What is the value of Podiatric Practice's goodwill in selling or buying a Podiatric Practice

If you are a solo podiatrist counting on selling your podiatric practice to retire, you do not want to read the next article.  Goodwill as it has become known in transactions is, the thought that once you sell the practice all these patients will come see the new podiatrist.  Goodwill is worthless.  Today, the only thing that is worth money in your practice is the actual equipment; everything else is essentially worthless.  The only goodwill that might be worth anything would be some nursing homes, and that is it.

I know you are thinking he is full of it, oh yea do not believe me.  Most if not all hospitals that are purchasing physcians practices consider goodwill to be negligble.  But, you say I have all these medical records of patients that have come to see me.  Reality check the IRS sets the value of medical records at about 12-22 dollars a patient, so if you have 3,000 patient records that may be the equivalent of 66,000 dollars if you find a very nice buyer.

However the internet has reduced the price of goodwill even further.  It is now easier then ever for a podiatrist to get his name out, no more direct mailers or ads in the phone book.  You get a good website up with a high search engine rank and you will be seeing patient's in the next week.

Don't believe me, want more proof.  Fine then read this:

http://www.physicianspractice.com/articles/appraisals-what’s-your-practice-worth

or this article from the AMA:

http://www.ama-assn.org/amednews/2008/09/15/bisa0915.htm

or this one

http://www.hcaa.com/view_file.asp?type=art&v=p&id=127&fid=1

Is there about to be a Podiatric recession with job losses

Much has been written about the podiatric residency crisis; there are more podiatric graduates then residency slots available.  The APMA and the CME have united to help form podiatric residencies to ensure that every student gets a residency.  But, if we are to spin that forward, does that mean there will become a podiatric jobs crisis.  Most recent grads from podiatry residency are not ready to run their own practice.  The podiatry managment classes and groups in podiatry seem more interested in pushing their own products and companies than educating podiatrists on how to run a practice.  So, most of these grads need a shepherding by an older podiatrist in an associateship, even if it does not develop into a partnership.  The experience alone is worthwhile.

In the year 2015, there will be 200 more graduates just from residency than ten years ago.  Is the Podiatric job market ready to accommodate this increase?  Some would argue this is great and anticipated podiatric expansion.  But the two areas where the greatest podiatric expansion has taken place, multi-speciality groups and the VA, are almost tapped out.  Podiatrists are now forming huge groups, which groups will take on one and no more then two associates a year.  The old guy who needs a young assoicate to come in and help him are not as plentiful as they once were.  If graduates shocked the residency system, does it not make sense that graduates from Podiatric residency will shock the employment system?  Or is that too forward a thought for the APMA?

Now, there are some caveats to this: we are reaching a period where lots of podiatrists are getting set to retire and sell their practices.  In fact, by converse I can make an argument that for those looking to purchase a practice the next five years will provide many opportunities.  By the way, I am not arguing there will not be a need, there will be.  Whether podiatrists will have the employment prospects to meet that need is the question I am posing.

In 2015, I think reimbursement cuts will hit, which may worsen the job crisis further.  Read more here:

http://podpost.us/issue/nov-dec-20122013/article/podiatry-reimbursement-is-coming-in-2015

To say nothing of the High Deductible insurance plans which will hit next year:

http://podpost.us/issue/nov-dec-20122013/article/high-deductible-insurance-plans-are-coming

As the full implementation of Obamacare nears, and the reforms start to increase at a faster rate. The rate of Podiatrists seeking retirement will escalate over the next 2 to 3 years. A lot of older podiatrists have no interest in EMR, or Obamacare or reimbursement cuts, they will seek retirement before they occur. Additionally, all the additional press about how bad all these reforms are going to be will also push Podiatrists into retirement.

 Now combine that with Podiatric resident graduates coming out with 200,000 dollars worth of Podiatry student loan debt, you have a perfect storm of a lot of grads who banks will not lend to. This will create a vacum of podiatrists who want to retire but no one to sell to. Remember, there are a lot of Podiatrist who counted on selling their podiatric practice to finance their retirement, so they need to sell their practice. While there are group practices in a lot of the areas that will be able to purchase the practice. A lot of your major podiatric super groups may take the approach of, he is old, he may not be able to sell the Podiatry practice. Let us just wait him out, and swoop in when he quits or slows down. With the internet, goodwill is not as valuable as it once was. Honestly, the number one spot on a local google search is more valuable today, then twenty years of treating patients, you may not like that statement but it is true. This comes to the basic point, that with the advent of the internet, are podiatric practices worth any money any more. A young podiatrist can start his own podiatric practice one block from an older one, get his website up and running. Then trounce the older podiatrist. My point is only a sucker right now would pay anything over 100K for the best podiatric practice. Also be skeptical of articles in magazines about how to buy and evaluate practices, remember everybody has an angle. If you need to evaluate a practice retain someone with no dog in the fight.