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Careful Appraisal Is Needed to Determine The True Value of an Oncology Practice

Careful Appraisal Is Needed to Determine The True Value of an Oncology Practice

MARINA DEL REY, Calif-Every physician needs to know the value
of his or her practice, especially in this era of change-when
mergers, affiliations, partner buy-ins or buy-outs, and outright
sales of practices are common, Kim R. Johnson, RN, said at the
annual conference of the Association of Community Cancer Centers
(ACCC).

"Don't let the overwhelming presence of people who want to
buy your practice influence you to make an unsound business decision,"
cautioned Ms. Johnson, principal owner of K.R. Johnson and Associates,
a company based in Coeur d'Alene, Idaho, that provides health-care
consulting and management services.

In her consultations with more than 130 oncology practices, Ms.
Johnson said that she has found many situations that can trigger
the need for a practice appraisal. A traditional, and extremely
important, time to get an appraisal is at retirement, especially
since, she said, "there are still a lot of practices where
the physicians have not set up very good pension plans for themselves
and view their practice as their retirement fund."

New partner buy-ins can also necessitate an appraisal, as do some
unpleasant circumstances, such as, "divorce, IRS problems,
or the death of a partner," she said. Sometimes physicians
are just tired of the hard work and long hours, and want to sell
their practice and "go do something else."

Fear that the values of their practices will fall in the era of
managed care is mo-tivating some people to want to sell, she said,
adding that in certain parts of the country, such fears may be
well founded but not in others.

In the past, multispecialty and family practice groups had more
opportunities for sales, because hospitals and corporations were
interested in purchasing them. Ms. Johnson noted that oncology
practices were not viewed as valuable commodities because "it
was perceived that everyone lost money taking care of cancer patients."
But in the past few years, the situation has changed, and buyers
can be found for oncology practices in nearly every part of the
country, she said.

This shift in attitude is based on a growing and aging population,
as the baby boomers reach "cancer age," Ms. Johnson
said. "The NCI estimates that total cancer costs are greater
than $100 billion, and corporate America wants its share,"
she commented.

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