Professional Management & Marketing
3468 Piner Rd•Santa Rosa•CA•95401-3954 Ph 707-546-4433 • Fax 707-546-4437
Email: Appraisers@MedicalPracticeAppraisal.com
Dear Doctor:
To facilitate the practice valuation, it would be helpful to have the following available (preferably well in
advance to allow review and discussion of data at the site visit if one will occur):
I suggest a valuation-date as-of which complete data is available (not too recent). For example, the end
of the last year or last quarter for which reports are complete.
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A month by month report on production (charges) and collection (receipts) for this and last year
posted to the attached worksheet, for each doctor, and for the group as a whole
An accounts receivable total as of the valuation date
A copy of the last 5 years’ tax returns (Federal only): entire 1120 for incorporated practices,
Schedule C, Form 4562, and attachments for unincorporated practices; Form 1065 for partnerships.
If the valuation is NOT for divorce or litigation, 2 years’ tax returns might be enough. Your CPA
might be able to send a digital file, if you cannot.
A year-to-date (as of the valuation date) Financial Statement from the computer, bookkeeper or
CPA (both an Income Statement and a Balance Sheet)
Prior 3 years' Financial Statements from the computer, bookkeeper or CPA. If the valuation is NOT
for divorce or litigation, the current year Financial Statement might be enough
A completed Questionnaire for Practice Valuation. Not all questions will apply to you. ASCs need
to also complete the separate Addendum, downloadable.
A list of the equipment, furniture, and major instrumentation, room by room. Please provide
purchase-data on any item estimated to be over $500 in value, if possible and not too much work
(purchase date and purchase price are often available on the tax return depreciation schedule). Do
not list consumable supplies or non-electronic hand instruments unless of significant value
(such as vaccines, excess radiology supplies), or unless of greater than one month's supply and of
significant value. I will assign a value of one-month's cost as current supplies value unless
instructed otherwise.
A one or two page letter about the practice (including description of office and # of rooms), hospital
privileges, number and type of competitors in the community, busyness, lease, special opportunities
or threats, etc
a latest-year 1-page summary of patient ratios by payor group (Medicare, Blues, Aetna etc.)
a latest year summary of services by procedure or CPT code for each doctor and the combined group
a current fee schedule
a copy of the page(s) of the office lease describing rent & renewal options
Thank you for your assistance. Call me or email with any questions.
Keith Borglum CHBC CBB, appraiser
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Doctor or Ancillary Provider name (a practice management report can be substituted for this page):
Charges
200_____
Receipts
200_____
200_____
Jan
Jan
Feb
Feb
Mar
Mar
Apr
Apr
May
May
Jun
Jun
Jul
Jul
Aug
Aug
Sep
Sep
Oct
Oct
Nov
Nov
Dec
Dec
TOTALS
TOTALS
Accounts Receivable
Total
$
month
Accounts Receivable Aging
200_____
year
0-30
31-60
61-90
90+
Average hours per week in scheduled patient visits in office
Average hours per week worked total
Special Notes:
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Professional Management & Marketing
3468 Piner Rd•Santa Rosa•CA•95401-3954 Ph 707-546-4433 • Fax 707-546-4437
Email: Appraisers@MedicalPracticeAppraisal.com
Questionnaire for Practice Valuation
Please provide answers as appropriate. Please answer as of the effective date of the appraisal, which is to be
(typically the end of the last month or quarter for which data is
available, not the date on which you are completing this questionnaire or the date of site visit by the
appraiser). If this appraisal is for litigation, ask your attorney what date to use. Please write "no" or "n/a"
(for not applicable) or "d/k" (for don't know) answers rather than leaving blanks. Blanks are interpreted as
overlooked and may result in a follow-up call. You may use separate pages if needed to expand on answers.
PLEASE PRINT LEGIBLY
1) Legal name of practice:
2) The practice name if different from the legal name:
3) The practice accounting (fiscal/calendar/tax) year end is:
4) Address(es) of practice
5) Addresses of any satellite offices:
6) Do any physicians/providers see patients at yet other offices not described above? Details;
7) Practicing at this location since:
Square feet of office:
Number of Exam rooms:
Number of procedure rooms:
If lab in office: CLIA status:
Is there an outpatient surgery suite in the office or attached ASC?
Are there any sub-leases to other physicians or entities, if so please detail
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8) Is the practice well located? Describe location.
9) Expiration date of current lease. Transferable? Renewal options? (attach page from lease)
Do you believe that your tenant improvements have significant value to be appraised?
If so: Installation date? Cost? Were they at tenant -or landlord- expense? Provide details.
10) Phone number of practice, website address, and email address
11) Owner's name. If there is more than one person or business entity in ownership of any of the assets
to be appraised please provide names, addresses, phone numbers and % of ownerships.
Name(s) of non-owner employed physician(s): If there is more than one person or business entity in
employ, please provide names, addresses, phone numbers and % of ownerships
12) What is the legal status of the business entity (sole proprietor, partnership, S Corp, LLC, etc)? Ask
your attorney or CPA if you are unsure.
13) What is the purpose of appraisal? In a sale of a whole practice, typically only the “assets” are sold,
not the entity. If this is an entity-sale, please explain why; for example a sale of shares in a buy-in.
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14) Is the practice a "going concern", meaning, is it in normal day-to-day operation, and if not, why
not?
15) What year was the practice founded?
16) What is the specialty? Is the seller board-certified-or-eligible in that specialty?
17) Is there a second or more boarded specialty or sub-specialty?
18) Are there elective non-covered services offered in excess of 5% of revenues?
19) Any pre/post paid capitation, bonuses, risk pools or withholds outstanding? Amounts?
20) Does the practice accept liens; if so, what is the dollar amount of liens outstanding?
21) Are there any atypical clinical practices other than would be expected for this specialty?
22) Are extenders or mid-levels used, and what type? If so, please provide separate answers and data.
23) Is the practice growing, declining, or remaining stable in collections? Reasons?
24) If there are any significant variations in revenues in the past 5 years, please explain.
25) At what percentage of capacity does the practice typically operate? ("busyness")
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26) How many patients/medical records are "active"? (may be n/a for surgeons)
27) Are the medical records legible and would they meet utilization review guidelines? If not, please
detail. If electronic
28) How many days/weeks must a new patient wait for a routine, non-urgent appointment?
29) How much competition is there, of what type, and of what impact?
30) Are any local organizations forming Accountable Care Organizations (“ACOs”)?
31) Please identify the practice management software name, version number if available, and company
contact person or number. If a billing service is used, please provide company name, contact name,
phone number, and a brief description of the terms of the agreement and fee structure (cost).
32) Are the medical records legible and would they meet utilization review guidelines? If not, please
detail. If you use EMR, what software and for how long? Is that EMR software the one used-most
in your medical community? Is it integrated with your practice management software? If not, please
describe.
33) How many clinical service hours per week are spent by provider(s) in patient office visits, dictation
& charting, hospital rounds, and surgery, but excluding interpreting diagnostic tests, calls to
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patients about test results, dictating letters, case-conferences or supervision mid-level providers or
techs, administration, on-call or marketing? Also exclude outside moonlighting and Directorships
whose income is not transferable to a buyer of the practice.
(Sorry – I didn't invent this definition – MGMA did and I need it for comparison. Please remember,
over-estimating your hours may decrease the value of your practice, so don't exaggerate)
34) How many total hours per week do provider(s) work in this practice? (including everything both
included and excluded in the prior question, but excluding outside activities like CME or hospital
committees – again, don't exaggerate)
35) What are the primary new-patient sources by percentage? (ie patient referral, MD referral, benefit
booklets, Yellow pages, Internet, ads, etc)
36) Please list the top 10 insurance plans and the percentage of patients or revenues from each. Please
also identify any capitated contracts. You can attach a report instead of posting here:
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37) Is ICD and CPT coding up to date and is the doctor skilled in those topics? Who does the coding,
doctor or staff? When was the last coding class/consult attended by doctor(s).
38) When was the last time the fee schedule was updated, and using what resources or data source?
Was the fee schedule updated annually during the last 5 years?
39) At what hospital(s) does the physician(s) have privileges?
40) Will the seller aid with an orderly practice transition to a buyer, and is an amicable transfer of
ownership anticipated? Has the owner otherwise been recently disabled or deceased?
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41) Will the seller grant the use of his or her name to the buyer for one year? (on the door, in the phone
book, website, etc)
42) Will the buyer obtain the practice telephone number?
43) Will the buyer obtain the practice website and email address(es) if any?
44) Were there any prior sales/purchases of ownership interests within the past 5 years? If so, please
provide details including: date of sale/purchase; size of interest bought/sold; price paid; how and by
whom that price was determined; terms of sale; and relationship between the buyer and seller, if
any. Please provide a copy of purchase document if available.
45) Is the practice a subsidiary or affiliate or franchise of another business? If so, please describe.
46) Does the practice have other businesses as subsidiaries or affiliates? If so, please describe.
47) Is any equipment or instrumentation owned by another entity controlled by the seller or seller's
family and leased to the practice? If so, please describe.
48) Please identify any business expenses in the Financial Statements that are of personal benefit to the
owner(s) of the practice, and amounts if unclear from the data provided (ie car, insurances,
retirement, club dues, excess CME travel, entertainment etc) For example, if insurances are lumped
together, identify amounts of life and disability insurance to the owner but exclude professional
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liability and office insurance; if health insurance is lumped together, identify amounts to the owner
rather than to staff; the same with retirement contributions)
49) Is a family member employed, and if so, please provide name, duties, hours worked and
compensation? Is compensation "above market", and if so by how much?
50) Please provide the following information for all revenue-generating licensed personnel:
Name
Avg hours per week
Salary/wage
Position/duties
Other benefit types and monthly amounts (car, insurances, club dues, travel, entertainment etc)
51) Is there an up-to-date Employee Handbook regarding pay, benefits, termination and other policies,
are employee files and records up-to-date to state/federal requirements, and are labor postings
current?
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LIABILITIES
52) Are there any agreements restricting, limiting, or in any other way influencing the sale or right to
sell, purchase, or encumber ownership transfer? If so, please provide copies of the agreements
53) Any loans-owed or secured by the practice or any practice assets? Please list any outstanding long
term debt, including owner loans to owned corporation or partnership entities, especially if not
accurately detailed on the Financial Statement Balance Sheet (as Balance Sheets are frequently out
of date).
54) Any equipment leased, with any residual (buyout) value? (please list and provide copies of lease)
55) Any accounts payable (ie expenses you pay to other companies) past-due, or unpaid and in
dispute?
56) Any recorded-but-unperformed work (obstetric bundles, deposits on surgeries, pre-paid capitation,
etc)?
57) Any balances due on equipment & furnishings, if not detailed above?
58) Do you do your own accounting and taxes instead of using a CPA?
59) Are any taxes due or past due? If so, has your business been liened?
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60) Any significant insurance premiums due?
61) Any unusual accounting or entities, like “physician captive insurance companies”?
62) Any real estate holdings included, with liabilities? (real estate usually needs to be separated to a
separate entity)
63) If the seller has ownership in the real estate, is the rent purposefully above or below market rate? If
so, please provide a market rate rent opinion from a local commercial leasing agent.
64) Is a forced relocation imminent for any reason?
65) Is the office neighborhood bad or deteriorating, or any known upcoming problems like hospital
closure?
66) Any significant salaries, bonuses, or severance pay due to staff? If so, please detail.
67) Any staff with sick-leave or vacation accrued in excess of 4 weeks? If so, and only if this is for a
buy-in or sale of shares instead of an asset-sale, please detail.
68) Any staff paid or receiving benefits over-or-under market rate for any special or negotiated reason?
69) Are any staff expecting a significant change in their compensation, benefits or position?
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70) Are there any known problematic or disgruntled staff, or staff litigation concerns?
71) Any staff with pending termination?
72) Does the practice experience or anticipate any shortage of competent personnel for any of its key
operations? (techs, nurses, mid-levels, etc)
73) Have any key staff given notice that they will quit employment if the ownership changes, or are
any staff anticipated to do so?
74) Are there any unfunded retirement plan obligations?
75) Any pending business litigation liabilities?
76) Any pending professional-liability litigation?
77) Any past business or professional-liability litigation, Medicare audits, adverse publicity, or
occurrences that might impact the image of the practice in the community or with referrers?
78) Any bankruptcy or bad credit in last 5 years?
79) Do any of the owners have any unique or special skills or relationships or licenses used in revenue
generation that will not be available to the purchaser?
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80) Please provide details on any revenues received and included in the financial documents provided,
or listed on the tax returns, from sources not being transferred to the buyer (such as ER pay, board
or Director stipends, SNF fees, authorship, rents etc)
81) As of the valuation date stated in the first paragraph, were there future changes known or
anticipated which had not yet occurred? Have any unanticipated changes occurred since the
valuation date? If so, please detail.
82) Are there any other issues of any kind that you think might affect the value of the practice?
Please send completed Questionnaire to appraiser with the assembled data and documents. Please try
to not send any original documents that must be returned to you (ie copies are preferred).
Statement by Owner:
The information furnished in this questionnaire and any documents provided are materially accurate
and complete to the best of my knowledge. By my signature below I authorize my accountant and/or
my attorney to answer your questions and furnish you with relevant documents.
Signature
Accountant name and phone number and/or email address:
Attorney name and phone number and/or email address:
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Date