MD Compensation and Benchmarking Tools

MGMA and ValueSource Release Software
Staff Reporters
Free online compensation and productivity benchmarking tools for physician practices are now available from ValueSource Software and the Medical Group Management Association [MGMA].
Dashboards in the Cloud
The two web-based [internet computing] dashboards enable physicians and group practices to enter a few easy-to-find variables about physician compensation, and production and costs, [...]

Marital Dissolution, Buy-Sell Agreements and Practice Value

Doctors, Divorce and Medical Practice Worth
By Mark P. Gross; JD
Determining how to value the business interest of each medical partner is a critical element of the buy-sell agreement.
Family law courts, however, have broad discretion about whether to accept or reject the validity and binding effects of the formula stated in these agreements. When assessing [...]

Concierge Medical Practice Fee-Setting

Pricing Decisions for Medical Providers
Dr. David Edward Marcinko; MBA, CMP™
Publisher-in-Chief
Professional fee-setting and related pricing decisions for a concierge medical practice, like most businesses rather than most medical-entities, is complex and will significantly affect the doctor’s profits.
New Markets
When a concierge medical practice is first introduced into a local market, the physician-executive must make a choice between [...]

Majority-Minority Relationships in Practice Appraisals

Disparate Principles Affect Medical Practice Worth
Dr. David Edward Marcinko; MBA, CMP™
Publisher-in-Chief
Did you know that majority shareholder-doctors in a medical practice have a fiduciary obligation to minority shareholders-doctors?
Actions Scrutinized
Yes, it’s true. In fact a minority medical practice owner is entitled to scrutinize every action made by the majority owner. In particular, majority shareholders have fiduciary obligations to [...]

Determinants of Medical Practice Value

Understanding Goals and Objectives
Dr. David Edward Marcinko; MBA, CMP™
By Hope Rachel Hetico; RN, CPH, MHA/MBA, CMP™
Much has been written, and much has been said about the goals, objectives, reasons, techniques and methodology of professional medical practice appraisals online at the Executive-Post.
And, even more actionable information is presented in our institutional 1,200 pages, 2-volume print [...]

Determining Practice Economic Interests

Understanding Modern Valuation Science
By Dr. David Edward Marcinko; MBA, CMP™
Publisher-in-Chief
Much has been written, and much has been said about the goals, objectives, reasons, techniques and methodology of professional medical practice appraisals online at the Executive-Post.
In fact, the material on medical valuations and practice worth appraisals is consistently one of our most frequently viewed topics [...]

Valuation Report Reviews

Understanding a Medical Practice Appraisal
Dr. David Edward Marcinko; MBA, CMP™
By Hope Rachel Hetico; RN, CPH, MHA, CMP™
Much has been written, and much has been said about the goals, objectives, reasons, techniques and methodology used in professional medical practice appraisals, at the Executive-Post.
And, even more actionable information is presented in our institutional 1,200 pages, 2-volume print [...]

Medical Practice Valuation Blunders

medical-practice-valuation-blunders.pdf
Top Ten Appraisal Mistakes to Avoid
By Dr. David Edward Marcinko; MBA, CMP™
Publisher-in-Chief’ 

White-Paper Excerpt 
“The science of the modern medical practice valuation can be traced to the Estate of Edgar A. Berg v. Commissioner (T. C. Memo 1991-279). In this case, the Court criticized CPAs as not being qualified to perform business valuations, failing to provide analysis [...]

Opinions of Medical Practice Value

Sample iMBA Inc., Engagements
Understanding FMV Methodology
Dr. David Edward Marcinko; MBA, CMP™
Publisher-in-Chief  
 
For doctors, buying or selling a practice may be the biggest financial transaction of their lives.  Reasons for appraising practice worth include: succession, retirement and estate planning; partnership disputes and divorce; or as an important tool for organic growth and strategic planning.  
However, the transaction is fraught with [...]

“Rules-of-Thumb” Valuation Benchmarks

Busting another Myth of Medical Practice Appraisal
Dr. David Edward Marcinko; MBA, CMP™
Publisher-in-Chief 

For doctors, buying or selling a practice may be the biggest financial transaction of their lives. 
Reasons for appraising practice worth include: succession, retirement and estate planning; partnership disputes and divorce; or as an important tool for organic growth and strategic planning.
However, the transaction [...]

Medical Practice Buy-Sell Agreements

Different Structures - Varying Methods
By Lawrence E. Howes; CFP™
By Joel B. Javer; CFP™  
All medical practice and other business agreements that dictate what happens to a physician’s property should be addressed in what is called a buy-sell agreement.  
Definition 
A buy-sell agreement stipulates what would happen to your practice should you die, become disabled, leave, or wish to retire.  The [...]

Completing the Medical Practice Sales Transaction

Issues to Consider Before Signing a Final Contract
Dr. David E. Marcinko; MBA, CMP™
Hope R. Hetico; RN, MHA, CMP™
 
Depending on whether the likely buyer of your medical practice is a health system, a private physician or a corporate partner, medical practice sale deal structures will vary.
From the physician’s perspective, deal negotiations are based on consideration of [...]

Maximizing Medical Practice Value

Understanding Basic Business and Economic Concepts
Dr. David E. Marcinko; MBA, CMP™
Hope R. Hetico; RN, MHA, CMP™
 
There a several interesting managerial concepts that all physicians should know in order to maximize medical practice value or business entity transfer worth. 
For example, when having a medical practice appraised, be sure to include the Discounted Cash Flow [DCF] method of [...]

Medical Practice Valuation

More on USPAP and the IRS 
Dr. David E. Marcinko; MBA, CMP™
Hope R. Hetico; RN, MHA, CMP™
Medical practice valuation is essentially a future prophesy and must be based on facts available at the required date of appraisal.
-Modified from: IRS Revenue Ruling 59-60
Some physicians may rightfully agree with the above statement, while others may not. Nevertheless, closely held [...]

“Standard” of Medical Practice Value

More than One Value Definition May Apply
By Dr. David E. Marcinko; MBA, CMP™
By Hope R. Hetico; RN, MHA, CMP™ 
 
All physicians are familiar with the legal concept of the “standard of care.” However, when it comes to the fair-market-value of a medical practice, healthcare business appraisers generally refer to three other “standards of value”; as defined below. 
The [...]

Physician Buy-Sell Agreements

Federal Estate Tax Implications
Staff Writers

According to some tax experts, the US Tax Court suggests several generally accepted factors for making a medical practice buy-sell agreement valuation price binding for Federal estate tax purposes. 
Acceptable Factors
For example, among other items, the medical practice buy-sell agreement must include the following factors for Federal estate tax purposes: 

The price must [...]

Medical Practice Valuation Engagement Types

Physician Goals Determine Appraisal Acuity Levels
Staff Writers 
 
Medical office valuation is as much art as fair-marketing accounting science. And, most physicians are unaware that - much like an IRS audit - there are several levels of acuity which may be obtained for various reasons. Although not standardized, the following three acuity levels are typical valuation engagement types: 
The [...]

Regulations that Impact Medical Practice Value

Understanding USPAP Standards
Dr. David E. Marcinko; MBA, CMP™
Hope R. Hetico; RN, MHA, CMP™  
 
When a medical practice changes ownership, both the buyer and seller need to understand how industry regulation impacts practice value, as well as have an appreciation for accepted appraisal definitions and methodologies used by qualified appraisers to estimate value.   
Uniform Standards of Professional Appraisal [...]

Externalities of Medical Practice Value

Understanding Premiums and Discounts
Dr. David E. Marcinko; MBA, CMP™
Hope R. Hetico; RN, MHA, CMP™ 
 
Some physicians today do not realize that after a medical practice is appraised, price discounts / price premiums may apply to the final selling / purchase price. These “externalities” may include the following:
Practice Appraisal Discounts:  
A discount may be applied to a medical practice [...]

Onsite Practice Appraisal Visits

In-Situ “Walk-Through” Often Essential for Proper Valuation
Staff Reporters 

Introduction 
The most effective means for any valuation professional to confirm his or her understanding of medical business value, and how internal controls over financial and managerial reporting are designed and operated in a practice, is to evaluate and test its effectiveness, in-situ.
Purpose of the Visit 
The purpose of an [...]

Novel Medical Practice Valuation Approaches

Enhancing Buyer Affordability
Dr. David Edward Marcinko; MBA, CMP™
Hope Rachel Hetico; RN, MHA, CMP™ 
 
All doctors realize that earnings drive the value of any medical practice, and more earnings equate to increased value. But, if a buyer cannot reproduce the earnings of the seller, the practice is worth less to the buyer. And, there are many variables [...]

The Medical Office Appraisal Process

Understanding Different Methodologies
By Dr. David Edward Marcinko; MBA, CMP™
By Hope Rachel Hetico; RN, MHA, CMP™ 
 
Much needs to be done before a medical practice can be sold for a premium. In fact, the following should be done before the actual practice appraisal process even begins:
· Choose an appraiser who understands the managed health care industry.
· Acquire historic financial information [...]

Onsite Visits for Office Appraisals

The Medical Practice Walkthrough – A Necessity?
Staff Writers
 
The most effective means for any professional appraiser to confirm his or her understanding of business value, and how internal controls over financial and managerial reporting is designed and operated in a medical practice, is to evaluate and test its effectiveness.
This includes making inquiries about and observing [...]

Appraising a Practice

Types and Levels of Medical Practice Appraisal Services 
Staff Writers
 
Medical office valuation is as much art as managerial accounting science. And, most physicians are unaware that - much like CPT® codes and office visits - there are several levels of acuity which may be obtained for various reasons.
Although not standardized, the following are typical valuation engagement [...]

Medical “Goodwill” - Does it Still Exist?

What is the Medical Practice Goodwill Conundrum?
By Dr. David Edward Marcinko; MBA, CMP™
By Hope Rachel Hetico; RN, MHA, CMP™ 
 
In the context of long-term compensation for a lifetime of work, mature medical practitioners of all types often erroneously focus on the intangible of ”goodwill” upon retirement; especially relative to medical practice worth.  
Definition
Goodwill is defined as “The ability of [...]

Medical Practice Worth

Introduction to Healthcare Business Valuation
By Bruce G. Krider; MHA 
 
This post provides an insight into the issues involved in buying or selling a healthcare organization or business.  Its purpose is to provide the reader with greater understanding of the process and the concepts conveyed within do not represent valuation “advice”.  
Whether acquiring or divesting, we strongly recommend [...]