Owner is looking for $1.5M
He has been running this medical centre for some 20 years & it’s about time to let someone else with fresh ideas to take over! With 5 part time GPs and also a specialist centre with about 30 medical specialists coming and going, this floor is very busy. There is a day surgery on the floor and also pathology and IVF, but these businesses are not for sale. The assist with drawing patients to the vicinity.
There are 3 sections on this floor:
- Medical centre has 7 CR's, 5 are used by GP's and the other 2 by medical specialists (for sale)
- The other side of the floor is a specialist centre with designated rooms that can be used on a sessional basis. There are Laverty + DHM path (with a direct lease from the landlord so no money coming to the business that is on the market from the path rent), IVF, and a herbalist who works long hrs
- The centre of the Floor is a day hospital with a lot of endoscopies (50%+) carried out as well as other minor surgeries (not for sale)
The costs of the reception are shared b/w the 2 entities that use the services, being the day surgery and the medical centre
Owner wishes to have increased levels of flexibility moving fwd as his parents living in Canada are aging and he needs to have the freedom to walk away whenever he is needed to visit them. Currently he is working Mon- Sat mornings only so can do site visits Wed and Fri afternoons.
There are no freehold options here, all leased from the landlord which is a corporation and owns many building in Sydney. Only 1.5 yrs left on the current lease and he will actively start getting this re-negotiated. He has been there 20 yrs already, so there is no reason why the landlord would seek to change anything. Their lawyers & landlord are preparing a new lease to be signed soon. This will extend the lease to March 2022. Landlord is a major international listed company with quite a few similar buildings in Haymarket alone and commercial property investment is only a very small portion of their portfolio.
Non VR GP's get 55% and the VR GP's get 60% of their billings. They don't have to do any of the admin as the shared reception does the batching for all of the GP's and the service entity looks after the payment of the bills etc. So their 40% pays the rent, utilities and the staff support.
As a company, the T/O is about $850K (not the pt billings, rather the income from the subtenants).
For the service entity, there is only 1 car park and the female GP has been given this.
The nett profit of the entity is about $277K year on year
The whole floor is ten thousand meters squared (10,000m/m) so the portion he is selling is about 1500 to 2000 m/m.
95% of the drs at the centre are Chinese as are the pts. Some of the surgeons are not Asian.
GP rooms are all accredited and this is due again in April/May 2016. There are no registrars there so no incentives coming from the govt to train jnr GPs. Also, the business hrs are not extended (Mon - Fri 9.30am to 5.30pm and Sat 9.30am to 12.30pm) so could increase the income by opening later/earlier, or Sat afternoons + Sunday. They have 1 nurse to share among the GP's and her wage is paid by the service entity. They get PNIP's for her. There is 24/7 hr security on the building which is paid by the landlord. There are no drug shoppers coming there as patients as they have a policy there not to prescribe S8 meds to these people.
Administrator is happy to stay on and very good at her role as the PM for his GP business.
VR's are getting 60% of their billings and their only non VR (who is grandfathered) gets 55%. Medical Specialists get 70% of their billings and pay the service entity 30%. Others pay $130 per session worked for use of the sessional rooms.
All mixed billing, with concession card holders and paed pts getting bb. International students have to pay the private fee. There has been no price rise for a while and this needs to be increased by $10 soon. The specialist centre as serviced offices contributes 50% of income. For the medical centre, 50% of the rest of the income are from students/tourists/private patients. As such, it has much less reliance on Medicare rebate comparing to most other centres with significant scope to improve by someone younger with more energy & drive. For the last 6 years or so, net profit has been over $300,000.