In disputes concerning lost profits for medical practices, experts should assess the key component--physician compensation—“both in terms of volume and reimbursement rates, based on the unit of service provided and net revenue per type of service,” James Lloyd (PYA Pershing Yoakley & Assoc.) told listeners during BVR’s recent webinar, Lost Profits Damages in Medical Practices. “The growth rates for each could be substantially different,” Lloyd said.
The analysis that goes into this type of a damages claim can be relatively sophisticated, agreed co-presenter Mark Dietrich (CPA.NET), editor of the latest edition of the AHLA/BVR Guide to Healthcare Valuation. Projecting future revenue for physician practices involves looking at many factors, such as:
- Capacity constraints, for example, the number of procedures allowed for a certain piece of equipment
- Revenue per unit of service, typically on a per CPT code basis (but that depends on the practice)
- Revenue per provider (“This can make a big difference depending on the productivity of the individual physicians,” Dietrich said).
- Revenue per payor (“The payor mix can obviously have a significant impact on the revenue and profitability,” he added.)