No rules or formulas exist for negotiating a fair buy-in. So many variables are involved — types of physicians, types of practices, specialties — that the only fair buy-in is the one that works in your specific situation.

To protect yourself as you negotiate the terms of your buy-in agreement, Richard E. Gable, Ph.D., M.B.A. recommends you pay attention to the following three primary valuables traditionally used in calculating a buy-in formula.

• Accounts receivable.
You shouldn’t be required to buy all of the practice’s receivables because it was only partially your work that created them. Some practices will credit a percentage of what you’ve put on the books toward the buy-in.
• Hard assets.
These are the standard items that don’t usually cause conflict or disagreement unless the equipment is old and out-of-date. The price of the hard assets is determined by their depreciated value or their fair market value.
Depreciated, or book value is the value to which the assets have been depreciated on the practice’s books. Fair market value is the cost to replace the equipment. You can obtain this information from the practice’s tax returns.
If the practice leases equipment, the value of the equipment should not be part of the buy-in deal.
• Goodwill.
This represents all of the intangible benefits that you’ve gained as a result of your association with the practice, such as reputation and introductions. In mature managed care markets, patients can no longer choose a physician based on reputation. What that means is that from a realistic perspective, goodwill is declining in value. That being said, however, goodwill can still be a source of controversy during your buy-in negotiations.