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Realities of Podiatry

by Ben (no login)

 
I started buying into a podiatry practice several years ago, not long after finishing my residency, and I made numerous mistakes and fell into many traps that could easily have been avoided.

First of all, I started buying into the practice without having worked there previously; therefore the buy in price was based on the senior partner’s salary. Although the corporate tax returns verified that the salary was indeed accurate, the valuation analysis of the practice did not disclose the fact that the senior partner’s salary included income from another partner who also was buying into the practice. Nor did the analysis indicate the compensation he was receiving for administrative duties. The money received from these sources artificially increased the value of the practice, and I would easily have noticed that if I had worked as an associate for several years and learned the level of the practice’s production before I started buying in.

The next mistake I made was to take the appraisal of the practice at face value (which was done by the same company I use for my malpractice insurance) and not hire someone to do a full appraisal of the practice for me. The bottom line is that a young practitioner should not buy a practice without at least several years of private-practice experience and without having worked in the practice for a number of years to make sure that the level of production more accurately reflects the buy-in price.

Posted on Mar 25, 2004, 8:31 AM
from IP address 12.101.107.154

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