| A theoretical framework for shedding additional light on the determinants of medical practice value. | |
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MedLine Citation:
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PMID: 19858920 Owner: NLM Status: MEDLINE |
Abstract/OtherAbstract:
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BACKGROUND: Over the years, business valuation techniques have been widely used to appraise the financial worth of medical practices. However, it has been argued that medical practices are one of the most complex and difficult types of business enterprises to value. PURPOSE: The purpose of the current study is to develop a theoretical framework that sheds additional light on the determinants of a medical practice's value and to provide practitioners with a theory-based model on which to base valuations to avoid "wild west" scenarios where individual valuators use his or her own unique models that can lead to wild variations in the value amount of the same medical practice. APPROACH: The article starts by discussing standard approaches to valuing any business including medical practices. We then develop a theoretical framework that sheds additional light on the determinants of a medical practice's value by showing how strategic choice and environmental determinism affect the value of a medical practice. Once the framework is developed, the practice implications related to the framework are discussed. FINDINGS: In this article, determinants of a medical practice's potential for sustained profitability are identified. Specifically, a framework is presented that shows how the combination of strategic choice and environmental determinism can affect a medical practice's chances of sustained profitability. Developing such a framework is an important contribution to the literature given that one of the most problematic areas of medical practice valuation is determining the factors that a valuator must assess to arrive at an appropriate fair market value for a practice. PRACTICE IMPLICATIONS: The development of a framework that sheds additional light on the determinants of a medical practice's value is important in light of the difficulty of obtaining reliable market data regarding sales of medical practices, which tend to be closely held private entities. |
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Authors:
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James J Hoffman; Bradley T Ewing; Jayne G Hoffman |
Publication Detail:
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Type: Journal Article |
Journal Detail:
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Title: Health care management review Volume: 34 ISSN: 1550-5030 ISO Abbreviation: Health Care Manage Rev Publication Date: 2009 Oct-Dec |
Date Detail:
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Created Date: 2009-10-27 Completed Date: 2010-01-28 Revised Date: - |
Medline Journal Info:
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Nlm Unique ID: 7611530 Medline TA: Health Care Manage Rev Country: United States |
Other Details:
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Languages: eng Pagination: 355-63 Citation Subset: IM |
Affiliation:
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Operations Management, College of Business, Texas Tech University, Lubbock, TX, USA. james.hoffman@ttu.edu |
Export Citation:
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| MeSH Terms | |
Descriptor/Qualifier:
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Contract Services
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economics Economic Competition Environment Design Financial Management Humans Managed Care Programs / economics Marketing of Health Services / economics Models, Economic Practice Management, Medical / economics* Practice Valuation and Purchase* Private Practice / economics |
From MEDLINE®/PubMed®, a database of the U.S. National Library of Medicine
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