[cytek1]

Gonna need some actual values. Not sure I buy the 12-13 year break even point.

Hope RP stock doesnt go like mednax.

[scandoc]

Are you in a location that can recruit to?

[kathleen.hibler]

Do you have a lot of employees on partner track?

Expect 3/4 of them to jump ship

Are you in a desirable major metro area? If not, you will definitely not be able to fill the positions. If you do, youll still struggle in this market (which shows no signs of letting up)

Youll be doing the work of everyone who left, but you wont be paid any more.

Are there a lot of people near retirement or getting close to that point ? Youll be doing their work too the minute this deal vests (will probably be the straw that breaks the camels back and cause your hospital to find a new radiology provider)

You calculate 12-13 years break even, you need to check your math.

Anecdotally, I know of one person in mid RP vesting period who is so unhappy he is looking for another position in another state. He thinks the risk of litigation for the buyout money is worth it

[Dr_Cocciolillo]

12x is crazy high.
Id question that.
The more you go into the deal, the more You will realize how little fringe benefits there are. So make sure you take that into consideration. They would not be doing the deal with you if it was a 12 year break even point. Feel free to PM me.

[julie.young_645]

Tell the senior partners there’s more to life than money. Don’t forget the little things like integrity, being able to sleep at night and look yourself in the mirror, etc. Let them know that the rest of the radiologic community will look upon them with disgust. 
 
It probably won’t make a difference, but at least you will have tried. 

[Unknown Member]

I’m surprised one of the pros isn’t “transforming radiology”.

Look, all I know is that Phoenix had decent groups people used to want to go and work for and now with RP they have a perennial hiring problem. I see their ads on ACR frequently and sometimes they conceal the fact they sold to RP.

There’s the cash you get, the portion tied up in their stock, and the ~30% shave job you channel to RP middlemen who don’t read films. Then there’s the severe manpower crunch when associates head for the door.

It’s too bad the whole thingvis shrouded in secrecy and stupid NDAs. Which is perfect milieu for shenanigans.

[Unknown Member]

12-13 year breakeven point on a buyout?  Wow, that sounds like a heck of a deal.  Nice to the point of taking the deal, then cashing out all of your bank accounts and moving to a non-extradition country in the dead of night kind of deal.  
 
Unfortunately the list of non-extradition countries is not full of ideal destinations.  Although I’ve heard Vietnam is pretty nice.
 
Seriously though, that aspect of the deal seems like the result of some numbers massaging.  Are you allowed to run the proposal by an accountant or other independent financial professional who can provide a clear view?
 
 
 
 
 
 

[Unknown Member]

Metro area. Would be competing with other non-corporate PP groups and academic group for future recruits.
 
Very few employees in group, most are partners.
Probably 10-15% of partners will look to retire before a 5 year contract with RP is fulfilled.
 
I don’t know details, other than what other similar groups have gotten. But, for the math:
Say you went from 600–>400, and you get a 8-10x multiple, you are looking at $1.6-2M (20-25% stock, up to to 80% cash), which is taxed at a lower rate (20% vs 37%). It will take around 11-13 years to make that same amount back (again, not including for investment returns from buy out or any return from RP stock, which could push it to 14-15 years!)
 
Anyone actually work for RP and confirm they are hands off and leave the groups to run their own shop? Would need some better arguments against selling to convince some of the older Rads looking to retire in less than 10 years.
 

[scandoc]

Metro like metro in cleveland or columbia south carolina or metro like SF bay area or NYC? No offense to cleveland / columbia of course but the location matters

[Unknown Member]

Quote from I’ld MR that

Metro area. Would be competing with other non-corporate PP groups and academic group for future recruits.

Very few employees in group, most are partners.
Probably 10-15% of partners will look to retire before a 5 year contract with RP is fulfilled.

I don’t know details, other than what other similar groups have gotten. But, for the math:
Say you went from 600–>400, and you get a 8-10x multiple, you are looking at $1.6-2M (20-25% stock, up to to 80% cash), which is taxed at a lower rate (20% vs 37%). It will take around 11-13 years to make that same amount back (again, not including for investment returns from buy out or any return from RP stock, which could push it to 14-15 years!)

Anyone actually work for RP and confirm they are hands off and leave the groups to run their own shop? Would need some better arguments against selling to convince some of the older Rads looking to retire in less than 10 years.

24% (not including state income tax) don’t forget NIIT (net investment income tax)

[Unknown Member]

Just say no.

[Unknown Member]

Im a bit fuzzy with the math example. So, going 600 to 400, leaves 200. Ok. The example has a 5 year contract. Ok, 5*200 = 1 million.

***One can do some additional calculations comparing the value of X amount of money now vs the value of X amount of money Y years in the future. For the sake of simplicity, lets leave that alone for now.

So how did you get an 8-10x multiple? Youre not giving away a cut of one years salary, youre giving away a cut of 5 years salary, or however many years you have to commit.

In addition, you are not getting all cash, since 25-30% of it is RP stock/scrip which can be devalued at any time. Knock 25% off that 1.6-2 million and you get 1.2-1.6 million. Which is getting pretty close to the 1 million worth of the salary cut you are taking as described above.

The additional bucks are well worth it to lock in an experienced rad for years, especially when they will kind of have you over a barrel since you now work for them. What do you do if they cut your vacation, increase your workload, hours, weekends, etc.? If you quit youve got to give them back the money?

[brunohaider]

From what I have heard, early deals may have been 80% cash, but the more recent ‘deals’ have been closer to 20% cash and 80% “stock”.  Or, as my attorney says, “magic beans”. 
 
RP sites are perennially short staffed, and guess who’s going to be doing that extra work? 

[khodadadi_babak89]

“magic beans”  – – perfect!
 

[Unknown Member]

80% stock? Come on, that cant be real. Thats like saying they pay you in Disney bucks, except that Disney bucks can actually be exchanged for goods and services in one particular place.

[Unknown Member]

This is my question:
 
What happens if you sign the deal and get the money but one year down the road you don’t do your work. If they want to kick you out, do you have to pay them a penalty? 

For example let’s say you don’t read high volume or you show up to work late or let’s say you generate some crappy reports or even don’t show up to work. Can they take back the upfront money from you? 
 
 

[kathleen.hibler]

How deranged to you have to be to expect RP stock to increase?

Their loans are junk bond rated (as in, those that have analyzed their finances are skeptical of their ability to pay it back)

You have to go into the deal assuming the stock will be worthless. If the cash component makes the deal palatable, only then should it even be considered

[Dr_Cocciolillo]

Recent deals are 20 percent – 30 percent stock

[link=https://www.radiologybusiness.com/topics/healthcare-economics/private-equity-and-radiology-bloom-rose]https://www.radiologybusi…d-radiology-bloom-rose[/link]

Good basic article

[Dr_Cocciolillo]

Watch out for the indemnity Clause. Some are 2x-4x the buyout amount.

Realize that salary quoted is misleading
You will likely pay for
1) health premium for spouse and kids 15k
2) cme out of pocket
3) disability
4) any other fringe benefit you currently get
5) have to read higher volume to earn that quoted salary.
6) crazy non compete

The deeper in the negotiations you get , the less attractive it may look.

[Unknown Member]

Quote from wisdom

Watch out for the indemnity Clause. Some are 2x-4x the buyout amount.

Realize that salary quoted is misleading
You will likely pay for
1) health premium for spouse and kids 15k
2) cme out of pocket
3) disability
4) any other fringe benefit you currently get
5) have to read higher volume to earn that quoted salary.
6) crazy non compete

The deeper in the negotiations you get , the less attractive it may look.

 
Thank you guys for the responses. Feel like we have a bit more ammo for our counter arguments for selling. 
 
To summarize, it is not a bad deal financially (the carrot):
Break-even due to tax savings alone is still around 12-13 years with a 9-10x multiple (i.e. salary haircut x 9-10), and technically would only be locked in for 5 years, then could jump ship.
 
But, the risk of older guys retiring and struggling to hire new rads, loss of operational autonomy, and loss of fringe benefits (no CME, no 401k contributions, no disability, no healthcare, etc) certainly has monetary value as well as pure peace of mind. 
 
Prefer to keep things copacetic, and weather any future economic downturns/healthcare reforms with full control of our situation, rather than being dependent on the big brother PE firm (who will always eat first!).
 

[Unknown Member]

Nicely put.

Would suggest quantifying those fringe benefits. Once you total them up, theyre not very fringe.

[julie.young_645]

It’s easy for me to say it, but the young’uns have only one point of leverage: Declare that you will quit [i]en masse[/i] if the old guys go for this. And make it clear that it isn’t an empty threat. 

[cchandc]

I was a partner in a group entertaining buys outs from RP, mednax, an Ohio group.

The math the OP gives is the exact same math RP had given us. I never understood it as i was taken on as a partner at the very beginning of the negotiations and missed the first few meetings- and no one in the group could repeat explain more than what OP did.

Anyway, my old group hired a company to help negotiate the deal as well as paid high lawyer fees for the process. Wasted a bunch of money pursuing it. The group was mostly old rads 50-70 yo. Plenty in good position to retire.

I left part way through the negotiations. I had no interest in it. The money sounded to good to be true- i couldnt see how they got the numbers they got…. and the work was in a shitty area with a long commute. I didnt want to be a corporate rad so early In my career. I had no interest in being locked in as a slave for 5 years. The group was vastly understaffed and difficulty recruiting as it was due to the location.

The sale never went through though. I never got the whole story. People in the group couldnt agree to all conditions. Im guessing the payout ended up not being as good as what they were thinking.

[al.georgiev_193]

This deal is getting worse all the time – Lando Calrissian, on negotiating with the Vader and the Dark Side

[Unknown Member]

Quote from Suprasellar Cistern

This deal is getting worse all the time – Lando Calrissian, on negotiating with the Vader and the Dark Side

Nice. I watched the video clip-
 

Hospital administrator towers over radiologist- Perhaps you think you are being treated unfairly?
Radiologist- No.
Administrator- Good. It would be unfortunate if I had to give your contract to RP.

[Unknown Member]

Younger radiologists (<5-10 years in practice) are afraid to walk. Plain and simple. I made a decision after starting out in a corporate gig that I will always leave a less than stellar deal. The minute I see unfairness I will point it out but if not corrected Im out the door

[radiologistkahraman_799]

If enough you younger partners, why not just vote it down?

[julie.young_645]

Junior partners may not have a vote at their stage.

[Melenas]

Any updates on what happened? 
 
Not sure I understand all the short hands so let me see if I get this:
You are private practice group say making 600k total (including 401k, malpractice, CME, health etc) per partner. RP wants to come in and buy your practice. 
 
They pay each partner 1.5 million but only maybe 500k upfront, the rest in stock option. But in order to get the 1.5 million you have to keep your current practice going for 5 years? But you also now have to provide your own CME, malpractice, and 401k? 
 
That 1.5 million they promise to give you, you could earn by working in your current PP group for 7 to 8 years and investing heavily on your own. In my example is the ‘breaking point 7 to 8’ years? 
 
They are NOT paying each partner 1.5 million our right correct? you generally have to stick around and keep the operation going?
 
If they said, we will pay each partner 1.5 million as a buy out with no strings attached I think that’s attractive. You can take that 1.5 million invest it and move somewhere else and work. 
 
Did I understand the basic of this? 
 

[ruszja]

Yes.

[Melenas]

FW. 
If what I just typed is the big picture, why would anyone want to sell to RP?
 
It isn’t like they are promising to give you a huge amount of money to buy you out so you can go somewhere else. Or even give you a huge pay out at the end of 5 years (maybe they do???).
 
They are promising you money THAT you could earn on your own as a PP rad. 
 
 

[clickpenguin_460]

I thought the payout was 2-3 million so the people within 5 years of retirement (the partners/executive councils/etc.) would take it and run.
 
If that’s not true then I have no idea why anyone would sell to RP.  Not only does it screw over your group and the future of radiology, but it doesn’t even make business sense on a personal level.
 
Something is missing here.

[Melenas]

IF the pay out was 2 to 3 million and I was a starting out as a partner, I’d take it too. Not that easy to get to that level quickly. Its like winning a lottery and taking the lump sum. 
 
But I doubt that’s the case. There’s probably a huge clause to favor the corporate side. 
 
I guess you have to decide how important is ‘autonomy’ versus getting a nice pay out (if true). 

[katiedavies05]

I was in a similar position with our group about 2 years ago.  We had multiple offers from multiple PE outfits including RP.  We looked at it very closely, even had a partner vote, we turned them all down.  I am very glad we did (although I was in favor of it at the time!)  The financial issues are just one issue to say no.  The payout is too low for what you give up and the value of the stock they sell you is doubtful to say the least.  The biggest issue is control.  All the PE groups I know of have laid off rads and or drastically cut pay in response to Covid volume loss.  As a group of partners, we decided to share the pain, no one was laid off.  We are on the back side of that pain and doing well again and stronger as a group of partners and colleagues and friends than we have every been.   We had some new rads hired who started this summer who are great, while many other groups cancelled contracts with new hires as part of their Covid response.   I want to be in my group, with our culture, not a employee of an organization that is in it for the money only.  I cant stress this enough.  If you sell out, you will regret it, you will not be able to be the physician you want to be, you will be a cog in a machine that grinds on for the benefit of others, not you and not your patients.

[clickpenguin_460]

Quote from besetrad

I was in a similar position with our group about 2 years ago.  We had multiple offers from multiple PE outfits including RP.  We looked at it very closely, even had a partner vote, we turned them all down.  I am very glad we did (although I was in favor of it at the time!)  The financial issues are just one issue to say no.  The payout is too low for what you give up and the value of the stock they sell you is doubtful to say the least.  The biggest issue is control.  All the PE groups I know of have laid off rads and or drastically cut pay in response to Covid volume loss.  As a group of partners, we decided to share the pain, no one was laid off.  We are on the back side of that pain and doing well again and stronger as a group of partners and colleagues and friends than we have every been.   We had some new rads hired who started this summer who are great, while many other groups cancelled contracts with new hires as part of their Covid response.   I want to be in my group, with our culture, not a employee of an organization that is in it for the money only.  I cant stress this enough.  If you sell out, you will regret it, you will not be able to be the physician you want to be, you will be a cog in a machine that grinds on for the benefit of others, not you and not your patients.

 
Great post.  Glad you all stuck it out!

[khodadadi_babak89]

just keep one thing in mind. 
You can’t believe one thing they say. everything they say is potentially a lie. 
You can’t do business with a company like that.
 

[ljohnson_509]

Why do you know not to do business Phil but countless groups in the country dont? Is it the sweet talk from the suits or the radiologists to blame for being short sighted?

[mpezeshkirad_710]

I thought corporate groups sweet talk hospital admins, who then let them take over a contract

[leann2001nl]

Greed

[forgottenegao_866]

The corporate PE firms do both. RP and Envision will sweet talk both the rad group and the hospital admins. They dont care about the rads or the quality, they only care about getting the contract to increase there reach for the hopeful sell off down the road. If they were in it to make money for the physician how come none of the nephrologist from DeVita made out like bandits when the sell off happened.

[JohnnyFever]

Venture capitalists play this game for a living. It’s not hard to see how a small group of physicians would be outmaneuvered.

[afazio.uk_887]

I can only think of of one scenario where it would be better for the Rads – that is if they sell them a contract that is in reality is likely worth less than what they are paying for it.  Examples would be a contract for a group that is not particularly stable longer term for whatever reason – smallish, poor relationship with hospital admin, difficult partner personalities, local mega-group or academic expansion threatening etc…. in this case the group partners may come out in a better situation.  I know a few groups that did just that in the earlier days, but I think over the years the VC groups have gotten smarter at evaluating practices. 
 

[reuven]

Quote from Waduh Dong

I can only think of of one scenario where it would be better for the Rads – that is if they sell them a contract that is in reality is likely worth less than what they are paying for it.  Examples would be a contract for a group that is not particularly stable longer term for whatever reason – smallish, poor relationship with hospital admin, difficult partner personalities, local mega-group or academic expansion threatening etc…. in this case the group partners may come out in a better situation.  I know a few groups that did just that in the earlier days, but I think over the years the VC groups have gotten smarter at evaluating practices. 

 
A radiologist with no formal business training who thinks they will outmaneuver PE when making a deal with them is unconscious of their incompetence and in store for a rude awakening 

[khodadadi_babak89]

Quote from Drrad123

Why do you know not to do business Phil but countless groups in the country dont? Is it the sweet talk from the suits or the radiologists to blame for being short sighted?

 
I’ve been down the road a few times. AND – I value maintaining control of my own work environment above grabbing for every last penny. 
 

[Melenas]

So why are they (RP) so successful?
 
I see their ads all over ACR jobs. I think theres just about a job anywhere in the country if youre willing to work for them.
 
So if it is working, it must not be that bad. Things tend to implode if they suck.
 
 

Quote from Phil Shaffer

Quote from Drrad123

Why do you know not to do business Phil but countless groups in the country dont? Is it the sweet talk from the suits or the radiologists to blame for being short sighted?

I’ve been down the road a few times. AND – I value maintaining control of my own work environment above grabbing for every last penny. 

[khodadadi_babak89]

well… the plethora of ads for jobs means they can’t fill them, right? Not exactly a success. The successful practice is not the one that advertises randomly for radiologists, it is the one that radiologists call because they want to join. 

also – there are  practices that do sell out for the benefit of a few of the members, and also practices that are forced to sell by administrations. 
 

[satyanar]

Quote from peehdee

So why are they (RP) so successful? 
  

 
Successful? Just because you know of a lot of practices they own? It’s a classic lose a little on each practice and make it up in volume scenario for them now. I wouldn’t call that a success.

[aaishafatima999_432]

12 years is a long time. 
Tax policy can change drastically depending on Congress and the Nov. election. 
Tax policy can change 1 year ago/’retroactively’ a la Clinton in 1993. 
With radiology, changes over the last 6 mos. were pretty big. 
12 yrs with a national company? Call me a skeptic. 

[Melenas]

Maybe I misunderstood. I thought the ’12 to 13′ years was how many years worth of equivalent money they could make. NOT how many years they are tied into contract. I though that was 5 years? 
 
Someone explain? 

[forgottenegao_866]

From what Ive heard and talked with other it is 5 years. You owe them at least that before you can walk and not be penalized regarding you buyout. I also know they will and do go after those who leave early (unless retirement). Also for most it is not a lump sum of cash. In the early days I think you were able to get more cash up front but were encouraged to keep as much money in as possible so you can get the big payout once they sell to the larger fish. My friend said some of the partner at the Phoenix outfit left 50% of their 3Mish buyout in RP stock. Since sale over the past few years most of the partners are barely able to reach 300k and reading more RVUs ever month.

I think the question now is who is big enough and going to buy them out to make the stock worth anything? My guess is they are hoping AI or mid level can come in eventually and help to cut their costs by having to staff less rads.

[bradford.gildon]

Crazy, starting to look for my first job and can tell the future of radiology is dim.

[Melenas]

So forget the money thing – say it is a wash working as a group versus getting some pay out over several years. 
 
What is RP giving you that an employed position (say you go to the hospital and ask them to take you on), wouldn’t give you? 

[stan.janus_621]

.

[cieminsjohn]

Quote from Hospital-Rad

This is my question:

What happens if you sign the deal and get the money but one year down the road you don’t do your work. If they want to kick you out, do you have to pay them a penalty? 

For example let’s say you don’t read high volume or you show up to work late or let’s say you generate some crappy reports or even don’t show up to work. Can they take back the upfront money from you? 

 
Sure the contract has claw-backs to get all the money back if criteria aren’t met. 

[talhas_world_364]

Most hospitals own their machines and stand alone outpatient centers are getting less profitable. Some groups are justified in looking into selling

[forgottenegao_866]

So my experience in this arena is they are never what they promise. Every rad Ive known who has done it has regretted once they are shackled with the increased work load and cannot get any new people. They offer poor fringe benefits like no CME allowance no diasablity or retirement benefits any perks you do have they try to elongate to cut fat and increase CEO profits. Remember these PE guys are not in it for you to make money despite what they say they are only acquiring assets so they can sell your contract to the highest bidder if your group survives the sale. Remember that stock they give isnt worth a hill of magic beans when the sale comes you and every other doc is gonna get a pile of nothing. Tell your group to run away and quickly.

[ranweiss]

Probably not a bad deal if you’re looking to retire in 5 years and are already a millionaire. Doubt there are many long term benefits. 
 
Our (attendings ) group has been approached by RP and other companies with similar offers. Older partners always wanted to sell, got outvoted by younger partners who actually crunched the long term math and saw too high of risk, too little of upfront profit.

[drmoralesmontero]

You should also keep in mind that older partners will likely seek exclusion clauses that let them retire before the 5 year “vesting period” is over.  Those shifts will be then dumped upon you and the remaining rads while they cruise into retirement or take some “advisory job” with RP.

[radiologistkahraman_799]

Agree with Tony Tony Tony.

Same thing happened at old group. A bunch of the senior higher up magically dwindled after years 2-3.

[consuldreugenio]

Its pretty ridiculous that some rads are still persuaded by RP today. Greedy shortsighted googles on big time!

See above responses.

[mcampbell_392]

I got friends in RP Phoenix and Vegas.
The only thing all radiologists in those cities seem to agree on is that they made a lifetime mistake by selling to RP/MEDNAX etc. 
Vegas and Phoenix are now trash cans of corporate radiology groups….
Just say no to drugs!

[al.georgiev_193]

A plethora of job ads also means that theyre constantly understaffed, which puts even more pressure on those work work there

[khodadadi_babak89]

Quote from billbob35

I got friends in RP Phoenix and Vegas.
The only thing all radiologists in those cities seem to agree on is that they made a lifetime mistake by selling to RP/MEDNAX etc. 
Vegas and Phoenix are now trash cans of corporate radiology groups….
Just say no to drugs!

 
good metaphor – feels good at first, and then…….
 

[ariesanurhani_334]

I guess the bottom line is avoid RP and other corporates at all costs right? Dont be swayed by greed, there is no such thing as a free lunch!!!!

[afazio.uk_887]

I think that train has already left….. Rads is full of a ton of greedy boomers. RP gonna continue to grow and by the end of the decade have a big share of the market. Rads will look more like Anesthesia or ER at that point. Shouldnt be a shock, Rads is just the last hospital based field to go corporate.

[jtpollock]

Bingo

[mpezeshkirad_710]

Quote from Waduh Dong

I think that train has already left….. Rads is full of a ton of greedy boomers. RP gonna continue to grow and by the end of the decade have a big share of the market. Rads will look more like Anesthesia or ER at that point. Shouldnt be a shock, Rads is just the last hospital based field to go corporate.

I agree with this pessimistic prediction.
 
It doesn’t seem to me like anything is stopping the RP freight train.

[forgottenegao_866]

I agree with the above the corporate rad cat is out of the bag and is unlikely to disappear and will likely gain steam especially as the start weaseling the admin/MBA Types in hospitals they could care less about the physician and quality if they can save a buck.

I also agree the PP has problem for sure and partner exploiting associates or younger rads for final gain is part archaic and shortsighted especially in todays age. But your delusional if your getting paid for your work from the corporate guy. If they are taking 50-60 cents of every dollar you earn you are not being fairly compensated either. I guess it comes down to whether youd have some partners benefit from your hard work or some suit like Rich Whitley who doesnt read a damn thing ever benefit. In reality both option kinda suck IMO.

[Gdm4903]

I would prefer them to give me VTI or VOO stocks. LOL.

[kbrough_732]

Private practice rad here. Read on the side for envision and rp. I’m with Dr. Dong. Fact is the corporates are better able to allow and compensate for true work than private practice. Boomers expect work to be done without compensation, to be part of the group and to “earn it.” Don’t worry that they “don’t read prostate or neuro MRI” At least corporates pay you something for the work. I’m gonna get what I can when I can.