The Goodwin brothers successful growing medical practice
Their approach to healthcare has been so successful, the Goodwin brothers have more than doubled the size of their medical practice.
Learn MoreA day surgery is a reasonably large business. A private hospital, while driven by the same basic ideas, is significantly larger and infinitely more complex.
6 minutes
Dr John Fox and the group of doctors who started Castle Hill Day Surgery (CHDS) back in 2000 saw an opportunity in creating Lakeview Private Hospital to service the growing population in Sydney’s Hills district. After five years of operating, the success of the facility was clear to everyone. Except, it seems, their bank.
“Lakeview is different to many private hospitals in that most don't own the buildings that they practice in, generally they rent,” explains Nick Romeo, financial controller for the hospital. “Other hospitals are usually tenants in the building. Our setup is quite unique. We have one entity that owns the building. Then we have a company—that is the hospital operating company—that leases the space in the hospital.
“The company that runs the hospital and the unit holders in the trust that own the building are exactly the same. But that led to us, inevitably, paying very high interest rates for our finance. Because the bank wouldn’t adjust the risk—it would look at what the hospital was doing, but not what the real estate side was doing.”
Doctor owned
Any private hospital owned by a large corporate group faces the same pressures—maintaining costs while attracting new doctors to use the facility. Lakeview is slightly different in that the hospital is owned by a consortium of 48 doctors. The same business structure worked on a smaller scale at CHDS and was driven by a desire to have a facility driven by patient outcomes rather than corporate goals.
The origins of the hospital stretch back to 2010, when the consortium purchased the former offices of Wyeth Pharmaceuticals. The consortium pooled their resources and bought the property with a view to redeveloping it into a hospital.
The key to making it work was to have a strong management team—which they did, led by general manager Rosemary McDonald—and to convince the doctors to treat as many patients as was possible and clinically appropriate. “It's a symbiotic relationship between the hospital and the doctors,” Romeo explains. “We don't charge them for coming to our facility and they don't charge us, but we need each other.”
Add to that the cost of equipment and fit-out, and you have a complex and finely balanced situation. “It was not without its many challenges,” says Romeo. “So it's a testament to those guys for their resilience in weathering early storms—and there were many—to now come out on the other side and be running a very sustainable private facility.”
Money and loyalty
During the modeling process for the hospital, the management team did projections and budgets to get an idea of future revenue. “We tendered that out to the financiers and we ended up with the bank that was our financier for CHDS because we knew who they were,” says Romeo. “Loyalty was the big thing at the time for us. But we didn't get the best rates.” What’s more, the bank seemed unwilling to change their perspective.
So when they looked around and found a competitive offer from BOQ Specialist, they were inclined to switch. But it wasn’t just a money issue. “BOQ Specialist understood where we were coming from,” says Romeo. “We don't flip-flop on any of our suppliers and so making the change was a big decision, but it was the one that was going to ensure that we could move forward successfully.”
“Lakeview Private Hospital has had a lot of success, particularly through COVID, with new doctors coming in and finding that the working conditions in a private hospital environment are good,” says Joshua Smith from BOQ Specialist. He adds this is all the more impressive because the trade-up time for a hospital is between five and seven years. “They became profitable a couple of years ago. But the group felt that they were still being viewed through the lens of a trading-up facility, and the relationship with the bank back then reflected that.”
A great move
The element that tipped Lakeview towards BOQ Specialist was that they were really interested in what the hospital was doing … and they were quick. “They really liked that we had the ability and willingness to provide a financing package for the individual doctors who work at the hospital says” Joshua Smith from BOQ Specialist. “The previous financier had talked about putting something together to support the doctors, but never did. We settled this in December, and we've already got that package ready to go.”
With finance under control and all theatres booked solidly, Romeo says “we're now in a position that we didn't think we were going to reach for several years into the future. So we're fortunate that we can start thinking about bringing forward plans.”
Thinking about starting or growing your practice? Click on the link to find out more about our tailored financial solutions for setting up a practice. Contact us to find out how we can tailor a practice finance solution for you, or call us on 1300 160 160.
