Stat Tracker

The Latest Data on Ophthalmology Goodwill Value

Goodwill value is almost always the most significant and valuable component of an ophthalmology practice's total worth. The Health Care Group's Goodwill Registry is a database that reports actual transactions involving the intangible goodwill value of ophthalmology practices, as well as other medical and dental practices.

The information below, drawn from the 2008 Goodwill Registry, continues to confirm that ophthalmology goodwill — though still trending downward — is still quite viable, and that ophthalmology practices are one of the most valuable of all medical specialties.

Average Ophthalmology Goodwill Percent

The Goodwill Registry uses a "comparable sales" methodology to allow an ophthalmology practice to determine the value of its goodwill. It reports a practice's goodwill value as a percentage (Goodwill Percent) of the practice's annual gross revenue (cash receipts) and represents goodwill values for actual real-world transactions (Table 1).

The average Ophthalmology Goodwill Percent for the last 10 years is 30.41% and has been trending downward, as reflected in the above graph. After averaging over 33% from 1998 through 2001, the Goodwill Percent was sharply lower from 2002 through 2005. However, reported transactions showed a much-increased Goodwill Percent for 2006 at 37.45%, but a much lower 21.38% for 2007. The fluctuations for 2006 and 2007 do not necessarily portend drastic immediate changes in the Goodwill Percent but usually merely indicate the happenstance of the year in which particular transactions took place. It is important to measure the trend over time (Figure 1). The average Ophthalmology Goodwill Percent for the last 10, 5, 4, 3 and 2 years has been trending downward, although the trend line for Goodwill Percent for the last 5 years is virtually flat as shown in the next graph (Figure 2).

Average Ophthalmology Goodwill Value

Notwithstanding the downward trend of the average Ophthalmology Goodwill Percent, the Goodwill Value per transaction instead has been trending slightly upward over the past ten years. Despite dipping below $300,000 in 2003 and 2004 (the $273,111 for 2003 represents the lowest dollar value in the past decade), the average Goodwill Value for the last three years has rebounded dramatically and averaged $536,223. The $618,595 dollar value in 2006 is the highest since 2000 and the second highest over the past 10 years. The average Goodwill Value per transaction over the past decade is $451,579; $418,390 over the past 5 years; and $465,936 over the past 4 years. The trend lines for Goodwill Value per transaction for the last 10, 5, 4, 3 and 2 years are rising with the Goodwill Value per transaction for the 5- and 4-year periods trending sharply upward as indicated in the following graph (Figure 3). OM

About These Data:

The Goodwill Registry for 2008 contains more than 4,250 reported transactions (including more than 155 for ophthalmology practices) submitted to the Health Care Group by participating health care advisors, consultants and practices during the years 1998 to 2007. Data from the Goodwill Registry have been used in numerous transactions and litigation proceedings to help resolve valuation issues. The complete 2008 Goodwill Registry also reports the specific detailed data for each transaction reported, including additional data such as state, reason for valuation, valuation method, gross revenue and overhead percent. A new data analysis Toolkit allows quick and easy analysis and graphing of the Goodwill Registry's comparable sales data. For more information about the 2008 Goodwill Registry, call Mark E. Kropiewnicki, J.D., LL.M, at (800) 473-0032.