How Much Is Your Practice Worth?

Neil Chesanow


October 17, 2017

In This Article

Choosing an Appraiser

Every industry has appraisers. But experts say that you should look for an appraiser who specializes in healthcare. Many doctors don't heed this advice.

"If someone doesn't have a lot of experience appraising physician practices, there's a good likelihood that the appraisal will be overstated," Tinsley says. "Someone once appraised a two-doctor orthopedic practice for $1.6 million. And the owner said, 'Okay, I want my $800,000 for a 50% share.' Well, the appraisal was done by their CPA, who had hardly done any physician practice appraisals, and she just messed it up. The practice wasn't worth $1.6 million—not even close. But once a doctor-owner hears $1.6 million, you can't move him off of that number."

An appraiser who isn't a healthcare specialist "probably won't understand what is going on in the industry, especially moving forward," Tinsley cautions. For an appraiser to do the best job for you, he says, he or she should have experience with reimbursement trends; know what to ask about medical billing software reports; and understand the Stark Law and the Anti-Kickback Statute if Medicare is involved.

In choosing an appraiser, "ask them what their approaches are, what their experience is, how many physician practices they appraise a year, and whether they have ever done appraisals that have been tested in the court system," Tinsely advises. "You can also go by reputation. You can find out a lot about people on the Internet. If someone says he's a healthcare appraiser, what percentage of his healthcare appraisals are directly related to physician practices, and in what context?"

Another piece of advice: Don't wait until the last minute to make a decision.

"Doctors usually seek a valuation because they want to sell the practice or retire," Nechay observes. "I always tell them, 'Think ahead. It takes time to sell a business. It could take a year or longer. Meanwhile, you don't want to slow down. Keep your numbers up. Consider doing a valuation now to get an idea of what the practice is worth, and then plan what you want to do with it.'"


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