Healthcare valuers keep an eye on a new proposal

BVWireIssue #156-3
September 23, 2015

It’s difficult to think of another industry that has as many layers of regulations as healthcare, especially in the era of health reform. Many of these rules impact valuation because they can significantly affect future revenue of healthcare providers.

One to watch: During a recent BVR webinar, the speakers mentioned a proposal to keep an eye on for 2016: the Comprehensive Care for Joint Replacement (CCJR), a model proposed by the Centers for Medicare & Medicaid Services (CMS). The proposal would force healthcare providers in certain areas into a bundled payments scheme for procedures such as hip and knee replacements.

Under bundled payments, a single payment is made for all providers who render services during a patient’s entire “episode of care” for certain medical conditions. The payment is then split up among the providers. This is designed to increase the quality of care and reduce healthcare costs.

The proposal would apply only to providers in large metropolitan statistical areas (MSAs). However, the speakers pointed out, some providers in these areas are already in a bundled payments program.

Carol Carden and Robert Mundy, both with Pershing Yoakley & Associates, conducted the webinar, Forecasting Cost of Capital in Healthcare Valuations.

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