In today’s healthcare landscape, assuming that the “A” in “M&A” exclusively refers to “acquisition” may be a faulty assumption.  Health systems, hospitals, ambulatory surgery centers, diagnostic imaging centers, clinically-integrated networks (CINs), and other healthcare entities are entering into a wide variety of service arrangements and agreements in order to facilitate the coordination of care with the hopes of increasing quality and reducing costs.  These arrangements include, but are not limited to:

  • Physician and physician extender employment agreements
  • Physician services agreements (PSA)
  • Management services agreements
  • Administrative services agreements
  • IT services agreements
  • Purchased services agreements
  • Medical director agreements
  • Call coverage agreements
  • Co-management agreements
  • P4P and quality service agreements

Since many of the arrangements and agreements involve physicians in some capacity, a fair market valuation opinion is typically necessary to ensure all parties stay within the guardrails of various laws and statutes.  Navigant’s compensation and service valuation experts have many years of experience providing reasonable and supportable fair market valuation opinions and are attuned to legal and regulatory issues affecting valuations in this area, including:

  • Medicare and Medicaid “fraud and abuse” laws (Anti-Kickback Statute)
  • Physician Self-Referral (“Stark”) Regulations
  • Internal Revenue Code 501(c)(3) for tax exempt organizations (private inurement and private benefit restrictions)
  • Commercial Reasonableness
  • Office of Inspector General (OIG) Advisory Opinions

In order to ensure clients receive the highest level of expertise and service, we typically staff professional service projects with specialists in this area.  Since valuing professional services (like valuing an asset or business) is both a quantitative and qualitative exercise, our professional service valuation specialists do not simply rely on a “black box” method or industry surveys to support our fair market value opinions. 

Given some of the known limitations of certain industry surveys, our team will often perform supplemental market and cost-based analyses and utilizes multiple “tests” to ensure our fair market opinions are as reasonable and supportable as possible.

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