Dermatology: Physician Practice Management Fees
Dermatology physician practices cannot be owned directly by non-physicians in states that ban the Corporate Practice of Medicine like California, New York, and Texas. Physician practice management arrangements are used by private equity firms, platform physician practice companies, publicly-traded practice operators, and other for-profit businesses to manage the non-medical staff, facilities, equipment, supplies, and business services of dermatology practices.
Under turnkey management arrangements, for-profit management companies charge independent medical Professional Corporations (PCs) management fees to provide facilities, equipment, supplies, business services, and non-medical staff. According to surveys, fixed percentage rates of medical practice revenues are the most common form of physician practice management fees.
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Dermatology physician practice management fees can vary substantially from practice to practice for several reasons.
- Sub-specialty Mix: Management fees need to be calibrated for your subspecialty mix. Practice expenses (and management fees) are not the same for every dermatology subspecialty. Some dermatologists are generalists, while others specialize in MOHS surgery, dermatopathology, pediatric dermatology, dermatological immunology, and procedural dermatology. Dermatology groups have different combinations of generalists and sub-specialists.
- In-Office Ancillaries: Each dermatology specialist uses specialized equipment, instruments, and lab services in their offices, as well as third party facilities. Superficial radiation therapy (SRT) can make up one-third or more of practice income in dermatology practices that provide this service in-office. In-office laboratory and pathology services can also make up a large proportion of practice income. Though these are Stark-Designated Health Services (DHS), these services can be provided under the in-office ancillary exception to the Stark Laws. A management company may provide the specialized facilities, equipment, supplies, and support staff necessary to furnish these services in-office.
- Regional Geographic Costs: Labor, real estate, supplies, and other expenses vary widely from market to market. Practice expenses and Fair Market Value dermatology practice management fees vary from market to market.
The American Medical Association, Medicare, and the medical specialty societies spend appreciable time each year administering practice expense surveys and compiling data on the practice expenses for every physician service provided under all physician specialties. This practice expense data can be compiled and aggregated for the services provided by each type of dermatology specialist and sub-specialist.
Turnkey Practice Management Fee Ranges for General Dermatology
Dermatology services can expect favorable growth trends from the aging baby boomer demographics for the next several decades. Dermatologists will have no problem finding national dermatology networks and management companies willing to provide back-office support for their practices.
A growing number of states have enacted mandatory state-level reviews of material transactions involving healthcare organizations and management service organizations (MSOs).
California, New York, Illinois, Washington, Oregon, and Minnesota have all enacted requirements for state agencies to review material transactions in healthcare. Future business transactions involving dermatology practices in these states and other states may trigger reviews.
If a state review is required, you want to make sure all your management arrangements are in compliance with applicable state and federal laws. A Fair Market Value opinion of your management arrangement can provide evidence that your management arrangement is legitimate.
We have the data!
The DataRise™ Physician Practice Management Fees data subscription is the most robust and authoritative data for comprehensive turnkey physician practice management arrangements.
Purchase the data subscription today, or contact Coker directly for a formal Fair Market Value opinion.
