Patrick McEneaney, DPM, always planned to own a practice. He didn’t plan on doing it five years out of residency.
Dr. McEneaney was working for a practice when its owner gave him a choice: buy it, or watch it go to someone else, because the owner was retiring in six months. He bought it. More than 12 years later, the practice, Northern Illinois Foot and Ankle, headquartered in Crystal Lake, Ill., has grown from two physicians in one office to 17 physicians across 15 offices in the Chicago area, including two in the city. Its physicians also hold a minority ownership stake in one ASC.
“I’d always planned on being an owner at some point, but wasn’t planning that quickly,” Dr. McEneaney said. “I got kind of thrown into it very quickly.”
The growth came in stages. He added a second and third physician as the original owner retired, then filled the first clinic until it was landlocked. “We built up, then built down. There was nowhere else to go,” he said. The group opened a second clinic, then a third and fourth, and eventually began buying other practices.
Along the way, he said, he had to learn to run a business — something physicians often hand off. “A lot of times doctors are too busy running real hard, trying to see as many patients as they can,” he said. “Sometimes business falls by the wayside, or they just hand it off to other people and aren’t watching it as much as it probably should be. As an owner, you have to work on being an owner too.”
Why the ASC
The move into the surgery center was part market share, part survival of his own schedule. At the hospital, Dr. McEneaney couldn’t fit his cases into a single day, so he stacked them early in the morning and late in the afternoon around a full clinic.
“Doing surgery in the morning, clinic all day, back to the hospital for another surgery in the evening — it just wasn’t efficient,” he said.
The ASC offered faster turnover and something harder to measure: the same people in the room every time. “Hospitals run at their own pace, and they never run at the pace that a surgery center can,” he said. “You don’t have 40 different scrub techs that could be there on any given day who don’t know what you do or how you do it. You’re working with the same few people every single time.”
Culture in, burden out
Dr. McEneaney credits growth first to people: strong physicians, and staff who want to be there. “Some people take a job just to have a job. Some people take a job because they like what they’re doing,” he said. “Finding the right people is really important.”
The second driver is one he didn’t create. Administrative work has climbed so sharply that physicians running their own offices are calling him to join. When he started, the practice had about one biller for every four physicians. Now it is roughly one per physician, driven by chasing claims, sending in documentation and fighting automatic downcoding. The practice now sends notes for every patient billed at a level four visit.
“The game has changed so much,” he said. “The amount of administrative burden that we have right now, and everything that we have to do to get paid for what we do — it’s crazy.”
The practice built layers of administration to absorb that work and keep physicians focused on patients. Word got around. “People say, ‘You have a good practice. I’m sick of running mine. Can I just come work for you?'” he said. “I get calls and resumes all the time.”
What keeps the group together, he said, is that everyone pulls the same way: “The selfish guy is not in the group.”
A fellowship as a pipeline
Scale gave the group room to train. With a deep surgical caseload and physicians who like to teach, the practice launched a fellowship, which Dr. McEneaney co-directs.
“It’d be a waste not to do this,” he said.
The program has doubled as a recruiting channel. The practice has hired fellows after training, bringing on physicians who already know the culture and fit it. Fellows also save attending physicians time during the day and push them clinically.
“They’ll come in being trained by other people and say, ‘Have you seen this new technique?'” he said. “Medicine’s constantly changing, so much faster than before. These guys come in with new ideas, and all that is great for patients.”
PE is a buyer; hospitals are the bigger threat
As lawmakers weigh limits on private equity and management services organizations in physician practices, Dr. McEneaney sees PE less as a villain than as a buyer that fills a gap.
The traditional exit — selling to a young physician — is fading. Residents finish medical school with as much as half a million dollars in loans, he said, and running a practice now demands fluency in billing, coding and payer contracting. “Private equity provides an option for people to sell their practices,” he said.
His bigger worry is hospital consolidation. A health system that employs its own podiatrist can redirect HMO referrals, inpatient consults and emergency department call almost overnight — which, for an independent physician, can be a third to half of a practice.
PE deals carry their own risks, he said: Some firms push efficiency hard to extract returns, and physicians who sign on only for the payday often don’t understand what’s expected of them. “You have to know who you’re getting in bed with,” he said.
But he places the root problem elsewhere — with regulation and payers. He said physician reimbursement has been cut 32% over the last 20 years when adjusted for inflation.
“I don’t think private equity is the evil that everybody wants it to be,” he said. “PE wants to see you make money. Hospital administration wants you to do medical stuff a certain way. That’s a big difference.”
Advice for would-be owners
Most residency programs are now hospital-based, Dr. McEneaney said, and they train physicians to work inside hospitals — not outside them. Physicians drawn to independence have to learn a different system.
Ownership means splitting time between patients and the back office: billing meetings, patient complaints, compliance and state business rules. “All of a sudden you get a letter in the mail that says, ‘This is past due. You have 30 days, or you’re shut down,'” he said. “You’ve got to keep track of all that kind of stuff too.”
Delegating isn’t a way out. “Some people think, ‘I’ll own the business, I’ll make more money, I’ll be my own boss, and other people will handle it,'” he said. “But those people need to be managed. I’ve seen a lot of doctors let a lot of money go out the door because they’re too focused on seeing patients as an owner.”
His recommendation: Work for a private practice first, learn how it runs, then build on those skills. He has watched physicians open practices and close them two years later to return to hospital employment.
For those who stick with it, he said, the payoff is real. “It’s nice to be able to take care of patients your way, and to sit back one day and go, ‘Wow, look what I’ve built,'” he said. “But it’s a grind. You have to be ready to really understand it all.”
At the Becker’s 32nd Annual Meeting: The Business and Operations of ASCs, taking place October 29-31 in Chicago, ASC leaders, surgeons and healthcare executives will explore strategies to drive growth, enhance operational performance, navigate reimbursement challenges and prepare for the future of ambulatory surgery. Apply for complimentary registration now.
