Business Valuation Blog | Understanding Buying / Selling a Company

How is a Private Medical Practice Valuation Different From Other Business Valuations?

Posted by Business Valuation Specialists LLC on Jul 6, 2020 8:00:00 AM

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When you're actively working in a private clinic, your days are filled with your patients and their many concerns. But beyond the value that you bring to your patients and their families on a daily basis, what's the value of your practice? If you're not sure, you're not alone. Private medical practice valuation is an exceptional tool that works well to provide you with in-depth details about your business, making it easier to make solid strategic decisions for your company. But how is this type of valuation different than other business valuation types? Here's a quick look at the process to help you get started.

How is a Private Medical Practice Valuation Different From Other Business Valuations?

There are a number of factors that impact your private medical practice's overall value. To start, what is your company's reputation in the community? If your business has a reputation for exceptional patient care, unique approaches to treatment or being able to provide at-home care for patients, these types of factors can greatly increase your company's bottom line. Why? This type of treatment is often sought out by those who want to make sure their family is well-cared for, to seek out treatments that are not commonly offered or to avoid having to move a sick child to have an evaluation and treatment plan developed.

What about the people who make your private medical practice exceptional? If you have top-performing doctors and nurses, you'll often have a larger following and will have people flock to your practice to receive treatment from these individuals. By comparison, if you have poorly-performing staff, patients may be reluctant to seek treatment at your facility, lowering your company's overall value due to lower demand.

Are you in a rural or urban area? Specialist medical practices in urban areas are often worth more than a general practice in a rural area, partially due to the availability of local patients as well as the demand for specialty treatments. However, many rural private medical practices have lower expenses and may have a devoted following, especially if the main practitioners have been a part of the community for many years.

How up-to-date are your practice's assets? If you have out-of-date equipment or are unable to keep up with changes in technology due to budgetary constraints, patients may seek care elsewhere to receive more exacting imaging and test results. However, if the race to have the latest and greatest equipment has put your practice into debt, that may result in a lower overall business value.

By having a private medical practice valuation performed on your company, you can rest assured that you have the details you need to make smart business decisions, whether that involves selling your practice, passing it on to the next generation, entering negotiations with a larger healthcare business, secure financing for expansion or many other purposes. However, you'll want to make sure that you're working with a certified business appraiser who has experience working with standardized methodologies to estimate your business' overall value.

Topics: Business Appraiser