Do you know what your
physician practice is worth? Whether or not
you're selling, you should. It will have an impact on your immediate business plans,
your long range plans and even your retirement.
It is no secret that hospitals are employing physicians at an accelerating rate. Whether
it is to create an ACO, or to accept bundled payments, or simply to replace retiring
attending staff, hospitals are spending money on physicians. It comes down to make versus
buy. Hospitals can "make" physicians by recruiting/employing new ones to the area or
hospitals can "buy" existing attending physicians.
Most hospitals do not want to compete for recruits with their attending physician groups.
But when key groups fail to recruit new blood, hospitals are compelled to step in and
recruit in order to preserve the future of the specialty to the community and the bottom
line of the hospital. To avoid competing with attendings, savvy hospitals often buy
existing groups and then recruit new physicians as needed.
Most of our valuations are ordered by hospitals interested in a particular group. Our
two fold report provides a detailed operational analysis and a fair market value
assessment. (To avoid Stark and anti-kickback rules, hospitals are limited to paying
the fair market value.) Before discussions even begin, the hospital knows the value of
the medical group before the physician owners do.
We think every group should have an idea of what their practice might be worth (or not worth)
before anyone else. Even if your group decides to do nothing, we offer suggestions
as to how your value can be improved. Finally, as with selling a house, timing is
everything. Medical group values in general have declined over the years as reimbursement
rates have decreased while operating expenses have increased. The window of opportunity
to be compensated for your excess good will is closing.
