Articles Written By Our Practice Brokers

Starting an optometry practice cold can be a daunting yet rewarding experience.  Many vision care professionals leaving optometry school have contemplated this path versus taking an employed position.  But the decision doesn’t need to be made immediately.  Some optometrists opt to work for a few years before starting a private practice.  The decision depends on personal preference and inclination as much as it does on the vision care market.

Medical group expansion in today's enviornment

Health care reform and the overall practice environment have caused a flight to safety for many independent doctors.  Physicians are fleeing to hospitals and health systems in troves, seeking a perceived sense of safety and an exit strategy.  But many of them did not bargain for the unfavorable economics of selling to or integrating with a hospital.  Selling doctors commonly receive far less than fair market value for their practices and are saddled with integration challenges for which hospitals can be ill-equipped to deal with.  Enter the group practice.  For medical groups (even small ones) looking to grow and expand their marketshare, there is ample opportunity to make key acquisitions in the consolidation chaos.  Medical groups have been able to approach selling doctors in many instances and offer them better solutions than hospital integration.  And if a reasonable deal can be reached, everyone wins.

What is a Medical Practice Worth to different Buyers?
We just completed a valuation of a gynecology and obstetrics practice for a potential hospital integration and post-sale employment of the selling physician.  The assignment entailed a fair market valuation of the practice assuming a third party buyer.  In a hospital integration scenario, it is common occurrence for a selling doctor to receive less than fair market value for their practice.

A medical practice has various components of value, some more apparent than others.  The primary aspects which usually come to mind are the tangible assets comprising medical equipment, inventory, leasehold improvement, personal property, etc.  However, the main component of value in a medical practice is typically the goodwill intangible assets which cannot be readily observed.  Intangibles may be the product of the existing patient base, earnings, staff and systems in place, among other things.

Practical use of a medical practice appraisal
Whether you’re an associate doctor buying into a practice or a retiring doctor selling to a hospital, getting a handle on what a practice is worth can be complicated.  Added to the complexity is a potentially arduous negotiation process, deal structuring, and financing.  Knowing when and how to approach the appraisal process may not always be clear.  Is a comprehensive formal appraisal report needed or can I accomplish the same goal with a letter form report?  And what’s the difference?  Setting a clear approach and expectation when seeking an appraisal will make the process easier.  It will also allow you to chose the right appraiser and apply the valuation to a practical use.