The Leading Business Education Network for Doctors, Financial Advisors and Health Industry Consultants

Goodwill Hunting

What’s your Office Really Worth?

[By Dr. David E. Marcinko; MBA]

There are several measures a physician can take to increase the value of medical practice goodwill, which in turn will make the practice more desirable, and profitable, when selling or taking on a partner.

These are listed below for your consideration:  

• Keep good financial records. Know your capital purchases, and have your balance sheet, statement of cash flow and net income statement up to date.
• Continually monitor key financial ratios, such as profitability, creditors, long-term debt management and medical equity value-added.
• Have adequate practice insurance, including property liability coverage, plus have workers’ compensation for staff and life and disability insurance on the key doctors.
• Build a brand identity for the practice rather than an individual brand identity for you as a physician. This helps in developing a business that others could assume and operate.
• Have a practice continuation plan that stipulates how the practice will be sold or continued in the event of a physician’s death or disability. Specify who will buy the practice and for how much. And specify whether the purchase will include land, buildings, inventory, licenses and goodwill. Have a covenant that specifies the procedures to follow when a physician leaves the practice.
• Have strong relationships with everyone who does business with your practice, including supply vendors as well as referring doctors and fellow physicians.
• Be organized when it comes time to present the supporting information. Don’t accept the first valuation given. Numbers can be changed, if you can present substantive reasons.

MORE: AMA News Interviews Dr. Marcinko

Conclusion

And so, your thoughts and comments on this Medical Executive-Post are appreciated. How have you reacted to the recent declines in both medical practice [business] and personal [doctor] goodwill?

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Filed under: Career Development, Glossary Terms, Health Economics, iMBA, Inc., Practice Management, Practice Worth, Research & Development, Subscribe CD-ROM Journal | Tagged: accounting value, book value, business goodwill, david marcinko, goodwill, goodwill valuation, medical practice value, personal goodwill, practice appraisal, Practice Worth | 1 Comment »