Achilles Foot & Ankle’s Mechanicsville location (BizSense file photo)
Two Richmond-area medical practices, each looking to remain in business while sorting out respective financial struggles, have sought bankruptcy protection in recent weeks.
Achilles Foot & Ankle Center and Montante Plastic Surgery & Aesthetics both filed for Chapter 11 bankruptcy late last month.
The filings, while unrelated, were made the same day on June 20 and share some similarities as to what caused the businesses to fall into trouble.
Achilles Foot & Ankle, run by founder Dr. James Baldwin, appears to have grown too quickly, according to court filings.
Over time, including via acquisition, the company grew to become what it described as the “dominant foot and ankle medical practice in Central Virginia” with 12 locations, 14 medical providers, 175 employees and $35 million in revenue.
James Baldwin
But its problems began in July 2023 when Baldwin sought to better handle that growth by bringing in a new management team to allow him to focus more on his medical practice and less on the business side.
“After a relatively short period of time, this new management regime failed,” Baldwin said in a declaration to the court. “On the medical side, new management was both ineffective and made changes that reduced profitability.”
The practice also had issues with payment reimbursements from Medicare and Medicaid, tying up $7.2 million in receivables.
Baldwin ultimately stepped back into the business side to try to right the ship.
“I worked diligently to save the (practice) by fully reengaging in management and by injecting $500,000 of my own money to pay employees and vendors and keep the debtor viable,” Baldwin wrote.
Baldwin quickly downsized the organization by ultimately laying off all but 26 employees and consolidating its operations down to its two current locations at 7493 Right Flank Road in Mechanicsville and a surgery center at 3974 Springfield Road in Henrico.
Baldwin said in the filing that the practice is now strong and its operations have been streamlined to a sustainable level. It intends to use the Chapter 11 process to shed unprofitable leases and contracts.
Its initial filings list $4 million in assets and $12 million in liabilities, most of which are unsecured. Its largest listed debts include nearly $3 million owed to software giant Salesforce, $2.25 million to tissue bank Mindsight Medical and a disputed $5 million legal claim from a patient.
Achilles Foot & Ankle reported nearly $21 million in revenue in 2023 and around $2 million in revenue this year up to the Chapter 11 filing date.
The practice is represented in its case by attorney Peter Barrett of Kutak Rock. Barrett said he and his client declined to comment.
Similar to Achilles but on a smaller scale, Montante Plastic Surgery & Aesthetics fell into Chapter 11 after making growth investments that didn’t go as planned.
Montante is owned by Dr. Steven Montante and his wife, Shelly, a nurse practitioner. They founded the practice in 2017.
Based in the West End, the practice provides aesthetic and reconstructive surgery, along with injectable treatments and other non-surgical procedures. It also recently launched Mancave Aesthetics, a side of the practice that caters to men.
One of its biggest investments was to move its office to the Westhampton on Grove development in 2018 with a 10-year lease.
The company took out a $650,000 loan and a $100,000 line of credit to upfit the new office from Virginia Commonwealth Bank, now part of Blue Ridge Bank, according to court filings.
It also invested in expensive medical equipment that didn’t drive as much revenue as expected.
Steven Montante
Like Achilles Foot & Ankle, Montante also began to rely upon outside business managers to handle the practice’s administrative side, including billing and collections.
“To our chagrin, we later learned that many of the fruits of our impeccable service had been lost due to improper billing, coding and/or collections by others,” Steven Montante said in court filings.
The nine-person practice was also hurt by the pandemic, particularly at the height of the Covid shutdown when most non-emergency procedures were shelved for months.
“While my wife and I are accustomed to assisting the practice in fighting through slow times, bookkeeping issues, and other dire economic events, we had never experienced anything like the pandemic’s health and economic crisis,” Montante wrote. “The practice was never able to gain the ability to address all of its financial obligations that had piled up during the office closure even though demand for its services picked back up quickly.”
Like Baldwin, Montante decided to bring the business management role back in house and found a practice manager who he said has turned things around.
In an interview with BizSense last week, Montante said filing Chapter 11 allows the practice to continue to care for patients while continuing to retool the business side.
“We made a commitment to our patients. We just can’t fail. We did as much maneuvering as we could and this is what we had to do to continue to grow,” Montante said. “We couldn’t turn the ship fast enough.”
The practice lists $338,000 in assets and around $1.5 million in liabilities in its initial bankruptcy filings.
Its biggest debt claims are tied to equipment and machinery used in the practice.
It posted $1.79 million in revenue in 2022, $1.45 million in 2023 and $724,000 through June 20 of this year.
Montante is represented in its Chapter 11 case by attorney Paula Beran of Richmond firm Tavenner & Beran.
“Nearly $3 million owed to software giant Salesforce”. Struggling to see how a 12 location medical practice with 18 providers can rack up that kind of bill, but has anyone had a positive experience with Salesforce?
I liked the foot practice and have gone there before, they fit you in. But i always left feeling like I was scammed. They had a very different payment model, cash up front, very stand off for accepting major insurance and lots of signing documents that made the patient produce more and more cash.
Curious how that method got them so under water given most every other medical practice I have had experience doesn’t demand cash as soon as you walk in ……..and instead usually says “we will submit to insurance, have a nice day!”
It is strange how that method got them so underwater. A lot of specialized doctors are now like that due to the complexities and issues with insurance. We had a oral surgeon so frustrated they only take cash up-front and file later with a reimbursement/refund from the insurance to the patient. I mean paying $17k up front to DR and then 3 months later get $9,000 back you would think they would have plenty of cash flow.
Agreed. I went there for treatment on my foot, and it was $70.00 a pop. Cash up front… and don’t even think about buying the recommended products they had for sale there. I went on Amazon and avoided the mark-up.
I had a similar experience, having gone to the Patterson office and pleased with the care. I had a follow up appointment right after the sale, only to find out that the new ownership wanted to keep my CC on file. I protested and they waived it. Then, despite me being insured, demanded double the copay. I walked out. I’ve seen ads indicating that the old practice has returned to the office.
My heart goes out to these people. It is very stressful to be a Doctor, it is very stressful to be a manager. The stresses and talents are usually different. To be both requires a very special type of person but one can spread themselves too thin which causes the ship to sink while the captain is working twice as hard as they should.
The only stress they felt was that they spent more than they took in. It is no more stressful to be a Dr or manager than most other professions. These people didnt manage their money well and given the money Drs tend to make, there were likely paying themselves absurd amounts of money.
These are personally operated practices; and many employees, bills and equipment needs to be paid for fairly. Being a doctor or manager of a medical practice is definitely is more stressful than working at Burger King (my current profession), because people get surgery and their health is the doctors main priority which can go for the long term.
The Montantes are such a caring and skilled team! I hope this doesn’t slow down their growth – they are important to the community they serve.
Went to Achilles Foot & Ankle for a foot issue. The initial appointment went well, even though the markup was ridiculous on the items purchased. No one ever called in my prescription, never followed up on my multiple calls to get it sent in, or even bothered to text me with my follow up appointment information as I had requested. Not surprised at all they are declaring bankruptcy.It had a very much a get them in, get them out feel.