Fam Pract Manag. 2004 Jan;11(1):62.
Selling a practice
I am preparing to close my solo practice. If I should find an interested party to assume this business, how do I determine the value of the practice and negotiate a price that takes into consideration my capitated patient base? If I don’t find an interested party, do these patients technically belong to the IPA of which I was a member? Where can I go to get affordable information I need to help me with the process of closing?
Historically, the value of a family practice equals the sum of its accounts receivable and tangible assets, plus the goodwill of five to 30 percent of the past year’s collections, with a median around 28 percent. This amount varies greatly across communities and is best determined by a formal appraisal from a medical practice appraisal specialist. With or without an appraisal, you must evaluate the risks and costs of trying to sell the practice with or without a broker.
It is important to differentiate between the appraised value of a practice, which is an opinion based on a hypothetical buyer and seller, and the actual price, which is the amount determined by negotiation between two specific people with their individual motivations. For example, local buyers trying to increase their own revenues might be interested in acquiring the patient base with or without the office.
You should contact the IPA and find out if your capitated contract and patients are transferable to a qualified buyer. If not, deduct that amount of collections from the goodwill calculation formula in estimating a value. If you close your practice without selling it, the IPA will reassign your patients.
An attorney or practice broker can facilitate and escrow the sale. Appraisers, brokers and attorneys can be found through the AAFP’s FP Assist consultant directory. For information on closing your practice, read the free article at http://www.practicemgmt.com/articles/closing_your_practice.htm.
Calculating RVUs for FPs
What is the average relative value units (RVUs) per hour for a family physician without ob/gyn?
According to the Medical Group Management Association’s Physician Compensation and Production Survey (2002 Report Based on 2001 Data), the median total RVUs generated by a family physician without ob/gyn is 7,258. The median work RVUs generated by a family physician without ob/gyn is 3,892. According to the same survey, family physicians without ob/gyn work a median 40 hours a week for 47 weeks a year, which is a total of 1,880 hours a year. Thus, the average total RVUs per hour would be approximately 3.86, and the average work RVUs per hour would be approximately 2.07.
What’s worth scanning into an EMR?
We receive a lot of paperwork about our patients from hospitals, consultants and other physicians. Since our practice is paperless, we’d like to scan the records into our electronic medical record (EMR) system, dispose of them or do some combination of the two. What do you advise?
You must weigh legal and payer contractual requirements, risk management/medical liability considerations and records maintenance costs in deciding which records to scan into your EMR and which to dispose of, if any. Overall, unless required by individual state laws or regulations, or by individual payer agreements, physicians are generally not required to maintain copies of records produced by other physicians or health care entities. Nor are physicians actually required from a risk management/medical liability standpoint to keep these records.
However, even if you do not generate the records yourself, you should exercise caution when disposing of records. Although destroying certain records may provide some feeling of security, it does not guarantee protection from liability. Your duties to review and consider the information in those records are the real source of liability risk. As a result, the only real protection is having no knowledge of these records at all, under circumstances where it is reasonable that the physician would not have a need to obtain such knowledge.
If you do destroy the records, you should also consider the costs you may incur if you have to obtain them later, as well as the record retention practices of the physicians or entities that are actually maintaining the records. Finally, you should of course consider whether you can provide quality care without maintaining the records. Regardless of the above, all records that contribute to medical decision making should be maintained either electronically or in hard copy.
* Denotes member of FP Assist, the AAFP’s online clearinghouse for consultants and attorneys.
Copyright © 2004 by the American Academy of Family Physicians.
This content is owned by the AAFP. A person viewing it online may make one printout of the material and may use that printout only for his or her personal, non-commercial reference. This material may not otherwise be downloaded, copied, printed, stored, transmitted or reproduced in any medium, whether now known or later invented, except as authorized in writing by the AAFP. Contact firstname.lastname@example.org for copyright questions and/or permission requests.
Want to use this article elsewhere? Get Permissions
More in FPM
Related Topic Searches
MOST RECENT ISSUE
Access the latest issue
of FPM journal
This supplement provides answers to frequently asked questions to help physicians successfully participate in and navigate the QPP.