Practice Valuation Services
Practice valuation begins with a review of the following:
- Charge, adjustment and payment information, by payor
- Accounts receivable data
- All managed care contracts
- Financial statements and related ledgers
- Physician-related expenses
- Practice procedure analysis
- Lease agreements
- Appropriateness of coding
- Practice’s patient mix and volume
- Inventory equipment and supplies, if applicable
- Coordinate real estate appraisal, if applicable
PracticeMax will then develop a valuation and arrive at a fair market value of the medical practice utilizing the market, replacement, and discounted cash flow methods based on the following:
- Projected volume, by procedure category and payor, for each year
- Projected gross charges and collections, by procedure category and payor
- Projected expenses related to the volume projected for each year
- Projected capital outlay each year based on prior years' activity and projected volumes
- Five year cash flow statement and subsequent "terminal year" cash flow value
Additional steps in the process include:
- Prepare a discounted accounts receivable schedule based on the practice's collection history, if applicable
- Prepare a practice operating indicator report comparing the practice with Industry Standards
- Review the final report with Physician
- Assist physician with negotiations. The valuation is an important tool in determining buy/sell agreements with future associates, retirement transition issues, group merger decisions and offers from third parties to acquire a practice