GI Practice Valuation – A 2,500 word guide on influencing EBITDA

GI Practice Valuation - A 2,500 word guide on influencing EBITDA


Whatever EBITDA is, it’s a hot term with medical practices these days. Because it’s a measure that investors value. Before exploring strategies to grow EBITDA, let’s first understand the elements of a basic financial statement and where EBITDA fits in.

• Revenues: Money that you make from insurance reimbursements, patient payments and so on
• Operational Costs: Money required to run operations
• Operational margin (or profits): Revenues minus operational costs
• Sales and General administration: Money that you spend on sales/promotions and to manage the overall company
• EBITDA (Earnings before interest, taxes, depreciation and amortization): Profits of your business after taking out most expenses but without considering taxes and certain accounting factors.

If it helps simply think of EBITDA as a measure of profitability or operational
performance.


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