Managing Your Practice

Should You Do This Deal?


 

You can also go back and change your assumptions and see how the changes alter the NPV. If Medicare reimbursement for DXA scans is reduced by 10%, for example, or if the number of scans you expected to perform each year is cut by 10%, what does that do to the NPV? If it veers into the red, don't do the deal.

A low NPV may give you bargaining power. In negotiations with the DXA machine vendor, a low NPV will substantiate why you're will to pay only $70,000 for the machine, or you may more clearly see the wisdom of purchasing a lightly used, refurbished machine instead.

Physicians don't tend to calculate NPV because it's time consuming, and it's not as challenging or as exciting as a clinical problem. But a lot of money may ride on it and it will help you know if your financial intuition is correct.

My advice: Go online, learn about net present value.

Crunch the numbers yourself, or hire someone to do it for you. But be aware of all the tools at your disposal before you cut that check.

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