Plastic surgeons are not trained in the business of medicine during their formal education. Instead they learn the business of medicine the hard way; through trial and error in private practice. However, because becoming a surgeon requires intelligence, many physicians eventually learn how to run a private plastic surgery practice. The obvious focal point of this on-the-job training is to constantly strive to improve the bottom line. Stated more simply, the business goal is to maximize the amount of money that can be taken home each year.

Even though they may learn how to run a private practice, most surgeons do not typically learn or understand whether their business practices are building value in their private practice. Consequently, there are (1) many misconceptions about the value of a medical practice and (2) often no strategic plans to extract value through the sale of all or a part of a practice at the appropriate time. The acronym FLAPS can provide you with five tips to maximize the value of your plastic surgery practice.

Tip 1: Forget
The first step in maximizing the value of your plastic surgery practice is to forget. Specifically, you should forget everything you have been told by other physicians regarding the value of a medical practice. Though this likely will sweep away some good information, you are better off with no information than the amount of incomplete or inaccurate information that is prevalent among physicians.

For example, it is a common perception among physicians that a medical practice has little or no value. Although this may be somewhat accurate in some cases, plastic surgery practices often have moderate to significant value. Moreover, several strategies can be implemented in your private practice to increase its value.

Tip 2: Learn
After you have discarded everything you have been told by other physicians regarding the value of your practice, it is important to learn the realities of the value of a plastic surgery practice. A great starting point is to understand the methodologies used by independent business appraisers. A certified appraiser has guidelines that must be followed when valuing a business (including plastic surgery practices).¹

Specifically, an appraiser must consider each of the following recognized methodologies when a practice is valued: (1) the asset-based (cost) approach, (2) the income approach, and (3) the market approach. The asset approach (or cost approach) is a valuation based on the value of the assets, net of liabilities; the income approach is based on discounted cash flows; and the market approach is based on sales of other, similar practices.¹