SBA 7(a) Medical Office Feasibility Study in New York

Physicians' offices in New York

The median is the metric that sets this cell apart. Medical office loans in New York have a median of $181,000, only 0.72x the median for physicians' offices nationally, with half the loans between $100,000 and $531,850. The file for FY2017 to FY2026 holds 379 loans worth $192.3 million. New York ranks fourth among states by count and physicians' offices hold ninth place on New York's list of 39 classes. Franchising is almost absent at 1.8%, as befits a profession of independent practices.

The cancellation signal

Cancellation after approval is high in this cell. At least 16.1% of approvals from FY2017 to FY2024 lapsed, and 17.4% once undisbursed loans are counted too. Charge-offs are lighter: the 150 loans disbursed in FY2017 to FY2021 show 4.0% charged off to date and 2.0% gone inside five years. Each is a minimum while some loans remain open. A notable share of approved physicians never closed, so a study should give the path to closing real attention.

Lenders and counties

JPMorgan Chase Bank, National Association is first on the table (60 loans, $15.9 million), followed by TD Bank, National Association (46, $24.3 million), then Manufacturers and Traders Trust Company at 45 loans and $5.2 million, Santander Bank, National Association (20, $13.5 million) and Newtek Bank, National Association (12, $5.1 million). The table shows portfolios and nothing about practice. New York County has 66 loans, Kings 59, Queens 48, Nassau 43 and Suffolk 41, with Erie at 22 and Westchester at 20. Approvals peaked at 60 in FY2018 and have run between 31 and 49 in recent years.

What a New York medical office study has to test

Revenue depends on payer contracts, so the study has to show which insurers will credential the practice, at what rates, and how long credentialing takes before cash arrives. Referral relationships and hospital affiliation, patient volume per physician, support staff ratios and malpractice cost should all be in the model. Space is expensive in the city and cheaper upstate, so the lease terms and the build-out for exam rooms, plumbing and records systems have to be priced against the $181,000 median. A purchase of an existing practice needs a valuation that rests on collections. Repayment should be shown on a slow ramp of patients, and an appraiser valuing a building will test its use by other medical tenants.