Charts aren’t worth much anymore. I wouldn’t pay a significant amount of money for them. Patients are free to see whoever they like now a days and typically don’t require a referral. At least not the plans you would like to be contracted with. Not to mention, a podiatry office isn’t a dental office or a family practice office where patients have regular, recurring appointments (for the most part). A chart for someone who googled the practice because they had an ingrown 3 years ago is almost worthless. Don’t forget that you are buying the EMR in which these charts are stored and if you don’t like it and decide to switch, that will cost you additional money after you purchase the practice. The charts that this old podiatrist feels have value, could end up costing you thousands of $ in data transfer costs. If you started out on your own you can obviously choose your EMR from day 1.
The previous practice has likely built up some sort of “name” and “goodwill” in the area with referring doctors and some community members, but you will still have to market yourself to those individuals so that they continue their current patterns. It would hopefully be less work than if you started up on your own, but not necessarily a big difference. So there can be value there as well, just not as much as most retiring podiatrists think there is
Assets have an easier to determine value. Chairs, computers, instruments, supplies, etc. are what I would be most willing to pay for assuming it’s equipment you feel you would use.
Accounts Receivable are usually part of the purchase price as well, since the new owner typically will ask for that money IF it comes in after the purchase is complete. The problem with AR is that some % of it is never going to come in. Unfortunately it can be a pretty large % that never gets paid by the patients. You can probably get an idea of how much that is worth by looking at previous months and years accounting records.
In the end, I think the question comes down to, how much will buying this practice cost me vs. starting my own? Keeping in mind that even after buying a practice there may be immediate expenses due to changes you want to or need to make to the practice. I haven’t heard of a purchase or buy in that makes a whole lot of financial sense. Meaning docs are asking for a $ amount that ends up being around 100% of gross revenue. So $500k-$700k purchase price when you could open up your own practice for half of that, at most. Is the potential immediate income stream that can come with an established practice worth an extra $250-500k in debt? I posted the story elsewhere, but someone paid around $600k for 25% ownership in a practice they worked at (so a buy in and not outright purchase/ownership) and within 6 months the two majority owners came under investigation for insurance fraud from compounding pharmacy kick backs. Congrats on buying into that...
If/when you’ve actually found a practice in a location that you are interested in, I would reach out to someone like Mike Crosby. He does valuations and helps with the selling of podiatry practices for a living. He typically has a good idea of what individuals and investment groups are paying for practices across the country. There is no easy number that anyone can give you which would apply to a broad group of practices, in terms of reasonable purchase price. Way too many variables.
