AUSTRIAN ECONOMICS: Can it Save Healthcare?

Posted on October 27, 2025 by Dr. David Edward Marcinko MBA MEd CMP™

By Dr. David Edward Marcinko MBA MEd

SPONSOR: http://www.MarcinkoAssociates.com

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The global healthcare sector faces mounting challenges: rising costs, inefficiencies, limited access, and bureaucratic entanglements. In response, some economists and policymakers have turned to Austrian Economics for answers. Rooted in the works of Ludwig von Mises and Friedrich Hayek, Austrian Economics emphasizes individual choice, market-driven solutions, and skepticism toward centralized planning. But can this school of thought truly “save” healthcare?

At its core, Austrian Economics champions the idea that decentralized decision-making and free-market mechanisms lead to more efficient and responsive systems. In healthcare, this would mean reducing government control and allowing competition to drive innovation, lower costs, and improve quality. Proponents argue that when patients act as consumers and providers compete for their business, the system becomes more accountable and efficient. For example, direct primary care models—where patients pay physicians directly without insurance intermediaries—reflect Austrian principles and have shown promise in improving care and reducing administrative overhead.

Austrian theorists also critique the price distortions caused by third-party payers like insurance companies and government programs. According to them, when consumers are insulated from the true cost of care, demand becomes artificially inflated, leading to overutilization and waste. By restoring price signals—where patients see and respond to the actual cost of services—Austrian economists believe the market can better allocate resources and curb unnecessary spending.

However, critics argue that healthcare is not a typical market. Patients often lack the information, time, or capacity to make rational choices, especially in emergencies. Moreover, healthcare involves significant externalities and moral considerations that pure market logic may overlook. For instance, should access to life-saving treatment depend solely on one’s ability to pay? Austrian Economics offers little guidance on equity or universal access, which are central concerns in modern healthcare debates.

Austria itself provides an interesting case study. Despite the name, Austrian Economics is not the guiding philosophy behind Austria’s healthcare system. Instead, Austria operates a social insurance model with near-universal coverage, funded through mandatory contributions and managed by a mix of public and private actors. While recent reforms have aimed to streamline administration and reduce fragmentation he system remains largely collectivist—contrary to Austrian ideals.

In conclusion, Austrian Economics offers valuable insights into the inefficiencies of centralized healthcare systems and the potential benefits of market-based reforms. Its emphasis on individual choice, price transparency, and entrepreneurial innovation can inspire meaningful improvements. However, its limitations in addressing equity, access, and the unique nature of healthcare suggest that it cannot “save” the system on its own. A hybrid approach—blending market mechanisms with safeguards for universal access—may offer a more balanced path forward.

COMMENTS APPRECIATED

EDUCATION: Books

SPEAKING: Dr. Marcinko will be speaking and lecturing, signing and opining, teaching and preaching, storming and performing at many locations throughout the USA this year! His tour of witty and serious pontifications may be scheduled on a planned or ad-hoc basis; for public or private meetings and gatherings; formally, informally, or over lunch or dinner. All medical societies, financial advisory firms or Broker-Dealers are encouraged to submit an RFP for speaking engagements: CONTACT: Ann Miller RN MHA at MarcinkoAdvisors@outlook.com 

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MONETARY VALUATION: Of the Medical Practice

Posted on October 27, 2025 by Dr. David Edward Marcinko MBA MEd CMP™

By Dr. David Edward Marcinko MBA MEd CMP™

SPONSOR: http://www.CertifiedMedicalPlanner.org

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Valuing a medical practice involves assessing its financial performance, assets, and intangible factors like goodwill and patient loyalty to determine its fair market worth.

Determining the value of a medical practice is a nuanced process that blends financial analysis with strategic insight. Whether you’re preparing to sell, merge, or bring in a partner, understanding how to value your practice ensures informed decision-making and fair negotiations.

There are several recognized methods for valuing a medical practice, each suited to different scenarios. The most common include the income approach, market approach, asset-based approach, and the rule-of-thumb method.

HEALTHCARE VALUATION: Terms and Definitions

The income approach focuses on the practice’s ability to generate future earnings. This method involves analyzing historical financial statements, projecting future cash flows, and discounting them to present value using a risk-adjusted rate. It’s particularly useful when the practice has stable revenue and predictable expenses. Key metrics include net income, physician productivity, and reimbursement rates.

The market approach compares the practice to similar ones that have recently sold. It relies on data from comparable transactions, adjusted for differences in size, specialty, location, and profitability. This method is ideal when reliable market data is available, though such data can be scarce for niche specialties or rural practices.

The asset-based approach calculates the value of tangible and intangible assets. Tangible assets include medical equipment, office furniture, and real estate. Intangible assets—like patient records, brand reputation, and goodwill—are harder to quantify but can significantly impact value. Goodwill, for instance, reflects the practice’s reputation, patient loyalty, and referral networks.

The rule-of-thumb method uses industry benchmarks, such as a multiple of annual revenue or earnings. For example, a general practice might be valued at 60–80% of annual gross revenue. While quick and easy, this method oversimplifies and may not reflect the unique strengths or weaknesses of a specific practice.https:/https://medicalexecutivepost.com/2025/03/17/medial-practice-valuation-adjustments//medicalexecutivepost.com/2025/03/17/medial-practice-valuation-adjustments/

Beyond these methods, several qualitative factors influence valuation. These include the size and diversity of the patient base, the practice’s specialty, use of technology (like EHR systems or telemedicine), and whether key physicians will remain post-sale. A practice heavily reliant on one provider may be less valuable than one with a strong team and succession plan.

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MEDICAL PRACTICE: Valuation Adjustments

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Timing also matters. Economic conditions, regulatory changes, and shifts in healthcare reimbursement can affect practice value. Tax implications and deal structure—such as asset sale vs. stock sale—should also be considered during negotiations.

Ultimately, valuing a medical practice is both art and science. Engaging a professional appraiser or valuation expert can help ensure accuracy and objectivity. They bring experience, access to market data, and the ability to tailor valuation methods to your specific situation.

In summary, a comprehensive valuation considers financial performance, assets, market trends, and intangible factors. By understanding these elements, practice owners can make strategic decisions that reflect the true worth of their medical enterprise.

COMMENTS APPRECIATED

EDUCATION: Books

SPEAKING: Dr. Marcinko will be speaking and lecturing, signing and opining, teaching and preaching, storming and performing at many locations throughout the USA this year! His tour of witty and serious pontifications may be scheduled on a planned or ad-hoc basis; for public or private meetings and gatherings; formally, informally, or over lunch or dinner. All medical societies, financial advisory firms or Broker-Dealers are encouraged to submit an RFP for speaking engagements: CONTACT: Ann Miller RN MHA at MarcinkoAdvisors@outlook.com 

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Filed under: "Ask-an-Advisor", "Doctors Only", CMP Program, finance, Funding Basics, Glossary Terms, Health Economics, Marcinko Associates, Practice Management | Tagged: , , , , , , , , , , , | Leave a comment »