I have an article in the next issue of Financial Valuation and Litigation Expert that addresses this and other issues associated with the use of replication cost in valuing physician practices for purchase by hospitals.

Zip Code: 01701

I would only use the Value per patient chart method as a rule of thumb. So many other factors affect the value of a practice. Especially when the purchaser is taking over leases, taking on the employees location in relation to hospitals, urban ares etc. Unless the purchaser is next door or sharing space with the selling MD, the patient population may not move to a new location. Or if you try to move them another physcian moves into the old office space and simply gets the benefit of the patients going to the same location by habit. I have heard of this situation so make sure the lease can be renewed.

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I have generally approached practice valuations based on discounted cash flow. Recently a hospital client inquired about using a price per active patient chart. Has anyone seen this approach that could direct me to any source of information?

Thank you.

Zip Code: 07981