Tips on choosing the best valuation approach when valuing home healthcare businesses
As with other industries, a unique set of variables drive the profitability and risks associated with home healthcare service lines, making it difficult to make global assumptions. Appraisers need to develop an understanding of each home healthcare service line and how they interact if the subject business operates in two service lines or more. Appraisers also need to choose the best valuation approach for the unique service line they are valuing. Here are a few tips on each of the approaches.
D&P updates multiples in healthcare services
The S&P Healthcare Services Index declined 1.9% over the last month, but outperformed the S&P 500, which declined 2.7% over the same period, according to the March 2018 Healthcare Services Sector Update from Duff & Phelps.
Hospice Valuation: Trends, Value Drivers, and Physician Compensation
Hospice has become a primary focus for buyers looking for stable reimbursement and good margins in the healthcare industry. What do hospice providers do? And why are the multiples for these companies so high? Join Darcy Devine and William Hamilton for an examination of the business model behind many hospice companies, as well as the risks and opportunities that investors face in this arena. Learn about the fair market value and commercial reasonableness issues related ...
No takers yet for Dietrich and Smith debate challenge
A few issues ago, we relayed the message that healthcare valuation experts Mark Dietrich and Tim Smith have offered to debate anyone who disagrees with their views on the fair market value of physician compensation.
Letter to the Editor: Comments on a Recent Article on the FMV of Physician Compensation
A letter in response to the article, “Dietrich and Smith’s Debate Challenge Re: FMV of Physician Pay,” that appeared in the March 2018 issue of Business Valuation Update that presents new thinking and approaches.
Dietrich and Smith’s Debate Challenge Re: FMV of Physician Pay
Mark Dietrich and Tim Smith will debate anyone who disagrees with their views on the fair market value of physician compensation, views that refute conventional wisdom. BVR will provide a forum for the debate.
Survey says? Alternative approach to the fair market value of physician compensation
For well over a decade, the use of physician compensation surveys has been the predominant paradigm for establishing the fair market value of physician compensation. In two recent BVR webinars on the fair market value of physician compensation, healthcare valuation experts Mark Dietrich and Timothy Smith refute conventional wisdom regarding the compensation hospitals pay to employ physicians and offer an alternative approach to determine fair market value.
Beyond FMV: Commercial Reasonableness of Physician Compensation Post-MACRA
The influx of federal money over the past several decades to healthcare providers, and the allocation of those dollars, drastically transformed the healthcare delivery system in a way that has had dramatic impact on the economic and financial value of healthcare enterprises, assets, and services. The recent paradigm shift in the reimbursement environment, from volume to value, has had perhaps the greatest impact on the processes and outcomes of valuation assignments, as the reimbursement environment ...
Imaging Centers: Developing a Value
Due to recent actions in the health insurance market, as well as continued increasing regulatory initiatives and consolidation and integration in the healthcare delivery system, imaging center transactions continue to be in play. Trends in the healthcare economy are leading to alliances with, and acquisitions of, imaging centers by a variety of suitors. Things have changed. Valuation challenges abound, requiring the professional valuator to be able to demonstrate a strong understanding of the factors of ...
Use and Misuse of Survey Data to Set Physician Compensation
Timothy Smith (Ankura Consulting) interviews Meghan Wong, assistant director, data solutions, Medical Group Management Association (MGMA), in an excerpt from the recently released BVR/AHLA Guide to Valuing Physician Compensation and Healthcare Service Arrangements, 2nd edition.
Business Valuation Update Yearbook, 2018 Edition
February 2018 PDF
BVR (editor)
Business Valuation Resources, LLC
Get Out of the Herd So You Don’t Run Off a Cliff: The New FMV Paradigm for Physician Clinical Compensation
Mark Dietrich and Tim Smith, co-editors of the just-released BVR/AHLA Guide to Valuing Physician Compensation and Healthcare Service Arrangements, offer a framework for a new approach to FMV for physician clinical services based on hundreds of hours of research, modeling, and writing. Examine and deconstruct the purported governmental mandate for using the “survey says” paradigm for FMV purposes, including a data-driven and evidence-based rebuttal of the government’s FMV theory in the Tuomey and Halifax cases ...
Hospital Valuations: Issues and Perspectives
As consolidation trends continue in the healthcare sector, hospitals are functioning as both acquirer and acquiree in a multitude of transactions and joint ventures. For the business appraiser, a thorough understanding of these trends is crucial to the appraisal of hospitals. Healthcare valuation experts Don Barbo and John Meindl provide an in-depth perspective into hospital valuations and share their insights on the current state of the hospital industry. An extensive overview of hospital transaction activity ...
Data Error: How New Research Is Changing the Paradigm for Use of Compensation and Work RVU Data for Fair Market Value
In the past decade, use of physician work relative value units (wRVUs) in physician compensation plans has become a highly popular practice. Much of the healthcare industry, including most valuators, establish physician compensation rates based on assumptions about the relationship between compensation and wRVUs in the MGMA and other survey data. Indeed, many valuators use survey data exclusively for fair market value (FMV) purposes based on assumptions about this relationship. New research has recently emerged ...
Dental Practice Valuation 2017: Drilling Into the Value Drivers
Dental practice values have continued to increase over the past three years. Fewer sellers, a growing pool of potential buyers (including corporate), increased competition, and higher costs involved with establishing a “cold start” practice have all contributed to higher values and more opportunity for business valuation professionals. Industry expert Steve Molinelli shares his transaction experience and gives insight into the evolving market dynamics. Jim Anderson translates how those changes should be incorporated into your valuation ...
Valuation benchmarks for ambulatory surgery centers revealed in updated survey
HealthCare Appraisers Inc. has just released valuation multiples of single-specialty and multispecialty ASCs based on data representing over 700 entities.
Latest AHLA guide discusses fairness opinions, M&A, and goodwill
The AHLA Transactions Resource Guide is a free collection of articles from leading healthcare experts that discuss significant transaction issues in the healthcare industry. Some of the authors are with Duff & Phelps, VMG Health, Wipfli, and others.
Current Trends in Ambulatory Surgery Center Valuations
The healthcare industry has been searching for ways to reduce healthcare costs while also increasing patient quality and satisfaction. Ambulatory surgery centers (ASCs) are strategically positioned to help bend the cost curve and increase patient satisfaction, which has led to a rise in popularity of investments in ASCs. Experts Angie Smith and Robert Mundy bring you up to speed with an overview of the ambulatory surgery center market and how ASCs fit within healthcare reform.
Healthcare services multiples from Duff & Phelps
Valuation data from the January 2017 Healthcare Services Sector Update from Duff & Phelps.
Business Valuation Update Yearbook, 2017 Edition
February 2017 PDF (349 pages)
BVR (editor)
Business Valuation Resources, LLC
Healthcare M&A volume up, spending down in 2016
There were 1,536 healthcare M&A transactions in 2016, up 1% from 2015, but overall spending dropped to $255.7 billion from $400.3 billion in 2015, according to data from Irving Levin Associates Inc.
Commercial Reasonableness: Defining Practical Concepts and Determining Compliance in Healthcare Transactions for Physician Services
Financial relationships between hospitals and physicians must be both commercially reasonable and at fair market value (FMV) to meet certain regulatory requirements. Ensuring compliance with these requirements is critical--failing to do so could invoke sanctions and penalties related to the Stark Law, the Anti-Kickback Statute, the False Claims Act (FCA), and Internal Revenue Service 501(c)(3) status for tax-exempt entities. As such, a thorough understanding of these requirements is necessary to ensure compliance in transactions between hospitals and physicians, as well as other parties with referral relationships within the healthcare environment.
Healthcare industry hit most by FCA in 2016
Over half of the $4.7 billion in settlements and judgments the government recovered in 2016 under the False Claims Act (FCA) were from the healthcare industry. Allegations often revolve around the measurement of the fair market value of physician compensation.
Will an ACA overhaul derail value-based payments?
Healthcare reform has been moving the industry away from the traditional fee-for-service revenue model in favor of one where revenue is based on the quality of care. Will the ACA repeal-and-replace efforts under the new Trump administration put the brakes on this? A healthcare valuation expert comments.
BVR Guide to Ancillary Healthcare Services Valuation
December 2016 Hardcover, PDF (474 pages)
Mark Dietrich
Business Valuation Resources, LLC