Practice Equity Program (PEP)
Find Untapped Value in Your Practice
One of the most unique and valuable aspects of Health Professionals Alliance (HPA) is our ability to transfer dormant practice value into a diversified, liquid, and appreciating asset.
Through our innovative, industry-first Practice Equity Program (PEP) we help independent medical and dental practices find untapped value in their practice. At HPA we recognize that one of the primary reasons a doctor chooses to sell his or her practice to a private equity (PE) group or hospital is the aspect of liquidity – receiving cash value from the sale of the practice. However, this short-term gain comes with many long-term consequences including a loss of control, autonomy, and independence, as well as high taxes on cash received, and diminished future earnings.
HPA’s Practice Equity Program (PEP) is an innovative way to realize otherwise dormant practice value in a far more advantageous way and has been referred to by many doctors as an “anti-private equity model”. PEP puts the value into the doctors’ hands.
Retain 100% ownership and control of your practice
Lever dormant, illiquid practice value into an appreciating, liquid, publicly tradable stock
Ownership in a company that is serving you, your practice, and binding together independent doctors and dentists across the country into a powerful alliance to combat negative trends in healthcare.
Improved tax advantage, both in the form of significant tax savings and tax deductions*
Low-risk, high-reward ratio, with no personal guarantees or obligations
Liquid and appreciating asset uncorrelated to the number of patients seen
How the PEP Works
Using an industry-leading valuation model we conduct a valuation of your practice.
Based upon that valuation HPA issues a note (loan) to the practice enabling it to buy an allotment of shares in HPA at a discounted pre-public price. Those shares are paid for over time from the practice operations, rather than requiring the doctor to write a check upfront. The doctor retains full-ownership, autonomy, and independence of his or her practice but has used what is otherwise dormant value to create a diversified, appreciating, and liquid second asset, HPA shares.
The doctor becomes an owner in HPA along with countless other physicians and dentists, in a business that is supporting him or her, their practice, and binding together independent-minded professionals. The doctor benefits from the relationship by having a marketable security that can be sold off over time or retained based upon his or her appetite and needs. Taxes are only paid when shares are sold. The practice benefits by having time and cost-saving resources through the HPA membership which helps enhance revenues, improve efficiencies, and profitability. The note repayment is conducted from the practice with no personal guarantee or obligation to the doctor while giving the practice an investment interest tax deduction*.
An Industry First
HPA’s Practice Equity Program (PEP) is an industry-first and a vitally important aspect to our company’s model, its mission, and value proposition in the market. It is an innovative model within the healthcare space, but one that is built upon proven, industry-standard practices in finance and real estate. It may help to better understand this innovative finance model by thinking of the PEP structure like a real estate opportunity.
For example, a mortgage allows the homeowner to amortize the cost of buying a home over a term (typically 15-30 years), and to own all the equity in that home from day one. Equity value increases in two ways, (1) from appreciation of the home, and (2) from paying down the principal on the loan. The PEP works the same way, except rather than a slowly growing home value you own shares in a rapidly growing healthcare company.
Another comparison to real estate is a home equity line of credit (HELOC), which allows the homeowner to access value in the home that is otherwise dormant unless and until the home was sold, and to put the funds from the HELOC into something useful and valuable. Likewise, the PEP allows the independent doctor or dentist to convert otherwise illiquid and dormant practice value into a diversified, liquid, and appreciating asset that grows in value regardless of how hard he or she works, how many patients are seen, cases and procedure completed, and hours worked.
Finally, another example also within real estate that many doctors and dentists identify with is the value in owning the building. The practice pays a mortgage payment on the building which the doctor or dentist owns, giving him or her a double value down the road when the time comes to retire because now, hopefully, there is value to be realized in both the practice and the real estate. Similarly, PEP allows the doctor or dentist to leverage the practice to make a payment into a secondary asset (HPA shares) which, come retirement or some future occasion, can be sold separately giving that doctor double the value from the same amount of work.
Power of an Alliance
The HPA shares intend to be publicly traded on NASDAQ**, which means the company is subject to disclosures and reporting the same as any public company. Therefore, the value of that security is certifiable, marketable, transparent, and liquid. Owning equity in HPA gives doctors a tax-advantaged way to create liquidity as they need over time and on their timeline. HPA Membership and the HPA Practice Equity Program (PEP) bring great value at the individual doctor/practice level and the market level as the share price grows over time. While there are many factors both internally and externally that drive share price on the public market, the HPA model has several distinct features that bode well for the future value of the stock price.
What HPA Can Do For You
Debt Free Model
Share price is driven by the interest income to the company on PEP note payments, membership fees, and profits on all the other services HPA offers. HPA does not have to borrow in order to issue PEP loans; the company can operate debt free.
Through internal development, acquisition, and strategic partnership, HPA is investing in other profit generating holdings that directly serve the membership and will increase share value.
Unlike a therapeutic, which is subject to lengthy and costly research and development, followed by trials, FDA approvals, and complex marketing mechanics, HPA uses proven financial models commonly found in finance and real estate, building a diversified portfolio of loans to economically viable and creditworthy professionals, physicians and dentist, similar to an e-commerce bank. This should help give HPA a strong market multiplier from Wall Street because it will be easily understood despite being innovative and disruptive within the healthcare vertical.
The members and shareholders themselves can directly impact revenue growth through utilization of services, participation in the PEP, and referral of colleagues into the Alliance, all of which should be additive to the share price over time.
There are many aspects of the HPA Champions Program which warrant deeper discussion and exploration. To learn more contact us today or join us for an upcoming Model Presentation to see if Membership is right for you.
Frequently Asked Questions
What is HPA?
Health Professionals Alliance (HPA) is a doctor owned, doctor led alliance of independent physicians and dentists.
Health Professionals Alliance (HPA) exists to support and enhance independent medical and dental practices. Our membership model brings best in class solutions to private practice – all technology enabled and scalable. We believe that while many options for the doctor of today exist, HPA is the answer for those that desire independence, are innovative and hungry for a brighter future. The HPA team has decades of practice management and business experience and have built an ancillary model that alleviates the need for a doctor to give up their independence. At HPA we believe in putting the care of patients back into the hands of doctors and HPA Membership can accomplish this. Doctors are better together.
How does HPA Differ from Private Equity (PE) / Corporate or Hospital Consolidation?
HPA exists to support independence in healthcare and to preserve private practice. It is our belief, and that of our members, that corporate consolidation has been a negative trend in healthcare. This trend has impacted doctors’ ability to earn as much and their ability to care for their patients the best way they see fit. It has taken control out of the hands of doctors and left patients with few options and often higher costs.
At HPA we do not buy practices, rather we support independent physicians and dentists with the tools, resources, and team to thrive in their market, reduce their operating burden, and put more of their time into their patients and themselves.
How is the HPA MSO/DSO Different?
HPA differs from a traditional MSO/DSO in a variety of ways. Our model gives our members unmatched flexibility, access to tools, resources, and team to support their operations 100% on their terms. It is a membership driven model in which services are utilized as needed. We partner with the practice in their region on a specialty basis to bolster the administration of the practice. HPA does not own the clinical assets of the practice.
What Services Does HPA Offer Private Practices?
HPA offers a range of best-in-class support services designed to help a physician or dentist operate, improve, and grow their business on their terms. Some of these services are internal while others are delivered through carefully selected external vendors, and all of which are vetted, and refined to help practices thrive.
Services include, but are not limited to: Data analytics, contracting, credentialing, compliance, billing and collections, marketing, HR, finance, IT support, wealth management, consulting, and a variety of support services. Most are highly customizable and tailored to the unique needs of each practice.
As a member of HPA, these services cost less than can be found on the open market, and as an Owner-Member in HPA, they help drive overall share value.
What Does it Cost to be a Member of HPA
The cost of membership is less than $1000 a month* and the value provided through the membership makes it not only a net neutral investment but a highly profitable investment. The membership fee includes DataDX, a world class, real-time data analytics dashboard, and access to a concierge-type account manager (Regional Manager) and consulting support services. Others services are purchased a la cart at a discount for members.
Owner-Members not only gain all the advantages of membership but also get to participate in the overall financial gains of the company as a shareholder.
Membership in HPA is limited to independent medical and dental practices and only select practices qualify. Click here to explore membership.
(*per provider, discounts assigned based upon practice volume).
How do I Learn More/Join HPA?
We offer webinars lead by senior leaders of our Dental and Physician divisions, to register for an upcoming Model Presentation Webinar, click here.