One of the trends in Podiatry over the decade has been the formation of “Podiatry Super Groups“. For the most part this has coincided with the increase in Podiatrists income of 40k. The SuperGroups have benefitted all Podiatrists in the long run. However, some SuperGroups may find themselves particularly vulnerable during the Coronavirus Pandemic. Now there are multiple structures of some of these large groups that leave others more vulnerable.

First off, let’s agree that geographic location is going to factor in to how much Podiatrists and SuperGroups in general are going to be hurt by the COVID shutdown. The fact is Podiatrists in New York/New Jersey are in a lot more financial trouble than Podiatrists in Boise,Idaho. But additionally, the structure of the Supergroup is going to be very important for the SuperGroup. Podiatry groups with strong central corporate governance are more likely to survive than groups that spread their decision making around over five to six Podiatrists. This is just simple. One person making decisions quickly is going to be more effective in a situation like this than a group of four or five Podiatrists to make decisions for a group where they are serving their own self interest.

The Podiatry Groups that are most at risks are the groups that were less a Podiatry group and more a Ponzi scheme. See some of these Podiatry groups are built to benefit the older Podiatrists and sell the younger Podiatrists on the ability to get equity and make partner. Typically these buy- ins run about 200k, needless to say this generally is not based on an unbiased valuation. This allows these older Podiatrists to not only make money from the younger Podiatrists revenue, but also to make money based on a phone evaluation. Here is the thing about Ponzi schemes, they always fall apart during a recession. Now I am sure some of you are saying there was a recession from 2008-2010. I agree there was. But if you look Podiatric income did not decrease during that recession.

Further, a lot of these Podiatry groups actually finance these loans themselves….so you can see the potential issue that is developing here. You have older Podiatrists used to certain lifestyles that may no longer be possible. One other point to add is that these Ponzi scheme Podiatry Super Groups generally have four to five Podiatrists at top, meaning their decision making is most likely going to be very poor during this Pandemic. For the first time in a while solo practitioners or small practices without heavy debt service maybe in better shape to handle this Pandemic than large Podiatry Super Groups.