Determining the Value of a Medical Practice

Published by Becker’s ASC Review

The value or worth of a medical practice to a third-party buyer in an acquisition is often the subject of much debate, theoretical analysis and often confusion. As the healthcare environment undergoes its cyclical market rituals that often includes the acquisition of physician practices, the employment of physicians and then ultimately the divestiture of money-losing strategies, the issue of what a practice is worth invariably plays a leading role.

Historical look at market drivers A brief, recent historical framework is useful for understanding the market drivers that result in the physician practice acquisition cycles. As recently as the mid 1990s, the imperative for hospital systems all across the United States was the development of the integrated delivery network (IDN). The conceptual idea of the IDN included a multi-faceted organization that included the primary care physician as the “gatekeeper” physician that served not only as the first point of contact for the patient experience but also as the entry point into the rest of the IDN. In most cases, a patient had to see their primary care physician in order to get authorization or referral to a specialist.

Click here to continue to the full article.