Medical Practice Valuation Guidebook 1999/2000: Including the Influence of Managed Care. - Brief Article - book reviews

Healthcare Financial Management, Dec, 1999 by Brett Irusko

The Medical Practice Valuation Guidebook is a comprehensive and insightful dual-purpose engagement guide and reference source for anyone involved in medical practice valuation. The issues discussed in the book will be of interest to the practice bookkeeper, the hospital administrator, the physician practice management company (PPMC) executive, the CPA or professional valuator, and, most importantly, the physician.

Medical practice valuation has been and continues to be a highly subjective and volatile area, dealing with issues ranging from practice size, geography and payer mix to the business effects of capitation, physician retirement, PPMCs, and competition clauses. Mark Dietrich offers a primer on group practice valuation that explores these issues in detail, offering suggestions on how to handle some of the most common errors in practice valuation (eg, those pertaining to coding and the effects of capitation) in an objective and professional manner. He also discusses the pros and cons of many of the most popular physician compensation plans used today and explains how to "normalize" calculations of practice finances and adopt the best valuation method for a given situation. This valuation primer constitutes one-third of the book and is one of the book's chief assets.

The remainder of the book offers tips for special situations, goodwill and intangible assets, primary care practices, specialty practices, and PPMCs. In his discussion of governmental concerns, Dietrich examines the effects of Stark II and draws upon a wealth of references to address tax and antitrust issues. Sections at the end of the book are dedicated to "tricks of the trade," which can be invaluable even to the most experienced valuator. Finally, Dietrich includes a full sample-valuation report. Financial professionals will find the sample report to be useful in evaluating the completeness of the reports they prepare as well as those they receive.

Because the Medical Practice Valuation Guidebook is intended as a reference, some readers may not wish to read the entire book. For such readers, the section titled "Author's Insight and Analysis" will be of particular interest. Many readers, however, will derive pleasure from reading the book from cover to cover. Dietrich has peppered the book with anecdotes and real-life stories conveying successes and failures experienced over a long career in the valuation field.

Reviewed by Brett Trusko, FHFMA, executive director, Superior Consultant Company, Inc., Racine, Wisconsin, and a member of HFMA's Wisconsin Chapter.