Input/suggestions on this venture

That rate of return seems paltry for the risk associated.

I am sure if you looked hard enough you could find better.

The issue to me is this..

You dont know the actual costs incurred until it happens.

What are the assumptions of occupancy and administrative costs? I would want a total projected P&L and where they came to the conclusions, and other examples from existing operations to see how they came to the numbers they did.

I dont know if I would settle for a set rate of return for investing into the LLC, and I would want some boundaries set for best and worst case scenarios..

Walsteet-

What are the assumptions of occupancy and administrative costs?   To my understanding from this preliminary discussion those are are all the hospital's responsibility. Another negative is unit holders would see no return, until after the facility is constructed  likely within 12- 18 months.

I would want a total projected P&L and where they came to the conclusions, and other examples from existing operations to see how they came to the numbers they did.

 The representative of this 3rd party with the attorney who did the power point presentation showed several of their other facilities that are currently under this model and profiting , and several that are set to breakground this fall... I assume that is where they arrived at these preliminary numbers.

I dont know if I would settle for a set rate of return for investing into the LLC,

I agree wholeheartly on this point. Hence the paltry return even if this facility's profits go throught the roof.

 and I would want some boundaries set for best and worst case scenarios..

Worst case scenarios I can imagine:1) Bankruptcy of the hospital

2) The Federal Government ammends Stark's law to prohibit such a venture.... Not sure how they would remedy the sale of the units owned by physicians.

 

Here is another issue..

What is the exit strategy? What if you wanted to sell, are you able to sell back to the LLC for what you paid or more or less? Do you need approval to sell the units if you were able to find a buyer?

Even if the hospital takes care of costs like utilities etc, there are costs associated with ownership such as taxes, insurance, management, LLC costs...

Are there guaranteed salaries to certain individuals who are constructing the LLC on a yearly basis? What kind of control do you have as to seeing financials and making decisions? Did you mention this is non-voting units?

What about adding more debt or making financial decisions, is that only done by certain members of the LLC?

I would still want to see a projected P&L and I would want to know how the LLC deals with additions or deletions of unit holders and to make sure that the structure you see is not changeable, meaning that your ownership interest cannot be diluted if they wanted to raise MORE funding for some reason, or say if costs exceed budget for the construction or the terms on the bank loan exceed expectations or if occupancy doesnt happen the way expected. And what if the hospital takes issue with the location or wants to go a different route etc..

For SURE I would have a lawyer of your choosing look at the proposal and see what they think..make sure the lawyer is one who is familiar with these sort of transactions.

 

Doctors are perhaps the worst business people you will ever meet as a general rule.