What Can San Rafael, CA Physician and Therapy Offices Finance?

Nearly everything in an exam room can be unplugged and carried out: a powered exam table, a diagnostic wall set with otoscope and ophthalmoscope, a vitals monitor, an ECG cart and the computer on its stand. A procedure room adds a surgical light, an autoclave and a minor-procedure chair. Each piece has a quote, a serial number and a working life of several years, and that is the shape equipment financing is made for: the item can serve as collateral, and the term can be set close to how long the item stays in use. Equipping a procedure room fits here. Building one, with new walls, plumbing, medical gas lines or wiring, is building work and outside this site.

Illustration only, invented figures: an internal medicine office replaces 2 exam tables at $7,450 each, adds an ECG cart at $11,800 and a vitals monitor at $3,250, for $29,950 in all. At an invented 9.6% annual rate, 60 monthly payments of $630.47 carry $7,878.20 of interest. Cutting the term to 36 months lifts the payment to $960.79, $330.32 more each month, and the interest falls to $4,638.44. Put plainly, the lighter monthly bill of the five-year version is paid for with $3,239.76 of extra interest.

An order of that size suits a small office. In Marin County, CA, 180 of the 282 offices of physicians in the 2023 County Business Patterns for the county had fewer than five employees, 63.8% of the total (NAICS 6211).

A physical therapy or chiropractic clinic buys a different set of things. Hi-lo treatment tables, a traction table, a combined ultrasound and electrical stimulation unit, a shockwave device, parallel bars and a recumbent bike are common pieces. Some cost a few thousand dollars, and one device can cost as much as the rest together, so the question is often which items to finance and which to pay for from cash.

Illustration only, invented figures: a clinic prices 3 hi-lo tables at $4,200 each, a traction table at $6,900, an ultrasound and stimulation unit at $5,600 and a shockwave device at $24,800, $49,900 together. Financed in one piece over 48 months at an invented 10.4%, the clinic pays $1,275.20 a month and $11,309.60 of interest. If it pays the $12,600 for the tables from cash and finances the other $37,300, the payment drops to $953.21, $321.99 less, and interest comes to $8,454.08, so the all-in loan carries $2,855.52 more in interest. The trade-off is $12,600 leaving the bank account on day one.

Chiropractors and physical therapists are counted under offices of other health practitioners (NAICS 6213), a code that also takes in optometrists and other practitioners. ZIP Code Business Patterns put that code at 46 establishments with paid staff at ZIP 94901 addresses in 2023; the ZIP does not follow the San Rafael, CA city line.

A visit billed to an insurer today is paid weeks later, while staff are paid every other Friday regardless. A business line of credit fits that kind of gap when it comes back again and again: the practice draws to meet payroll, pays the draw down when remittances land, and pays interest only on what is drawn, for as long as it is drawn.

Illustration only, invented figures: a family practice runs $18,600 of biweekly payroll, and in this example its insurer remittances arrive 35 days after the visit. A 35-day wait holds 2 or 3 paydays; the third lands inside it only when the first payday comes in the first 7 days. The practice draws $37,200 for the 2 paydays it is sure to meet. At an invented 13.5% annual rate charged by the day on the drawn balance, 35 days of that draw cost $481.56 in interest, and the line is back to zero once the remittances are deposited and the draw is paid off.

A one-time gap, for example the weeks after a change of billing service, can also be met with a fixed-term product; the medical practices page compares the two for provider hiring.

In a buy-in, an incoming physician pays the current owners for a share of the practice: its patient base and goodwill, its equipment and part of its receivables. That price is paid once and earns back over years, which is what a term loan is for. The share of the business can be financed; the building or an office condo the practice owns is real estate, and real estate loans are outside this site.

Illustration only, invented figures: a one-third share is priced at $210,000. The incoming physician puts $31,500 down from savings and finances $178,500 at an invented 10.25%. Seven years of payments at $2,986.42 each total $250,859.28. Ten years instead: $2,383.67 per month ($602.75 less), yet $286,040.40 paid by the end, which is $35,181.12 more.

The medical practices page has the Marin County, CA counts for physician offices and the buy-in steps in more detail. A partner reviewing a buy-in may ask for the purchase agreement, the practice valuation and recent financial statements. Other trade articles are on the blog.