One of the most common concerns I hear about a practice for sale is that the selling doctor is contracted with Delta Premier.
Why is that a concern?
If you are not already aware, Delta Premier is essentially a great reimbursement plan to be a part of. Unfortunately, they no longer contract with new doctors. It’s essentially a “grandfathered” plan that many sellers have been benefiting from for years that is most likely unavailable to you.
Because of that, it can be a red flag if you’re looking at a practice that has high collections, the majority of which comes from Delta Premier policies.
Ultimately, that is income you may not be able to rely on if you take over this office. Since that is income that will be lost to any new owner, you may be asking yourself…
Does Delta Premier Affect the Practice Valuation?
Hard truth… No.
Why not, though?
Well, think of it from both perspectives.
You may be thinking, “But this practice is worth less to me.” As cut throat as that may be, it’s completely reasonable.
On the flipside, the seller may think (and possibly say), “It’s not my fault Delta will pay you less”. Not only do they have every right to think that way, but it’s also completely reasonable.
So if you both have equally justifiable arguments, you’re essentially canceling each other out. You’re the -1, the seller is the +1. (It’s true, my math skills are unparalleled.)
So if the practice isn’t worth less, but it can’t continue to have the cashflow it currently boasts, what happens next?
The way this is handled in real transitions is to actually calculate the projected dollar loss from updated fee schedules with Delta Premier. After that, the buyer then decides what the practice is worth at that point.
You’re at the point in your career where you have many options, each with associated pros and cons. It’s not as simple as finding a practice that has overhead at 61%, collecting $900,000 and offering $720,000.
It’s important to ask questions now. Don’t hesitate to schedule a call with me, and we’ll make sure you’re asking the right questions during your hunt for the perfect practice.