Wednesday, June 30, 2010

Selling a Medical Practice to a Hospital

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The number of physician practices which are sold to hospitals and other healthcare entities has varied widely over the last few decades. In recent months there has been increased talk regarding hospitals making these purchases. In the annual meeting of the NSCHBC, great sessions were offered regarding a number of issues concerning medical and dental practices. One particular session discussed hospital-physician integrations and the sale of medical practices to hospitals. It was surprising to hear that the volume of these hospital deals have been picking up, but as expected, hospitals are largely unable to pay physician sellers for the full market value of their practices (largely comprising goodwill). A piece in the AMA News was also written recently about physician practice management companies getting back into the game and buying medical practices. But the volume of these deals pales in comparison to the acquisition mania of the 1990's and they mostly seem to be inpatient practice purchases. Corporate deals and larger-entity acquisitions are still happening but have not picked up major traction as many had expected. Large corporate buyers and other healthcare entities may be cautious in an uncertain regulatory and reimbursement climate. However, physician-to-physician practice sales still seem to be flowing at a steady rate. The ability of hospital purchases to be successful depends on how the selling doctor is able to function (or not) within the structure of the acquiring entity. It is often difficult to give up the autonomy of a private practice and work under the direction of a larger entity, even with the added security and economies of scale available to the seller. Also crucial is how the post-sale physician compensation agreement is structured. It will be interesting to monitor the staying power of these deals and see whether they will unravel over time. The changing dynamic in regional markets dictates much of this. It may be a good option (or the only option) for some practices to sell to hospitals, but for the ones which are more marketable it is generally better to sell to another group or individual physician buyer. Hospitals can't pay sellers for goodwill value like other buyers can. Most physician sellers continue to seek all-cash transactions for the sale of their practices and are largely able to receive these deals from buyers who can obtain practice acquisition financing. As long as private party transactions continue in number, the volume of hospital purchases at lower valuations will not increase exponentially as many have speculated. Many retiring doctors who hear about these transactions may wonder if selling their practice to a hospital is a viable option. The answer truly depends on a number of factors but many of the determinants are ultimately related to the accurate assessment of the fair market value of the practice.

Tuesday, June 29, 2010

Physician Practice Appraisal Valuation Services

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Medical Practice Appraisers - Specializing in the valuation of medical practices and clinics.

MPA's medical practice appraisers and valuation analysts apply deep knowledge and technical expertise in determining fair market value for your medical practice.

Utilizing accepted standards of value and specific understanding of medical market dynamics enables us to provide accurate practice valuations. Appraisals are used for various purposes including:

  • Sale of a medical practice
  • Partner buy-in or buy-out
  • Medical practice merger or consolidation
  • Practice financing
  • Divorce, estate, tax, or financial planning
  • Practice performance evaluation and analysis

A medical practice may be one of your most valuable assets, making the accurate determination of its value especially critical. Why rely on unsubstantiated rules of thumb, gross multipliers, and inaccurate comparable transactions to determine value?

Monday, June 28, 2010

Hammer Museum Forum on Health Care Reform

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It will be interesting to see the effect of health care reform on the valuation of medical practices and the sale of medical practices. Reform touches on numerous areas which can impact practice valuation and ultimately affect the purchase, sale, and merger of these healthcare business entities. I will be attending a forum on Wednesday at the Hammer Museum in Los Angeles entitled: Health Care Reform - Government Takeover or Corporate Welfare? I've attended some of these events at the Hammer Museum in the past and they've been very informative. The speakers are usually very accessible, which is great for getting your questions answered.

Thursday, June 24, 2010

Dedicated practice valuation service: Medical Practice Appraisers

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We've launched a dedicated service for practice valuation: Medical Practice Appraisers. Click the picture below to arrive at our landing page.

Tuesday, June 22, 2010

Healthcare Economic Forecast - UC Irvine

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For many of us who are not able to attend this event, UC Irvine has been gracious enough to post video of the Annual Healthcare Economic Forecast. This is a phenomenal conference featuring heavyweights from public and private institutions. I hope to attend next year's forum.

"Over the past 19 years, the annual Health Care Forecast Conference has become a leading national forum for discussing the economics and politics of healthcare. Each conference includes an economic forecast for the healthcare industry, a federal budget outlook, updates on state healthcare issues, and the latest industry trends, giving participants a broader and deeper understanding of the forces that affect the way health care is delivered in this country. This highly respected event provides knowledge and insights to leaders in the private and public healthcare sectors who are grappling with complex problems during an era of unprecedented change."


HEALTH CARE REFORM IN AN ELECTION YEAR,
February 25-26, 2010

Presented by the
Center for Health Care Management and Policy
The Paul Merage School of Business
University of California, Irvine
Welcome to the taped webcast of
The 2010 Health Care Forecast Conference
This webcast is supported by the
California HealthCare Foundation, based in Oakland, California

Principal Benefactor
California HealthCare Foundation

Major Benefactors
Cigna Health Care of California
Hoag Memorial Hospital Presbyterian
Kaiser Permanente

Benefactors
Anthem Blue Cross
Aon Consulting
Beckman Coulter Foundation
Blue Shield of California
UnitedHealthcare

Co-Benefactor
Orange County Medical Association


Buying a Medical Practice - Practice Evaluation when purchasing

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Monday, June 21, 2010

Sale of physician practices to hospitals and ppmc's

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Just got back from the annual meeting of the NSCHBC. Great sessions were offered regarding a number of issues concerning medical and dental practices. One particular session discussed hospital-physician integrations and the sale of medical practices to hospitals. I was surprised to hear that the volume of these hospital deals have been picking up, but as expected, hospitals are largely unable to cash-out physician sellers. I also read a piece in AMA News recently about physician practice management companies getting back into the game and buying medical practices. But the volume of these deals pales in comparison to the acquisition mania of the 1990's and they mostly seem to be inpatient practice purchases. Corporate deals and larger-entity acquisitions are still happening but have not pick up major steam as many had expected. Many buyers will continue to be cautious in an uncertain regulatory and reimbursement climate. However, physician to physician practice sales still seem to be flowing at a steady rate.

Saturday, June 19, 2010

Annual Meeting of the National Society of Certified Healthcare Business Consultants

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The annual society meeting just finished up today in Palm Beach Gardens Florida. It was a fantastic opportunity to meet colleagues, vendors, and new contacts. Session topics were very informative and covered a broad spectrum of issues concerning medical and dental practices, as well as strategies we can employ as practice consultants:
  • Lean six sigma for the medical practice
  • Dental practice marketing and trends
  • Impact of the New York Ingenix case on setting fees
  • The consultant's role in hospital-physician integrations
  • Dental practice valuation and transitions
  • Dental practice statistical benchmarks
  • EMR implementation
  • LinkedIn and social media marketing
  • Medical economics roundtable
  • Medical practice legal risks
  • Troubled practice turnaround - medical practice debt restructuring
  • PQRI registry reporting
  • NSCHBC practice statistics
  • How to turn satisfied patients into loyal patients
The society has a lot planned for the upcoming year and it's a great time to join our organization. NSCHBC also offers has a practice statistics product which I highly recommend. Check it out: Medical/Dental practice income and expense averages.

Thursday, June 3, 2010

Sale of a Medical Practice - Primary Care - San Diego California

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Selling a family primary care medical practice in a highly desirable coastal community of San Diego County. Exceptional primary care practice collecting $1,700,000 annually with solid earnings. Beautifully designed, state of the art facility with x-ray, lab, and dedicated surgical suite. Established practice providing top notch care with a host of ancillary services. Well-run and efficient operation. Contact one of our practice brokers for details: San Diego Medical


What to consider when selecting a valuation professional for a medical practice appraisal.

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Obtaining a professional opinion of the value of your medical practice can be helpful in a number of capacities. One major catalyst when it comes to obtaining a practice appraisal is a transaction or anticipated transition in the practice. This may involve buying or selling a practice, divorce, estate planning, medical practice financing, merger, consolidation, or other business combination. Various considerations come into play when seeking a qualified appraiser to value the practice. An appraiser should take into account the multiple valuation approaches per industry standards and accepted guidelines, in addition to providing a competent application of these principles given the subject practice. Medical practice appraisers should use a number accepted methodologies suggested by the IRS, The Appraisal Foundation’s Uniform Standards of Professional Appraisal Practice, and standards of appraisal for medical practice valuation. Equally important is the value judgment when it comes to gauging the risk factors and growth rates applicable to the subject practice, the medical specialty, and industry as a whole. A good medical practice appraiser will use correct assumptions of growth in the specific specialty and region, and will know how practice value is affected by supply and demand side factors, reimbursements, and structural changes to health systems. The valuation of medical practices can be confusing and fraught with conflicting information, especially when it comes to using appraised value for selling and buying practices. The key to selecting a good practice appraiser is working with one who understands these dynamics yet can provide a valuation at arms-length. The appraiser should be keenly familiar with the medical practice focus, as general business appraisal principals can be grossly inaccurate when they aren’t nuanced for the specific nature of the practice environment. Obtaining a practice valuation opinion is the first step in understanding what the practice may be worth and can be very helpful in structuring deals for outright sales, buy-ins, buy-outs, mergers, and consolidations. Having an informed basis makes it easier to justify value and price points to ultimately achieve the given transition objective.

Medical practice appraisal, valuation, sales, financing, and practice evaluation.

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