ArticleThe Monte Carlo Method Improves Physician Practice ValuationGrayson, James M. PhD; Rutsohn, Phil DRPh; Jackson, Pamela Z. CPA, PhDAuthor Information From the College of Business Administration, Augusta State University, 2500 Walton Way, Augusta, Ga (Dr Grayson and Dr Jackson); From the Graduate School of Management, Marshall University, 100 Angus E. Peyton Drive, South Charleston, WVa (Dr Rutsohn). Corresponding author: James M. Grayson, PhD, College of Business Administration, Augusta State University, 2500 Walton Way, Augusta, GA 30904 (e-mail: [email protected]). The Health Care Manager: July 2006 - Volume 25 - Issue 3 - p 282-288 Buy Abstract This article demonstrates the use of the Monte Carlo simulation method in physician practice valuation. The Monte Carlo method allows the valuator to incorporate probability ranges into the discounted cash flow model and obtain an output indicating the probability for specified ranges of practice valuation. Given the high level of uncertainty in projected cash flows associated with physician practices, the value of this kind of information in a practice valuation decision would quite obviously be superior to any single point estimate generated by a traditional discounted cash flow model. It is postulated that virtually all hospitals support an information system that can easily accommodate a Monte Carlo simulation. © 2006 Lippincott Williams & Wilkins, Inc.