What's my medical practice worth?
You may not think much about the value of your medical practice on a day-to-day basis. But when changes happen in your professional or personal life, the value of your practice may become the most important business term you need to know.
The value of a medical practice can be at issue in many stages of a business, from a young doctor planning to buy a practice to mergers to an older professional who is ready to sell a practice and retire. The value of a practice comes up in your personal life as well, whether it's drafting an accurate premarital agreement or establishing a value during divorce.
Establishing the value of a medical practice is challenging, however, because of the wide range of factors that must be considered. An article in Medical Economics lays out some of the factors:
- Assets such as real estate, office space, equipment and patient accounts receivable
- Goodwill. This is one of the factors that can vary the most and can also be the most contentious.
- The fee schedule for Centers for Medicare and Medicaid Services (CMS)
- Other doctors in the service area
- Expense ratios
- Patient populations
- Current and future earning capacity
- Doctor productivity
These are just some of the factors that need to be considered. In addition, numerous legal considerations apply in cases involving the purchase or sale of a practice. The Stark Law, anti-kickback regulations and other health care laws often affect whether and how a deal can be structured.
Our law firm has attorneys experienced in both health care law and divorce law. We understand how valuations of medical practices work, how to ensure that your practice is accurately valued and how to use that valuation to structure a deal - whether a business transaction or a divorce settlement - that is in your best interests.