A typical medical practice is full of assets – from the coffee maker to the sphygmomanometers. When selling a medical practice, the goal is to get the best price for its assets and recoup as much of the initial investment as possible. Depending on the buyer and type of transaction, asset sales may require a fair market value appraisal and a site visit from the appraiser.
A site visit gives an appraiser the opportunity to gather the information necessary to arrive at an appropriate value, such as model numbers, manufacturer names, and the age and condition of assets. Best practice is to schedule the site visit to allow for easy access and adequate time for the appraiser(s) to locate and document this key information. After business hours (when staff and patients are gone for the day) is often preferred timing because it allows for more efficient accessibility of workspaces, treatment rooms, and equipment storage.
When scheduling the site visit, it's important to convey the actual scope of work to the appraiser, including the size of the facility (i.e., square footage and number of rooms) and any pertinent details regarding equipment to be included in the appraisal. This communication is important in planning an effective visit and aids the appraiser in scheduling adequate personnel and allotting sufficient time.
Preparation for a site visit includes cleaning the facility, wiping down furniture, and removing clutter. The appraiser will take a very close look at the practice, and dust and grime do not add value. An unkempt environment could negatively impact the appraiser’s assessment of the assets’ condition, upkeep, and maintenance.
Another major step prior to the site visit is the designation of the staff member who will serve as the contact person for the appraiser. Ideally, the designated contact person will be a courteous and knowledgeable ambassador – an individual capable of representing the practice in the best light. On the day of the site visit, the designated contact person will greet the appraiser(s), lead a tour, provide a facility floor plan, answer any questions, and provide relevant documentation. The appointed ambassador needn’t be a clinician or engineer, but their having basic knowledge about the practice’s assets, including location and function, is valuable.
We also recommend that medical practices prepare the following lists/inventories when preparing for a site visit:
Surgical tools and/or other small equipment that could be overlooked in drawers or cabinets
Items secured in restricted spaces and locked rooms such as hot labs, drug closets, and biohazard areas
Expensive/high-tech equipment including noted details of add-ons, special configurations, and software updates (it is also helpful to provide copies of invoices, proof/dates of maintenance, and other relevant documentation)
Any leased or personal items that will be excluded from the sale
Portable equipment that may travel outside of the office (i.e., goes home with patients or staff on a regular basis)
Overall, a little preparation goes a long way in helping a site visit to go smoothly. While many factors play into asset valuations, a productive site visit can help an appraiser catch on to value that may be hidden in a medical practice and deliver a more accurate appraisal.
BFMV specializes in the appraisal of healthcare businesses, assets, and services. Contact us for assistance with medical asset appraisals or other valuation-related matters.