your future revenue. So I'm gonna go through an example here. I just call this group Big State Orthopedic Group, and let's just say they have 100 physicians. Let's say they collected $150 million last year.

And they paid out $60 million to their 100 physicians. So every physician made $600,000. If Big State sells 50% of their future income at a multiple of 12, they're gonna get a one-time payment of $360 million or $3.6 million for every doctor. Pretty lucrative for that one-time, which makes everyone happy for that first year.

Next year though, that physician's salary is not $600,000. They did the same amount of work but they only get to take home $300,000. The private equity firm gets the Other $300,000. Um, so it works great at the beginning, um, but if you are a young surgeon and the group that you're joining just did a private equity deal, your future revenue may have just gone out the door and you may not have gotten the one-time payment to make it all worth your while.