Making an offer

Q: I am interested in buying the practice of a retiring physician. He has a formal appraisal from two years ago, but he does biopsy procedures that I won't be doing, so I won't be able to take advantage of the same income. He hasn't found a buyer in two years. How do I make an offer at the lesser price I am willing to pay without offending him?

A: Make an offer that works for you, in the form of a non-binding letter of intent. Explain your reasoning in the letter, but don't worry about all the lesser details yet. An offer is the only way to elicit the seller's serious response. Don't worry about the appraised value.

"Value" is an opinion as of a point in time, between hypothetical parties, based on a number of assumptions at that time by the appraiser. For example, we didn't know about the healthcare reform impact two years ago, and that Medicare reimbursement still wouldn't be settled.

Answers to readers' questions were provided by Jack Rue Coleman, CHBC, Dental-Medical Economics, Plano, Texas; and Medical Economics consultants Keith C. Borglum, CHBC, Professional Management and Marketing, Santa Rosa, California; and Judy Bee, Practice Performance Group, La Jolla, California. Send your practice management questions to medec@advanstar.com