The anti-Obamacare, Republican-dominated House voted Friday to pass a bill that would prevent significant cuts to doctors’ fees at the end of the month. But the money would come from delaying the requirement that all adults have health care by 2019, which Democrats will not tolerate. The Democratic-led Senate will likely kill the bill when it comes their way. An entrepreneur from Los Angeles has devised a prescription for recouping doctors’ potential losses from of Obamacare by earning them passive income.
Sean Dalesandro, president and CEO of Osprey Real Estate Capital, has created one investment fund exclusively for doctors that have raised $35 million. He says they aim to earn doctors extra income in response to their potential losses and inability to save for retirement owing to the Affordable Care Act. Dalesandro, 35-years old, was formerly a director at Wachovia Real Estate Investment Bank. He doubled majored in chemistry and business finance at the University of Florida. He explains his views on Obamacare and his plan to help doctors make more money.
GLV: Why did you launch these funds?
Dalesandro: We launched thes funds to serve the needs of retiring, or soon to retire physicians. This started as a family business with my father, who is a doctor. I would invest in properties that provided the sort of security he needed upon retirement, which until recently, seemed like something he would never actually do. However, retirement has become a much more real course for him due to the changing medical landscape that Obamacare has spurred.
The most enjoyable parts of his job, autonomy and a personal connection with his patients, are dissolving under the Affordable Care Act. On a broader scale, the ACA is forcing some younger and/or still very capable doctors into early retirement due to the mounting costs it imparts upon the business owner.
GLV: Why are you only targeting doctors? What purpose or function would it serve in their portfolios?
Dalesandro: We are targeting doctors because Obamacare has lead to restrictive government regulations, significant reimbursement cuts, and rapidly increasing operating costs that are placing a monumental strain on physicians, their practices, and healthcare as we know it. The Obamacare legislation adds yet another burden for doctors to bear, effectively cutting their income, and making it difficult for doctors to save and maintain cash flow during their retirement.
GLV: What leads you to believe that Obamacare is affecting doctors’ ability to save for retirement?
Dalesandro: Doctors may have a nice looking pay check, but it comes at a cost. High taxes, business debt, and an average of $166,750 in student loans make it extremely difficult for physicians to maintain cash flow, let alone to save adequately for retirement.
Adding to their already uphill climb now is Obamacare, which further expands Medicare and Medicaid, increases operating costs, and causes significant reimbursement cuts. Furthermore, physicians who take Obamacare patients are paid less than non-Obamacare private insurance patients, further handicapping their ability to save.
While the reimbursement system is complex and varies by state, increased operating costs in the form of purchasing new office technology and re-training staff to use it, is certain. Privately-owned practices are folding under the pressure of expensive government mandates and are forced to sell their practices to corporate-owned health networks.
GLV: What evidence do you have that doctors are retiring specifically because of Obamacare?
Dalesandro: A study conducted by AMN Healthcare reports that physician vacancies have nearly doubled from 2009 to 2013 to nearly 20%. Additionally, a survey conducted by the Deloitte Center of Health Solutions indicated that six in 10 physicians believed that doctors would choose to retire earlier than planned in the next one to three years.
For years, doctors have been battling unfavorable health exchanges within the Medicare and Medicaid systems and as the Affordable Care Act expands these highly regulated, low-paying insurance plans, it should be no surprise the physicians are trying to limit their exposure to the ACA as much as possible.
The New York State Medical Society, an organization of 29,000 members, polled doctors about their readiness to become official Obamacare providers. The study revealed that only 23% of respondents indicated a willingness to accept patients enrolled in an Obamacare exchange and an additional 33% remained undecided. Dr. Jane Orient, a spokesperson from the Association of American Physicians and Surgeons, confirmed an even harsher reality: Many doctors simply cannot afford to stay in practice and will be forced to work for a corporation hospital where the profits are distributed to shareholders or retire.
GLV: What is your investing strategy in the Doctor’s Fund I? As an entrepreneur, what is your prescription to recoup doctors’ losses from Obamacare?
Dalesandro: Doctor’s Fund I (DFI) is focused on acquiring middle-market, real-estate assets outside of the major cities that create annual income and growth for its investors. Middle-market properties range from $8 million to $30 million in purchase price. They are too big for private investors and too small for institutional investors, who typically only focus on properties in major metropolitan markets. Many of the properties contain the same tenants (and therefore same credit) that institutional investors are buying. But because they aren’t located in an inflated market, usually provide more attractive terms of purchase.
GLV: What are you currently invested in? What catalysts will drive their returns?
Dalesandro: Doctor’s Fund I is able to create annual cash flow and principal appreciation for its investors by diversifying its investments into properties at various stages of their lifecycle. For example, our most recent investment was a 97,085 square-foot shopping center in Kansas City, Mo. and currently we are developing a 150-room boutique hotel in Tampa, Fla.
The majority of investments will be in cash-flow generating properties. Investments are separated into mature properties that provide stable cash flow as well as significant principal protection, while other assets present an opportunity to increase cash flow and value through limited redevelopment activity and improved management. A small portion of the fund is dedicated to ground-up development, which provides investors with significant principal appreciation.
Sean Dalesandro, president and CEO of Osprey Real Estate Capital, is an entrepreneur with a prescription to recoup doctors’ losses from Obamacare.
By Trang Ho