Root Valuation

Have you ever tried to determine the value of your healthcare practice by comparing it to another practice that was recently sold?? ? While on the surface this may seem like a reasonable approach, every practice has its own unique characteristics that impact value.? ? Here are a few factors that could cause significant differences in the value of your practice compared to a similar one:? ? ? “Normalizing adjustments”: Adjustments to revenue and/or expense on historical income statements. ? Growth potential: Are there opportunities for growth an expansion within your market? ? Physician Comp Model: the post-acquisition compensation model will have a significant impact on purchase price. ? Intangible factors: Goodwill, workforce retention, local competition, and other considerations. Want to learn more about how to determine an accurate valuation for your practice? Feel free to reach out to me on LinkedIn to discuss. #healthcarevaluations #valuations Root Valuation Root Partners, LLC

What are the advantages of value-based care (VBC)? This patient-centered model differs from a fee-for-service approach by focusing on care quality while controlling costs. Essentially, a VBC model is measured by “health outcomes achieved per dollar spent” on a patient. Core metrics include: ?? Clinical Outcomes? ?? Patient Experience? ?? Efficiency? ?? Patient Safety? ?? Prevention Initiatives Learn more about VBC on our insights page: https://lnkd.in/gAsKbV_n? #valuebasedcare #healthcare #patientcare #reimbursements?

Savvy physicians know that there is more to building a successful practice than simply maintaining clinical excellence. To grow a profitable healthcare business, it’s just as important to understand your financials. This is especially true if you have an eye on selling your practice or acquiring a strategic partner.? ?? Can you answer the following:? ?? ?? Do you know how to interpret your income statement and balance sheet?? ?? What are the primary revenue drivers in your practice?? ?? Are you maximizing your reimbursements and revenue cycle management?? ?? Is your practice staffed optimally?? ?? What is the growth potential for your practice?? ?? How did you do? If you are a practice owner and could answer these questions, you are well ahead of your counterparts. If not, give us a call at Root Valuation and we can help you develop the financial acumen needed to better understand your business.? ? #healthcarevaluation #valuations #revenuecyclemanagement #financials

When valuating a healthcare business, appraisers will often find it necessary to make normalizing adjustments — ensuring that your reports accurately reflect your financial reality going forward.? There are two common types of adjustments:?? ?? “Normalizing adjustments” are made to revenue and/or expense on income statements, typically demonstrating expected financial performance. They can include adding revenue for services that have not yet been collected on, incorporating revenue from growth initiatives, eliminating non-recurring expenses, and personal/discretionary items irrelevant after the transaction.? ?? “Synergistic adjustments” reflect buyer-specific facts and circumstances. They may not be realized by every buyer, and impart synergistic benefits on a target business to increase value.?Though synergistic adjustments are often considered as part of the buyer’s diligence process, such adjustments are not appropriate to include as part of a fair market value (FMV) analysis.? ?? Learn more about the impact of adjustments on valuation here: https://lnkd.in/gi5724WN?? ?? #healthcarevaluation #valuation #healthcareadvisoryservices #advisoryservice #adjustments?Root Valuation

As I reflect on 2024, I’d like to take a moment to celebrate the incredible work of the Root Valuation team. Our clients rely on our personal approach, expertise, and trusted insight, and we pride ourselves on bringing a high standard of quality to each and every interaction.? ? As we continue to move into a new year and navigate new challenges in the world of healthcare transactions, I’m thrilled to rely on such a talented and driven team and grateful to work alongside them.?? ?? Thank you for all you do!?https://lnkd.in/gaSx87JR? #thankyou Todd Mello Mark Spurlin, CPA David Walline Breana Payne? #valuation #healthcarevaluation #healthcareappraisal

Did you know that inflation has a direct impact on the value of your practice?? ? Inflation directly impacts the costs of goods and services used by your practice, and when these costs rise faster than increases in revenue, profits will be negatively impacted. And because reimbursement is typically fixed by contract or limited by annual CMS fee schedules (which often increase at rates below inflation), rising labor, supplies, and other operating costs present a major challenge for healthcare businesses. ?? ? In addition to the more obvious impact on expenses, inflation can also impact the cost of capital through higher borrowing rates, restrictions on capital, and/or higher investor return requirements for equity investments. These factors have a direct impact on the valuation multiples paid for a business.? ?? The Root Valuation team offers decades of expertise and can help you navigate valuation questions related to ongoing changes in the economic landscape. ? ? Learn more: https://lnkd.in/gAv882sZ?? ?? #valuation #healthcarevaluation #healthcareappraisal #healthcarefinancials?

Warmest wishes for a healthy and happy holiday season to our clients, colleagues, partners, and friends.

A common question: “How much does a healthcare appraisal cost?”?? ? As with many topics surrounding valuation, the answer is simply: “It depends.” The cost of an appraisal, which can vary from the start depending on the type of facility or organization, will be considered based on its unique considerations and components. We take into account:?? ? ? Scope of work?? ? Size and complexity of the organization — departments, locations, providers, etc.?? ? Quality and accuracy of available data? ? Intended use?? ? Age and health of business? ? Healthcare valuation is multifaceted and highly dependent on each organization’s individual needs. Contact Root Valuation at any time to discuss your options or begin the valuation process: https://lnkd.in/gJGVXyMP? #valuation #healthcarevaluation #healthcareappraisal?

Remember: market multiples are simple in concept, but are almost always more difficult in application. Purchase price (or value) is determined from many complex factors, and no two transactions are the same. There can be significant confusion around what multiple to expect based on inaccurate information and misguided assumptions.?? ?? Despite the large volume of information covering healthcare transactions, drawing conclusions from this information is often flawed at best. Valuation multiples vary from deal to deal for a variety of reasons, and public disclosure of transactions often exclude important factors. Don’t fall into the pitfall of simplicity — an appraiser can help you calibrate your expectations during the valuation process without relying on myths.?? ?? I discuss this in my presentation, The Myth of the Healthcare Multiple, available here: https://lnkd.in/gfR888hs?? ?? #valuation #healthcarevaluation #healthcareappraisal?Root Valuation

No two healthcare organizations are alike — and the same goes for appraisal firms. When selecting a healthcare valuation expert, the expert should not only be highly competent, but also reflect the character and values championed by your organization.? ? Selecting an appraiser typically begins with filtering for experience and skill level, but your search shouldn’t stop there. Just like a physician’s bedside manner can impact a patient’s experience, an appraiser’s attitude when working with your organization (or an acquisition target) makes a difference.? ?? When selecting an appraiser, consider:?? ? ? Level of accessibility and professionalism?? ? ? Emotional intelligence — their ability to navigate the egos, personalities, and other stressors?? ? ? Openness to input — an ability to adapt to?change as they work?? ? ? Manner of speech — how they communicate complex information to those who may be less familiar?? ? ? Integrity — a willingness to do what’s right, even when it’s not the desired outcome? ?? Different circumstances may call for different qualifications in your appraiser, but shared values and cultural fit should be non-negotiable. ? ? Have questions about healthcare valuation? Feel free to reach out to me directly on LinkedIn.? ?? #healthcarevaluation #valuation #healthcareadvisoryservices #advisoryservices?Root Valuation