With the opening of health insurance exchanges and marketplaces this week under the Affordable Care Act, accountants and other professional service providers are being urged to pursue doctor’s offices as clients, especially as the prognosis for their financial health is expected to remain positive.
Sageworks, a provider of financial data on private companies, recently diagnosed the average ratios for privately held doctors’ offices and found the vital signs for their financial health appear to be remarkably strong. Looking at the private company financial statements of physician offices in the past 12 months, Sageworks found they were growing revenue at a steady, consistent pace, up 5 percent compared to the previous year.
Doctors’ offices also have a very healthy 13 percent net profit margin, Sageworks noted. “In terms of revenue growth and profitability, this trailing 12-month period is par for the course,” said the research. “Doctor’s offices typically grow revenues at a steady rate, and they’re always amongst the most profitable industries in the Sageworks Private Company Database. Liquidity and cash flow look to be strong as well. Overall, you can assure your business clients within this industry that their bill of health looks to be fairly clean.”
Sageworks noted that from a business development perspective, offices of physicians may be a good target demographic when accountants are seeking out new business. “These companies do not show a lot of volatility on their financial statements, and their consistently healthy profit margins and strong liquidity may suggest that they may have some extra cash to spend,” said the analysis. “More generally, the health care sector may be a good place to look for business development opportunities. The Bureau of Labor Statistics estimates that more than 5.6 million new health care and social assistance jobs will be created between 2010 and 2020.”
The data below focuses on financial statements ended in the 12-month time period between August 2012 and August 2013:
For other new business development ideas, check out the health care sector analysis included in the latest Private Company Report by Sageworks, identifying some of the most and least profitable sub-industries related to health care and social assistance. To find more financial metrics for the medical industry or approximately 1,400 other industries at no cost, visit Sageworks Industry Data for CPAs.
Register or login for access to this item and much more
All Accounting Today content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access