Questions for Dr. Stern
About Your Urgent Care Center
23. I have been moonlighting at an UCC for the past 2 years, and now the owner has made me an offer to buy the UCC. I am hoping to solicit your advice about whether the price is a fair one. Here are some specifics: for 2005, Gross=1,573,146; Net=1,297,498; Census=17,268; Pt/Day=47.31; Profit=346,206. For 2006, G=1,574,451; N=1,237,756; C=17,163; Pt/Day=47.02; Profit=298,900. He is asking for approx 900-930K by using the formulation of profits X 3. I know there are other models of practice valuations but he says that this is the simplest way. Based on your extensive experience, do you think it is a fair price?
Thanks for contacting us. This might be a fair price. Issues:
- Profits on the collections seem high. Make sure that a market-price salary for the owner physician’s hours is included in the expenses (i.e., subtracted from the profits). Make sure that the salary for the owner is an expense, not a “profit.”
- Why is he collecting only $72.12 per patient visit? This is very low. We have worked with several customers to dramatically increase revenue after purchase. This can increase collections by ~20-40% in some cases, and a close evaluation of his financials may reveal this possibility. Message here: You may be looking at a gold mine that has a completely untapped strike. The practice might be worth much more than the asking price.
- Occ Med potential: Simply adding 10 occ med patients per day will increase profits dramatically.
If you would like to review the numbers and potential for this practice, I would invite you to spend a day with me (and our team) at Physicians Immediate Care and Practice Velocity. We are located only one hour west of Chicago O’Hare Airport.
