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Physician Practice Medical Practice Valuation Putting a Price on Your Practice | Putting a Price on Your Practice |
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| Written by Amy Jorgensen | ||||||
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Another goodwill calculation method is by comparing the revenue of your practice to the average salary of another physician in the same field with a comparable background. When you subtract the numbers, you then divide the result by 20%, a percentage referred to as a capitalization rate. The final number gives you a dollar value for your practice's goodwill. Remember the value of your goodwill will also depend on factors such as how long your practice has been in business, how many patients you have, and how strong your relationship is with other medical facilities and vendors in the area. The Bottom LineWhen the time comes to assess your medical practice's value, you will be in a much better position if you already have a figure in mind than if you have never given the subject a second thought. If you are presented with an estimate far below what you think is fair based on your calculations, then you need to ask for a second appraisal or hire your own appraiser. After all, you have worked too hard building your practice not to earn what it is truly worth. Keep in mind that if you do work with an appraiser, he or she needs to calculate the value of your practice's goodwill when determining its total valuation. Resources for this article include:
About the AuthorAmy Jorgensen is a freelance writer based in southern Indiana. Her articles have appeared in a variety of publications, including Southern California Physician magazine. The author has no financial relationship to any of the companies listed in the article. |
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