Impact of Managed Care on Practice Value

Patty Moyer (an appraiser and associate/partnership facilitator with the Pride Institute in Greenbrae, CA)

The following is excerpted from an article in the Journal of the New Jersey Dental Association (Volume 67/Number3)

We appraised a dental practice that included a large block of capitation patients coming from several capitation plans. The two owners wanted to sell because they were taking no draw from the practice even though it was generating quite a bit of cash flow, with collections more than $800,000 annually.a They were supporting three or four associates. The sellers were doing all of the private patient work in the practice but getting paid nothing for their efforts. they were, in fact, supporting themselves half-time at other practices.

Planning for retirement: Will Your Practice Have Value?

It is not advisable to count on the value of your dental practices in your retirement planning, because you don't know what, if anything, a practice might be worth at the time of retirement.

However, if the HMO/PPO trend continues, exclusively referral-type practices, with successful continuing care programs will be at a premium. If an owner allows a practice to become dependent on HMO/PPO or other discounted-type plans he/she in turn puts practice equity that might be realized at retirement extremely at risk.