Banner
  • Revenue Cycle Management
  • COVID-19
  • Reimbursement
  • Diabetes Awareness Month
  • Risk Management
  • Patient Retention
  • Staffing
  • Medical Economics® 100th Anniversary
  • Coding and documentation
  • Business of Endocrinology
  • Telehealth
  • Physicians Financial News
  • Cybersecurity
  • Cardiovascular Clinical Consult
  • Locum Tenens, brought to you by LocumLife®
  • Weight Management
  • Business of Women's Health
  • Practice Efficiency
  • Finance and Wealth
  • EHRs
  • Remote Patient Monitoring
  • Sponsored Webinars
  • Medical Technology
  • Billing and collections
  • Acute Pain Management
  • Exclusive Content
  • Value-based Care
  • Business of Pediatrics
  • Concierge Medicine 2.0 by Castle Connolly Private Health Partners
  • Practice Growth
  • Concierge Medicine
  • Business of Cardiology
  • Implementing the Topcon Ocular Telehealth Platform
  • Malpractice
  • Influenza
  • Sexual Health
  • Chronic Conditions
  • Technology
  • Legal and Policy
  • Money
  • Opinion
  • Vaccines
  • Practice Management
  • Patient Relations
  • Careers

Q&A: Buying into a medical practice

Article

This is a good example of why buy-ins should be negotiated in advance.

Q: I am an internist who has been working with a cardiologist for five years. When it came time to discuss a partnership, the cardiologist said he wanted to charge me for "buying into" the practice, i.e. paying for the "goodwill" that he has built through the years since he started the business. Isn't goodwill an outdated concept? What about my "sweat equity" and recognizing that part of the value of the practice is due to my five years there?

A: This is a good example of why buy-ins should be negotiated in advance. Employees generally do not earn "sweat equity" in the ownership of their employers' businesses, even though much of a business's value is often built upon the labor of employees. The concept of "goodwill" as part of a practice's intangible value is still alive and well-mostly in cases in which there are "dividends" to ownership above compensation for labor. For example, for an internal medicine practice in which buying it would yield the purchaser an extra $500,000 in annual income, it inarguably has "goodwill" value. It takes an expert medical appraiser to determine the practice's actual value, as well as negotiations to agree on the actual price.

Related Videos
Jennifer N. Lee, MD, FAAFP
© National Institute for Occupational Safety and Health
© National Institute for Occupational Safety and Health
© National Institute for Occupational Safety and Health
© National Institute for Occupational Safety and Health
© National Institute for Occupational Safety and Health
© National Institute for Occupational Safety and Health