Articles Written By Our Practice Brokers

Transition Consultants was the key component of my office sale and made it possible. The sale was not the smoothest but he was able to steer the sale towards the correct direction. Was very professional during the entire negotiation period. I am absolutely satisfied and I certainly would use your services again. It was a great experience and learned a lot. It was my first business sale and this was a learning experience.

Highlights from the Medicare Payment Advisory Commission's March 2014 Report

The March 2014 MedPac report had a number of key take-aways for doctors and other health professionals. The commission is placing an increasing focus on compensation differences between primary and specialty care. They are concerned that fee for service payments and fee schedules contribute to the undervaluing of primary care and overvaluing of specialty care.

They believe that the resource-based relative value scale, which forms the basis for the fee schedule, includes mispriced services. This can lead to income disparity between primary care and specialty doctors. Also, fee for service payment methodology allows some specialties to increase the volume of services they provide more easily while other specialties, particularly those that spend most of their time providing E&M services, have limited ability to increase their volume. This difference in ability to increase volume can also lead to the compensation differences between primary care and specialty care. This has been a recurring theme.

In regard to recommendations on payment changes for Medicare in 2015, the Commission outlined multiple recommendations. The primary focus is on the repeal of the Sustainable Growth Rate (SGR). They cited the destabilizing effect of temporary measures to the fix SGR on a periodic basis. SGR has created uncertainty for physicians, other health professionals, and beneficiaries, and the short-term overrides of the SGR have created an administrative burden on providers and CMS.

The Commission also believes that physicians and health professionals who join or lead two-sided risk Accountable Care Organizations should have more opportunity for shared savings compared with those in bonus-only ACOs and those who don't join any ACO. The greater opportunity for shared savings would come through a performance standard that does not reflect lower updates.

Consultant's Corner – Q&A with the Industry Experts

Question: What are the most critical things a buyer should be aware of when buying a practice?

"There are many important aspects a buyer will want to keep in mind when purchasing a medical practice. Some of the more obvious ones are conducting a complete due diligence review of all the books and records, having a lease assignment or new lease agreement for the office space, and securing financing for the acquisition, which are the typical buyers conditions to closing we see on a Letter of Intent. As well, there are other important aspects of the transaction that should be discussed and negotiated ahead of time with the seller and incorporated into the purchase agreement before the deal is finalized. These would include such things as a non-compete clause, transition assistance, and a billing and collections provision, all of which any reasonable seller should be willing to agree to. However, beyond the deal structure of the transaction, it is imperative that the buyer be mentally ready for the challenges (and rewards) that being in private practice brings, as this is one of the most critical aspects sometimes overlooked by buyers when purchasing a practice. There is nothing worse than having "buyer's remorse" for not fully considering or appreciating what being in private practice means, both good and bad! - David Lopez, Medical Practice Broker"

Consultant's Corner – Q&A with the Industry Experts

Question: How do you determine what a particular practice is worth? Your firm works with medical, optometry, and dental practices. Aren't they different?

"Short answer: They are very different. Thankfully, our firm is well experienced in the nuances of all these professional health disciplines. We have valued and sold practices of all these disciplines in every major market in the nation. Our work speaks for itself. That being said, business valuation is still very tricky. Surprisingly, business appraisal is an unlicensed profession. Clients often ask me how they can assure that they are getting a suitable work product. First off, I have two certifications (CBA & CVA) which are recognized under the qualified appraiser guidelines of the IRS, SBA, and U.S. Department of Labor. Although business valuation is unlicensed, only appraisers with certain certifications are qualified to do certain qualified work. On top of that, I only appraise healthcare professional practices and healthcare businesses. This is a key distinction. Healthcare business appraisal work is vastly different than other valuation work. Our organization provides comprehensive valuation services exclusively to healthcare professionals. The proper application of industry-accepted methods and standards is critical in producing an accurate valuation for a professional healthcare practice. Our appraisers will analyze all facets of a practice including financials, clinical data, and market information. The end result is a credible appraisal report, giving our clients the necessary information and tools to achieve their outcomes. – Christopher Majdi"

Consultant's Corner - Q&A with the Industry Experts

Question: Describe the current market for selling a private medical practice.

"Overall it has improved. Buyers are less fearful and more confident in the healthcare market. Sellers are less fearful too. Of course, healthcare reform will continue to change the market dynamics but I view it like any other market force out there. And there will always be entrepreneurial physicians who will find ways to thrive within the private practice environment. – Christopher Majdi"

Question: How is it playing out for different specialties?

"Certain specialties are more in demand: Family, Internal Medicine, Pediatrics, Urgent Care. This is in part due to a greater emphasis on primary care as well as more money flowing into programs. Medicaid rates moving on par with Medicare rates also helped. Overall though, this shift is based on the expectation that more beneficiaries will be paying into the health insurance system. The sustainability of this trend is predicated on the solvency of the insurance risk pools. We'll see how it plays out. The good thing for our clients is that we constantly have our ear to the street, and can best position them and their practices based on the changing market dynamics. – Christopher Majdi"