Medical Practice Valuation Guidebook
Sorry, the paper edition (published in 2001) is SOLD OUT, but the entire book has been scanned into Adobe pdf – see below for ordering details. We do, however, recommend purchasing the BVR 2012 Guide to Physician Practice Valuation instead because it is more current. The following quote is from the author’s introduction to the Second Edition (2001/2002), which has more than 30% new material and an Attorney’s Guide! More recent books are available elsewhere on the website.
“I am very excited about the second edition of the Medical Practice Valuation Guidebook, Including Comprehensive Financial Analysis and the Influence of Managed Care. The overriding goal of the second edition is to provide in-depth analysis and related problem solving tools to the financial and valuation issues confronting the medical profession now. Readers of the first edition will note the addition of extensive new material covering such diverse areas as dental practices, ambulatory surgery centers and litigation. As many who followed the PPMC industry expected, a host of lawsuits has sprung from the near collapse of that industry, and this book addresses many of the related valuation issues, such as valuing the noncompetition agreements typically included in such a transaction. Valuators engaged in Expert Witness and Divorce work will find a wealth of new information, including a point by point approach to isolating enterprise (practice) goodwill from personal (professional) goodwill, including a spreadsheet model. The Tax Planning chapter includes detailed analysis on the impact of recent tax cases such as Davis and Gross. It also includes a comprehensive description of the issues and approach to valuing a medical practice for donation to a tax-exempt entity, a surprisingly common occurrence. Valuators and physician-advisors will find a solution to the most common of all small medical practice dilemmas, solving the two-person practice buy-out. In addition, there is a complete Attorney’s Guide to the book as well as a Checklist to be used by attorneys in evaluating experts and their reports. That checklist should be invaluable to expert witnesses and valuators as well. There are numerous other additions and updates. I am certain you will find the second edition the most valuable asset in your medical practice library, whether you are a valuation expert, a consultant, industry executive, or attorney.”
Author’s Note: The print edition is sold out, BUT we have recently (July 2009) re-scanned the entire book into a single, searchable, Adobe pdf file! We are offering the scanned book along with the updated Chapter 5 on valuation methods (in searchable .pdf format with expanded coverage of valuation methods) for the price of $125 with the most recent edition of my Report on the Healthcare Economy. For prior purchasers of updated Chapter 5, a special discount is available – e-mail for details. New Chapter 5 includes critical analysis of why the market approach for valuing medical practice DOES NOT WORK due to lack of sources of comparable data. The Chapter is consistent with my peer-reviewed article appearing in the November 2005 edition of the Journal of Accountancy.In addition, to make sure purchasers have current information, the latest Report on the Healthcare Economy with more than 80 pages of detailed information industry – specific inflation, growth, reimbursement and regulatory topics – is e-mailed with your paid order. Chapter 12 of the book contains a Sample Report, which was written based upon market conditions in 1996. I still structure my reports in the same fashion, but readers should not believe that market conditions in 2009 are remotely similar to 1996 – that is why I offer the Report on the Healthcare Economy! In particular, market “data” is known to be less relevant simply because insufficient comparable data is available. I am amused when asked in cross-exam (as happened this past May, 2007) about values today based upon a report written nearly a decade ago. I have been influenced by the excellent work on the limitations of market data done by Nancy Fannon, CPA/ABV, ASA and Heidi Walker, CPA/ABV as well as my own extensive analysis. Of particular importance for medical practices is the insufficiency of Goodwill Registry data for use in the direct market method of valuation.Finally, given the importance of Revenue Ruling 59-60 in valuation, I offer the following quote from new Chapter 5: “The IRS Exempt Organizations Continuing Professional Education Technical Instruction Program Textbook for 1995 states the following in a section entitled Establishing Comparability under the Market Approach: “Factors affecting comparability include markets served; practice and specialty type; competitive position; profitability; growth prospects; risk perceptions; financial composition (capital structure); physician compensation; physician age, health and reputation; physician productivity; average revenues per physician; cost structure; and average revenue per visit or covered life to revenue to revenue mix (capitated versus fee for service): with a reference to Financial Valuation: Businesses and Business Interests. I know of no database with such information!”
Mark combines more than 20 years of experience as a medical practice consultant and tax partner with his skills as a valuation consultant accredited by the AICPA, to produce the first and only comprehensive guide applying the art and science of valuation specifically to medical practices. Templates and spreadsheets on disk are included, with a valuation model. To order the searchable .pdf version of the Book along with updated Chapter 5 in searchable .pdf format with expanded coverage of valuation methods, call (508) 877-1999.
Look for first edition reviews in:
Business Valuation Review, March, 1999
Business Valuation Update, June 1999
CPA Expert, Special Edition, Spring, 1999
Accounting Today, August/September, 1999
Health Niche Advisor, June 1999
Valuation Examiner, August, 1999
Reviewer quotes for the 1999/2000 Medical Practice Valuation Guidebook – Including the Influence of Managed Care, first edition
“This book is a real contribution that I recommend to anyone involved in a medical practice valuation. This is a very comprehensive and useful book with a lot of information packed into every page in an easy-to-read style. Besides the basic information, the frequent “Author’s Insights and Analysis” paragraphs translate the author’s own experiences into useful guidelines for readers. He also succinctly differentiates characteristics and appropriate valuation methodologies among different types of practices.”
Shannon P. Pratt, CFA, FASA
Managing Director, Willamette Management Associates
“At last, a single source that explains all issues and details required to analyze a health care practice! This book takes the time to explain the health care analysis factors that should be considered as well as the implications of the analysis results. Should be required reading and library reference for every valuation and health care professional.”
Jim Rigby, CPA-ABV, ASA
Co-Managing Director, The Financial Valuation Group
“You can’t value what you don’t understand. Mark Dietrich offers the valuation expert – who is not already versed in the intricacies of physician practice management, the knowledge and insight in how to correctly value a medical practice. This books is three books in one: a detailed review of medical practice operations, an excellent review of valuation theory, and a nearly unlimited supply of practical “author’s insights” based on his extensive experience. If you value medical practices, you will value this book.” (Sadly, Jim passed away in January of 2009)
John Mayerhofer, FACHE, FHFMA, CPA
Mayerhofer & Associates
“Needless to say, the information in this [book] is invaluable to appraisers attempting to value a physicians’ practice or the (likely) restricted stock of a PPM company. Chapter 10, Wall Street Meets Medicine, is must-reading for any physician who is considering participating in a roll-up with a PPM. Dietrich captures the essence of the economics of PPMs both from the perspective of the physician and the PPM, as well as providing insights into the very nature of roll-ups.”
Z. Christopher Mercer, ASA, CFA
President, Mercer Capital
The Table of Contents is available (just click). The book leads the reader through the analysis and valuation of the practice. Special chapters on special valuation circumstances, regulatory concerns, physician practice management companies, common mistakes and a sample valuation report with commentary round out this complete guide to valuing a medical practice. In addition to the text, the book will include a CD-Rom with valuation spreadsheets in Lotus and Excel format, reports, correspondence and other material necessary to permit the reader to value a medical practice.
To order the revised version of Chapter 5 in searchable .pdf format with expanded coverage of valuation methods, call (508) 877-1999.