I mean, hopefully we evoke some questions or whatever it is to see how we can change your practice or whatever it is. So I throw it open to anything goes that we'd like to hear, you got to say something. So is there a question about getting out of your practice? Is it about what to do specifically today in social media if you're not doing it? What do you feel, I got to evoke something, I know it's still a little early, but we left plenty of time for that on purpose, anything. Gary, while they're thinking about it. So it is about... I have a question for Gary. Okay. Yeah. I love it. I'm intrigued by your statistic of 30% of your clients right now in this space are hospital employed or tied up to a PSA. That is very interesting. Be careful with abbreviations for me. I hate abbreviations. Professional service agreement. And what is that? It's a contract between a group and a practice to provide orthopedic services. And a lot of all sorts of different stuff can be included in that in regards to employees and Gary went over that. But it's a way to become... It's sort of like hospital employment light, easier to unwind than hospital employment, but that's really intriguing. Wait, before you answer Gary, let's see. Can you guys raise your hand if you're in private practice? It could be any one person, two person, three person. And if you own it or you're part of an ASC, could you raise your hand? Great. If you're an employed physician or something, you work in a hospital base. So it's about 50-50, just so you know in your audience, it's important. So a PSA, essentially the doctors in a group that was independently practicing is technically leasing itself to the hospitals, faculty practice or captive PC, physician enterprise. And all of the professional services, whether it's at their office, which is now technically a branch office of the faculty practice or physician enterprise of the hospital, all your professional services are billed through the hospital and it's captive. That's a PSA. So yes, I think right now 30%, the deals, we just closed a deal in cardiology where we extracted a group from a PSA in Colorado and there's a lot of interest in orthopedics right now. What do you mean? I'm not letting you go that fast. I'm a grinder here. So you extracted someone. So a group originally had a contract or you got them a PSA contract? They were under a PSA for 12 years. So they chose to have a different type of employment under the PSA. No, they were under a PSA tied to the hospital. All their services were billed by the hospital. They got whatever, X dollars per work RVU and also other fees for on-call and medical directorship. So all of their money, they didn't get paid by payers. They just got paid from the hospital or the hospital affiliate. So that's why they're kind of totally leased to the hospital. And they elected, they were approached by a private equity firm. This one was cardiology. And they said, hey, you know, we could set you up in offices in the same locations, you know, and they had the flexibility to give a 90 day notice after they signed their deal with private equity, which is very lucrative, like, you know, tens of millions of dollars. And they hated the hospital. They thought the hospital was shorting them on their RVUs. They report the RVUs. They think the hospital wasn't paying them, was downcoding or reducing some of the RVUs. And they were complaining about it for years. And they had other frustrations too, but that was the big one. And so they signed this contract. The private equity firm established the offices for them. And once they signed the contract, they gave a 90 day notice to the hospital. The private equity platform, which had other practices in the region and other states, set up the practices because they were experts in it, and they are. And at the end of 90 days, they go live now. So they're still under the PSA, but they've given their 90 day notice. And in another 45 days or so, they're going to be, you know, let's call it September 1st, just for the sake of argument. They're going to be in independent practice again. You know, they've already gotten significant funds, and some of it's in the rollover equity. And they're going to be detached from the hospital, okay? So that's what it means. So have there been a lot of those deals? No. There have been a few in cardiology and one, I believe, in orthopedics. But we are talking, we have clients right now. I would say about, yeah, 30% of our clients right now are employments, employed at big academic health systems or big hospital systems or have in PSAs with them. And we've reviewed their agreements, we've plotted out how they could extract. And now they're, you know, through a banker or a consultant, they're now talking to various orthopedic platforms. So that's how it works. It hasn't broken through, but I think that over the next six to 12 months, you're going to see at least a dozen of these, you know. So when they say it's not about the money, it's always about the money. No, it is in life. So you know, we have to be, as doctors, a little skeptic. So help us, because someone's making money on the back end. I understand the doctor gets something, but doctors sometimes have a, they just can't wrap their head around if you, I grew up in a non-doctor family. Dad was a CFO of a big Fortune 100 company. My dinners were not easy, to put it mildly, when the quarterly earnings had to come out. So help me to calm the native beast and the doctor saying, yeah, you're going to make something, but what are the other people making in this? That's the impetus that suddenly business said, oh, I can't make money doing selling stuff at Kmart, so I'm going to now go into the doctor business. What do you think to help us for that? Right. So as I said several times, it's not right for everybody, okay? Investment bankers will say, oh, this is great, this is great. So basically, Lou mentioned in his talk that it's really hard. Some physicians who are employed by a hospital, hospitals still allow them to invest in ASCs. But it's minuscule, you know? It's again, just to kind of trap them and keep them quiet. It's not the same as being part of an ASC where, you know, you have more equity and it's run by experts. Again, hospitals don't, you know, run physician practice as well, again, most. There are some good ones out there, but they're few and far between. They don't manage physician practice as well, and I don't think they run ASCs well. But there are these big national companies that help with that, like USPI, Surgery Partners, SCA. But I do think that there's definitely a more direct financial benefit to kind of backfill these other reimbursement reductions that you get when you leave a hospital and you have a bigger stake in an ASC. And how do you pick? I think it's all about growth, right? The only reason why private equity is interested in orthopedics is because the growth curve is substantial, right? And they realize that. What do you mean by that? In other words, there's increased, going to be a big increase in procedures, volume, and there's going to be a migration to a site of service that has less cost. And those two things are going to drive profitability, right? So that's the reason why they're interested in orthopedics is because of the growth potential. So I would add to Gary's point about why would you do private equity? The only reason to really do it is to grow your practice. If you look at large practices that have sort of integrated and are vertically integrated and are really good at what they do, sometimes they struggle. They do struggle. I've talked to several who run these things. They struggle to get 3% growth, 2%, 3% growth. They can't break out of that. You know, our goal is 5% growth base bottom, right, for each practice. Well, how are we going to do that? Well, there's a lot of different levers you pull on that. But that's the value add. It's the infrastructure to accomplish that, right? It's not just, oh, I'm going to get a big bag of cash. I'm buying a company. I'm investing in a company that's going to grow my practice and all the practices that I partner with. And it's not- ASCs is the main driver and very profitable. But orthopedic surgeons have the most ancillary services. There's imaging. There's physical therapy. There's DME. There's orthopedic urgent care. There's occupational health. So they love that opportunity. The main one by far is ASC. There's others too. There's a question. Please. Well, I don't think anybody answered the question that I was trying to ask. How much money I didn't make in the back end? You know, these companies, I won't. Okay. Nobody asked that question. So the basic model, let's assume, you know, in the deals I've worked on, doctor's value can be anywhere, let's just say on the low end, you know, $2 million to $4 million. Okay. Let's just take $3 million. So your value, so there's 10 doctors. It's $30 million and it's $3 million a doctor, right? So let's say 70% of that gets paid to you in cash at the closing, right? So 70%. What was the example I gave, $2 million or $3 million? $3. $3 million. So $2.1 million comes to you at closing. Tax advantage, like it's not like ordinary income. It's long-term capital gains. The other 900,000, the other 30%, you get equity in that platform. Okay. The private equity investor, if this is the very beginning, also has equity in that platform. What they're trying to do, and most of them do, is to grow it to three times that value over a period of maybe on average five years now. Okay. So that rollover equity, not only the cash you got, which you can then invest, but that rollover equity, they have the same equity and they're in this to have growth and they want that equity to go at least three, I've seen five, to go at least three, but I've seen two, but to go at least three times in three to five years. So that means that in five years, they're expecting the value to grow of the entire enterprise. Okay. From 30 million to 90 million by adding on and investing and all that over five years, which means their investment went up three times, but that 900,000 that you have also has gone up three times. I think what you're talking about is the flow through to the MSO, to the company, right? So what happens is that the doctors take a cut in pay when they do a deal like this. It can be anywhere from 15% to 40%, it's usually around 20 or 30. So that 30% flows through, that's what they've determined to use. It flows through to the MSO. Wait, so you use some abbreviations again. It's not fair. We're very good at ACL. A management service organization. So what happens is that when you do one of these deals, you form a management service organization that manages the practice because there's many laws against the corporate practice of medicine. Non-doctors can't be involved in owning businesses that practice medicine. So the MSO allows for that to happen. So the MSO is the company that everybody has shares in and its flow through is 20 to 30%. But wait, Lou, as we finish it. So we take a cut in pay, but we get some money. So how do we make it up? Let me give an illustration. I think it would help. I didn't realize that was the question. So let's go back to that group, okay, that's worth $30 million with 10 doctors. How did you get to the 30 million? Rewind. Each of those doctors hypothetically makes a million dollars a year. They take- They collect that or they charge it? Their compensation, their annual compensation is a million dollars. A lot of doctors are more than this, right? But let's say it's a million dollars for easy math. You take a 30%, it could be 20%, it could be 40. You take a 30% pay cut. So you now going forward, each of you go down to 700,000. So that 300,000 that's reduced times 10 doctors is $3 million. That's called the EBITDA. And if you multiply it, in this case, in my example, by 10 to come up with the value of the practice, the value of the practice is 30 billion. So when you go back to the doctor, okay, you're giving up, everyone's giving up 30% of their comp. But by all of these things that Lou talked about with the ASC and other improvements and payer rates and otherwise, they're expecting, it's called income repair. That's 700,000 to go up without working harder to go up over the next few years back to where you were. So that you got the payday, it's better managed now, there's cost savings, there's better managed care rates, there's ASC and expanded ancillary. Does the businesses, these businesses contribute to the practice or it's just using money from within or they bring money? They use that 3 million. So everybody went down to 700,000. So they got 10 times 300,000. They got that 3 million. They use that 3 million and they put more of their own money in as needed to invest in growth. Okay. Yeah. Yes, please. I'm about to join a position on a private practice group in about a month and I'm finishing up my fellowship. Congrats. They have assured me verbally, not in writing, that they have no plans to go private equity anytime soon. Now, according to your stats, it seems like it's happening pretty fast. Before I have a chance to make partner with them, which will be at least a year, if they were to decide to go private equity, how was that going to affect me moving forward? Well, I actually have spoken to folks like you that are coming out of fellowship and looking at contracts and they've called me because they've seen articles I've written and whatnot. And I do think that that's a potential issue for you and that you want to try to address that in the contract. If they go to private equity and you're not an owner, you don't participate in it. They will give you an opportunity to invest like they had rollover equity. You know, like in my example, if it's worth $3,900,000, they're going to give you an opportunity to invest over time so that you can be aligned in that. And they're definitely going to want you to be in the ASC ownership. So one of the major concerns of practices in partnering with PE is the ability to recruit new doctors. So you have to have a pathway for your recruit or your recruited physicians to become partners and to be invested in the MSO. So for USOP, we don't want to have any doctors who aren't owners. We want everybody to be an owner. So what we do is we set up a little holding company when we do the deal that holds equity for future partners. And that's what you want to, you know, that's what you would need to do. You need to say, okay, I'm going to, no matter what, I'm on a two-year track to partnership, right? I'm going to ramp up over two years. They're going to pay me. That's not going to be affected by PE. What will be affected by PE is your salary after you become partner. But what you're really interested in is that equity that they're going to hold for you. So if you become their partner and they pull the trigger on PE, don't freak out. Just make sure that they have that pathway for you to become invested in the company. That will include all of the ancillaries. Correct. Right. Yeah. That's all part of the opportunity to buy into that. You actually don't have to buy in. That's the nice thing about this. You won't have to give them any, you don't want to have to give them any money, right? You want to be, you want to get the shares in the company when you become a partner. And that transaction is, that's, there's no money that transacts and there's no tax consequences to that either. But you could, I've advised some, some fellowship folks who are concerned about this and they said, how can I really protect myself? And I said, well, you can ask for something. They might not allow it, but you could say that if there's a private equity transaction before I become partner, and as long as my production is appropriate and I'm in track to be partner, you'll make me a partner right before the transaction. Now, the reason for that is in my example, and most won't agree to it, but the reason you could ask if they, if you're really important to them is that in my example of $3 million, right? The 2.1 million, which is long-term capital gains. So you would not get long-term capital gains. You would have the worst tax treatment. But the good part is that 900,000, that whatever the rollover equity is, if you're an owner the day before the deal, that, that rollover equity comes to you tax-free. If you're not an owner, you're taxed on when you get it. So this is given to you. Sorry if that's complicated. There's a question and then we'll stay here to answer it because you have busy days. Go ahead. Dr. McIntyre, I'm in Florida, non-CON state. What's killing us right now are the Medicare Advantage plans, which are just proliferating on the West Coast of Florida. Any advice on that? Because that's killing our joint reimbursement for the surgery centers. You own it wholly? Surgery partners in general. Yeah. Do you, do you have like a one vendor? Do you do one vendor for all your... One vendor for all the joints. Right. Yeah. So you've got a great price and all this. Yeah. Yeah. That's, that's tough nut. I mean, some stuff you just can't do. I mean, if you can't do it, you can't do it. Meaning? One second. I'm a tough guy. Meaning they should stop doing the joints? Well, if you, if you can't make any money on it, you can't do it. So the Medicare, the Medicare Advantage plans are taking about 15% down in where we are in Florida. And you know, at 10,000, it's 8,500, 8,300. It's just starting to get smaller and smaller. Yeah. Yeah. You know, you can certainly select who, you know, and obviously it affects your volume,

private equity

medical practices

orthopedics

professional service agreements

physicians' compensation

Medicare Advantage plans