The Best State to Practice Medicine

Physician's Practice came out with its list of the best places to practice medicine in the November 2009 issue, based on the following criteria:

• Medicare Geographic Practice Cost Index
• Cost of living
• Number of physicians per 1,000 residents
• Malpractice climate
• Medical Board Major Disciplinary Actions Per 1,000 Physicians
• State income taxes

It is most interesting to note how many states are "in crisis" or have "serious problems" when it comes to the malpractice climate. This underscores the view that reform addressing malpractice is long overdue. Even in the states with a multitude of favorable qualities for practicing medicine, the malpractice situation is downright scary.

SBA Loans for Electronic Health Records systems

Senator John Kerry has proposed a bill that would allow physicians to obtain SBA loans for the acquisition of electronic health record systems and other computer technology to modernize their practice. This is a welcome relief to physicians who are worried about the high costs involved in acquiring, implementing, and maintaining such systems. Investing in electronic health records will be required in order for physicians to qualify for some government incentives and comply with upcoming mandates. It is encouraging to see that there is a push to make SBA loans more accessible to physician practices, especially in light of a puzzling move by the SBA last year to place a cap on goodwill for acquisitions. The goodwill cap has since been revised and it has still been possible to obtain amounts in excess of the limit through an individual review process, but the thought of such a limit being implemented is still disconcerting.

Protecting Practice Value - Southern California Physician

The latest issue of Southern California Physician featured an article entitled "Protect the Value of your Practice", which discusses the importance of a contingency plan for the practice in the event a physician-owner passes away. In such an instance it is vital for the sale of the remaining assets to occur as soon as possible. Intangible assets and goodwill are often the most valuable assets in a practice, and their value erodes rapidly once the principal is incapacitated or passes away. The article suggests the use of a revocable living trust as a way to address the drawbacks of the probate process. While this may be a stop-gap measure for further erosion of remaining asset values in the practice, a more important aspect to consider is the planning of a comprehensive exit strategy in advance. We often receive phone calls from relatives of recently deceased physicians who are looking to dispose of the remaining practice assets. In most cases it is difficult, if not impossible to find a buyer. It is imperative for older physicians to think about exit planning far in advance even if thoughts of retirement or mortality are unpleasant. Selling the practice outright is one solution. Bringing on an partner/associate and negotiating a buy-out plan in advance is another option. These are steps which can help to preserve some of the goodwill value of the practice and avoid a fire-sale situation in the event of death or incapacity.

Optometric Management - Staff meetings in the Optometry practice

Regular and well-administered staff meetings are vital to the management of any healthcare practice. Especially as practices grow and diversify these venues become increasingly important. Wise practice owners can use these opportunities to gauge key factors before making adjustments to business practices. In addition, staff meetings can be crucial outlets for the discussion of topics which are not suitable to address during normal operations. An article in Optometric Management on How to make your staff meetings more effective touches on a number of helpful strategies to get the most of out of these opportunities.

Selling a Professional Healthcare Practice - Frequently Asked Questions

Frequently asked questions about the sale of a practice...and answers, provided by yours truly.

When is the best time to sell my practice?
The decision to sell can be driven by a variety of factors: retirement, career change, lifestyle desires, or financial concerns. Addressing personal timing in conjunction with financial considerations is crucial when trying to obtain full value for the practice. From a financial perspective, the ideal time to sell a practice is during a period of solid earnings. The value of a practice is largely driven by recent performance. Buyers and financing sources will look for consistency over the prior 2-to-3 year period with additional emphasis placed on the last 6 months to 1 year. Growing and maintaining the practice in anticipation of pursuing an exit strategy is important to maximizing potential value.

How much is my practice worth?
A practice’s value depends on many factors. A professional appraisal, conducted by an expert in healthcare practice valuation, takes highly specific market factors and industry nuances into account. In choosing an appraiser for this purpose it is important to consider whether the appraiser uses sound principles and has a strong foundation in the realities of practice transactions occurring on the market. An appraisal is only as good as its ability to realistically reflect the value of the entity.

How long does it take to sell my practice?
The marketability of a practice and timetable for completing a transaction are dependant on various factors. The most common aspects that come into play are: practice earnings, practice valuation, specialty, buyer demand, geographic area, and seller motivation. In general, 6 months to 1 year is a fair timeframe to consider for the complete lifecycle of a transaction. A major determinant of success in this process involves the ability of a consultant to anticipate potential challenges and diligently prepare an approach prior to marketing.

Why not sell the practice myself?
Practice owners may discover that the time and expense involved in trying to sell the practice themselves does not usually result in savings or a successful outcome. The mere decision to sell a practice is one of many steps in a potentially complicated and emotional experience, coupled with the intricacies of a transaction process for which an owner may have limited prior experience in handling. Even well-seasoned individuals may find that supervising the process themselves draws focus away from the management the practice, thus risking a decline in the very asset they are trying to obtain optimal value for. Working with a qualified practice transition specialist can yield a much higher probability of obtaining maximum value for the practice. A specialist is able to expose the opportunity to a larger pool of potential buyers and can rigorously qualify candidates both professionally and financially. In addition, the expert guidance and assistance provided by an advisor can make for more effective negotiations and a streamlined and successful transaction. Sellers can also address the need for confidentiality more effectively when an intermediary is in place.

How do I choose a consultant?
It is vital to select a transition advisor who is knowledgeable about the nuances of selling healthcare practices and can gauge market realities when devising a selling strategy. A good advisor who can give an honest analysis upfront and provide reasonable expectations for selling the practice is much more likely to deliver actual results within your given timeframe. It is important to work with someone who is committed to providing full service guidance from start to finish.

American Medical News - EMR packages being bundled as single product

The bundling of hardware and software packages into multi-functional EMR solutions is occurring at a rapid pace (American Medical News). The push for facilities to adopt electronic records is increasing and vendors are ramping up in anticipation of rising demand. Mandates by Medicare and federal stimulus money will make EMR solutions virtually unavoidable in modern practice. In light of these changes, the need for packages geared towards smaller facilities and physician practices is immense. Smaller practices may find it difficult to find a solution that isn't exorbitantly priced nor a hassle to implement and maintain. The average practice won't need or be able to afford a full-blown, integrated solution that might be found in a larger practice or hospital. More entrants into the EMR market has meant a wider variety of options for physicians. Even document management systems are popping up which are being billed as hybrid EMRs. While EMR may eventually yield positive results for our health care system in aggregate, practices that are seeking immediate return on investment should look towards billing or practice management solutions...these can be ideal for improving productivity, cash flow, and efficiency right out of the box.

Delegation of tasks to non-physician providers in plastic surgery practices and med spas

Many practices and med spas that offer a variety of cosmetic and aesthetic treatments have come under scrutiny for certain practices. Among these, is the delegation of patient care tasks to non-physician providers. Practice owners must carefully manage the medico-legal and ethical aspects of their practice by following clearly established guidelines. The American Society of Plastic Surgeons and the American Society for Aesthetic Plastic Surgery have a joint guiding principles on the supervision of non-physician personnel in physician practices and medical spas. The use of physican extenders is an excellent way to increase a physician's efficiency, though the delegation of tasks to these providers must not be divorced from carefully monitored, physician-directed care. The chain of accountability ultimately ends with the physicians themselves. The current economic climate is already challenging for many cosmetic practices who rely of discretionary consumer spending. Practices that attempt to cut corners by inappropriately delegating tasks to extenders to make up for leaner profit margins risk severe consequences.

Featured Practice - Psychiatric practice in Louisiana

Featured listing: Psychiatry practice for sale in Louisiana. This is a phenomenal practice with low overhead and solid earnings

* Established practice which is well-positioned in its market
* Netting ~$780k on gross collections of $1.2 million+
* Low Overhead
* Exceptional opportunity for 1-2 psychiatrists looking for excellent cash flow

Contact here for more info

Here is another one of our recent psychiatry practice transactions.

Understanding practice benchmarks - Ophthalmology Practice Managment

An article regarding the use of benchmarks in ophthalmology practices appeared in the April issue of Ophthalmology Times. The author makes a good point regarding the use of a single benchmark versus a collection of benchmarks. The use of a combination of relevant and effective benchmarks can be a more reliable way to gauge the ongoing health of an ophthalmology practice rather than the use of a single "favorite" standard.

For the purpose of practice sales and transition planning, different benchmarks are more useful than others. In ophthalmology practice valuation and appraisal we primarily look at overhead and underlying profit. When arranging an exit strategy and transition plan it is important to review these numbers in light of other factors such as patient statistics. An incoming buyer may be better served by retaining the outgoing seller for a longer period post-closing, if the transition would be more effective in this manner. Conducting proper due diligence during the selling process and reviewing the right statistics is crucial to making such determinations.

AOA Gains National Platform for Optometry's Priorities in Health Care Reform

The American Optometric Association weighs-in on how health care reform will affect Optometry and patient access to their vision care providers in the following audio news release (click here to listen).

Optometric Management - Manage Change in Your Practice

Managing change in an optometry practice can be challenging, especially when there is a laundry list of changes to be made. Prioritizing and carrying out these initiatives to successful fruition is often easier said than done. An even more difficult task is establishing protocol that ensures these plans are replicated and followed through by providers and staff. Appearing in this month's issue of Optometric Management is an article outlining a simple and straghtforward approach.

Optometry Practice Managment - Winning new patients depends on your value proposition

Many optometry practices take a haphazard approach to marketing. Here's a perspective on an approach called a value proposition, "or the sum total of all the benefits a practice promises the patient in exchange for the fees he or she will be charged. The ratio of benefits to fees is what will establish the value of visiting your practice in the eye-care consumer's mind (Optometry Times, De Gennaro, 2009)." Click the linked quote for the full article from the Optometry Times.

There is much which can be done beyond basic marketing and advertising to expose a practice to a larger base of patients. De Gennaro explains quite aptly, that the full patient experience is what allows a vision care practice to gain and retain market share. One strategy which I have seen applied in other successful healthcare practices, is the cultivation of a mission and vision that can dovetail well into an overall marketing strategy.

Best Jobs in America - Money/PayScale.com's list of great careers

Numerous healthcare-related jobs can be found on the Money/PayScale.com's list of Best Jobs in America for 2009. Interestingly enough, physician extenders are in the 2nd and 4th spots on the list: #2 (Physician Assistant) ; #4 (Nurse Practitioner). Healthcare continues to be an area of tremendous growth and need. This is not a huge surprise, but it is interesting to note the size of demand for these positions in light of forthcoming health reform. Many sellers and buyers of healthcare professional practices are anxious about upcoming reform. The increased use of extenders will likely be an important strategy for practices to employ in order to be nimble and adaptive in this changing environment.

Other notable healthcare-related jobs on the list are:
7 Physical Therapist
11 Anesthesiologist
13 Pharmacist
14 Occupational Therapist
15 Nurse Anesthetist
19 Physician/General Practice
22 Physician/Obstetrician/Gynecologist
23 Clinical Psychologist
24 Psychiatrist
25 Veterinarian
27 Speech-Language Pathologist
44 Pharmaceuticals Sales Representative

Featured Optometry practice for sale - Palm Beach County Florida

Acquisition opportunity - Optometry practice for sale in Palm Beach County:

• Grossing ~$520,000, on 4 OD days/week
• Real estate also available
  
• Long established practice situated in a freestanding building
• Up to 100% Financing

Please call us at 800-416-2055 or visit our practices for sale section for additional information

Summary of HHS regulations Breach Notification for Unsecured Protected Health Information

Here is a nice summary of the Health and Human Services (HHS) regulations on Breach Notification for Unsecured Protected Health Information, especially as it pertains to family physicians: This is a summary FAQ written by Steven Waldren, M.D., director of the Academy's Center for Health IT,

Per Dr. Waldren:
"This is fairly dense language, as is often the case with government regulatory efforts," said Waldren. "In an effort to save members time and frustration, I zeroed in on a few sections of the regulations that are most likely to impact family physicians' practices."

MGMA: Medical practice revenues fall

An article from the Medical Group Management Association regarding declining revenues in the medical practice: MGMA: Medical practice revenues fall. Many practices that already run on lean margins are being squeezed even further as patient volume drops, accounts receivable cycles lengthen, and patient's bad debt racks up. These are all indicative of an economic environment which has made it challenging for many. This may be an even stronger impetus for medical practices to become more efficient. From the article......William F. Jessee, MD, FACMPE, president and CEO of MGMA: "Even in a good economy, many of our member practices have trouble staying financially solvent, so now it's more important than ever that practices look for ways to operate as efficiently and effectively as possible."

Medical supply costs stabilize - American Medical News

Cost inflation for medical supplies seems to be growing at a lower-than-anticipated rate, according to this article. This is partially attributable to more generics drugs hitting the market as well as weakening demand for supplies due to budget tightening. Health care institutions are running on leaner inventories. Despite this "good news", the rate of inflation in medical supplies still outstrips the general inflation rate.

Dermatology practice - Acquisition Opportunity - Oklahoma

Calling all Dermatologists...we have another fantastic practice acquisition opportunity for you.

• Well established solo dermatology practice
• Grossing ~$1,150,000, netting ~$700,000+ annually
  
• 100% medical dermatology
• History of strong earnings

Buying a dermatology practice of this caliber is an excellent way to enter practice with solid earnings from day one. This is a solo practice located in a large city in Oklahoma. The practice could potentially be expanded by adding additional providers and services. Please contact us for additional details and visit our medical practices for sale page for additional dermatology practices currently being offered.

How electronic medical records affect staffing

An article from the AMA on How electronic medical records affect staffing.

Implementing an EMR solution in a healthcare practice can be challenging from many perspectives. Beyond the implementation process itself, much time and effort can be spent in training employees and redefining their roles. Much of the success of an EMR solution in a practice hinges on how well the practice operates prior to this change. Dr. Eric Pifer puts it well: "If the practice isn't already spinning like a top, it can get ugly". This makes sense. If a practice is efficient, nimble, and adaptive from the getgo, implementing EMR can be much easier endeavor. EMR may not be the right solution for all practices at this point but healthcare has been moving progressively towards larger and more ambitious electronic systems. It may be better for practices to accept this trend sooner than later.

American Medical Association - Code of Ethics - Opinion 7.04 - Sale of a Medical Practice

I often have physicians who ask me about the transferability and saleablity of goodwill in their healthcare practices. Below is an opinion from the America Medical Association regarding the sale of a medical practice. Goodwill is certainly saleable and transferable (as long as IRS purchase price allocation guidelines, Stark laws, and HIPAA are adhered to). In fact, goodwill is often the most valuable asset within a healthcare practice.

Opinion 7.04 - Sale of a Medical Practice

A physician or the estate of a deceased physician may sell the elements that comprise his or her practice, such as furniture, fixtures, equipment, office leasehold, and goodwill. In the sale of a medical practice, the purchaser is buying not only furniture and fixtures, but also goodwill, ie, the opportunity to take over the patients of the seller. A patient’s records may be necessary to the patient in the future not only for medical care but also for employment, insurance, litigation, matriculation, or other reasons. Therefore, the transfer of records of patients is subject to the following:

(1) The physician (or the estate) must ensure that all medical records are transferred to another physician or entity who is held to the same standards of confidentiality and is lawfully permitted to act as custodian of the records.

(2) All active patients should be notified that the physician (or the estate) is transferring the practice to another physician or entity who will retain custody of their records and that at their written request, within a reasonable time as specified in the notice, the records (or copies) will be sent to another physician or entity of their choice.

(3) A reasonable charge may be made for the cost of locating, duplicating, and mailing records. (IV)

Report: Issued July 1983; Updated June 2000
Source: http://www.ama-assn.org/ama/pub/physician-resources/medical-ethics/code-medical-ethics/opinion704.shtml

Selling a practice vs. Closing a practice

Determining whether a practice is saleable can be tricky. I am usually able to give clients a good idea whether their practice is saleable by looking at earnings, specialty, and geographic area in conjunction with specific market indicators and industry data. For those practices which are unlikely to sell, the process of closing the practice can be daunting. Here is a guide provided by the American Academy of Dermatology on closing a practice:
Closing a Dermatology Practice - PDF
Closing a Dermatology Practice - HTML

Doctors Fight Penalty for Heavy Test Use - Wall Street Journal

Article from the Wall Street Journal. Addressing overutilization will be one of many challenging tasks in containing health care costs. Though I haven't read this specific part of the bill myself, I question its mechanism when I hear it described like this:

"Any doctor whose level of testing and procedures ranked at the 90th percentile or above would be penalized with 5% reductions in Medicare reimbursements."

"The bill calls for the secretary of Health and Human Services to account for doctors with less-healthy patients. But the government has acknowledged that its efforts to collect that type of data haven't fully accounted for all the attributes of Medicare recipients."

How can penalties be assessed to a provider for overutilization if patient health status isn't accounted for? Sicker patients generally utilize greater resources, and this leaves the potential for providers to be unfairly penalized if they treat a larger proportion of sicker patients.

Dermatology practice for sale - NY - Quality of life

Are you a Dermatologist looking for a serious upgrade in the quality of life department?

How would you like to:

• Work 4 days a week
• Take 12-15 weeks of vacation per year
• Take home $600,000-$700,000 annually
• Live in beautiful Monroe County, New York

Click here: Dermatology practice for Sale - NY

Call here: 800-416-2055

Hospital group opposes 'meaningful use' quality improvement targets

(Article from Medical Economics) I see the need for quality improvement targets but what are these targets based on and who creates them? From what I've read, even the best quality-improvement measures can be flawed by the inherent difficulty in measuring health outcomes and other indicators. How do you track a patient's care over a lifetime and attribute those outcomes directly to a specific provider? If you do evaluate shorter term measures such as patient care episodes, is it really possible to isolate for other factors outside a provider's control? Also, can the party that is creating and benchmarking the quality improvement targets be truly impartial?...especially when targets are linked to a incentives or reimbursements of some type?

Listing Highlight - San Diego Primary Care Practice for Sale

We recently listed a Family Practice in San Diego County, California . This practice was one of the more impressive practices I've seen in a while (my motivation of course is to facilitate the sale of this place, so this is also obviously a plug as well). To be honest though, this practice was magnificently efficient, well-designed, technologically advanced, and aesthetically pleasing. These are qualities which I don't usually focus on because I typically concentrate on earnings and other factors that drive economic value. What made this place notable was the fact that it had a solid vision and mission. This was visible throughout the practice in virtually every detail imaginable. This is what made all these factors gel together and stand out for me. Processes, systems, equipment, procedures, layout, etc were all selected and designed in a way that was tuned into the greater purpose of the practice...to deliver excellent, timely care with the experience being pleasurable for everyone involved. That's just plain awesome. I'm sure there are equally efficient, technologically advanced, and aesthetically pleasing practices out there where employees, patients, and doctors are all miserable. A lot of the business and strategic planning advice you read about seems like fluff until you see it successfully implemented and it blows your socks off. My point is that it's doable...and that's empowering knowledge for any practice or business out there. Find your vision and immerse yourself in it.

Small Business Administration to Ease Limits on Loans

Earlier this year the SBA put a 250k cap on the amount that could be financed for intangible assets in an acquisition loan. Looks like they're raising the cap to 500k (with a review process for amounts in excess of this). The cap increase will definitely help to get more deals done. The primary value of most healthcare professional practices is in goodwill intangible assets.

Ronald Feldman called the cap the "antistimulus". The SBA's move to implement a cap on goodwill during the midst of the financial turmoil earlier in the year was mind-boggling to most, because it created additional hindrance to funding in a time of need for many small business deals. I understand the desire to curb sellers from inflating intangible asset values, but there's probably a better way to accomplish this, and the timing wasn't so great either. Here is the link to the full article from the Wall Street Journal:
http://online.wsj.com/article/SB125348578905126173.html?mod=dist_smartbrief

Lean and Six Sigma in the Medical Practice

Lean process improvement and Six Sigma are interesting concepts, especially in healthcare. I've written papers about both of these methods albeit in a very academic context as part of my Master's program. Lean and Six Sigma always struck me as techniques that would work best in large organizations with thousands of iterations in a process or series of processes; it's more difficult when you have a smaller sample set of data to work with. In addition, smaller organizations have less resources to track data, complete root-cause analysis, implement process improvements, and set a program like this into perpetual motion. Finding a way to bring these ideas into smaller organizations like medical practices is genius. Obviously, medical practices DO have thousands of iterations in processes...medical charts, script writing, billing, coding, etc. I'm thinking of picking up "Mastering Lean Six Sigma for the Medical Practice, by Frank Cohen and Owen Dahl." Will let you know how it is. Owen Dahl, by the way, is a fellow colleague in the NSCHBC and was my instructor for the CHBC certification course...very knowledgeable guy!

New Website

Hello everyone. We have just redesigned the Transition Consultants website and I couldn't be happier. The new site can be found here: Transition Consultants. The old site is still up (Old Site) and will be phased into the new site over the next few months.

The website redesign is more than an aesthetic overhaul. It is part of our bold, new web strategy which is truly meant to serve our client's best interest. The most noticeable result will be increased exposure of our existing listings of medical practices for sale and optometry practices for sale to a larger pool of potential buyers. This will also assist with our buyer-specific assistance in conducting targeted practice searches based on detailed acquisition criteria. It will also allow us to continue serving physicians with streamlined practice financing and appraisal/valuation services. Please check out the site and contact us with comments, suggestions, praise, hate mail, etc!!! :) We pride ourselves on being straightforward and professional, so your brutally honest feedback is much appreciated!! Thanks. -Chris Majdi

Here are the links to various subpages:

Sell a Practice
Buy a Practice
Medical Practices for Sale
Optometry Practices for Sale
Practices Wanted
Appraisals
Financing
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