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The CY 2016 Work Relative Value Units

The Impact on Employed Physician Groups The CMS 2016 Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center Payment System downwardly revised reimbursement for GI/endoscopy services and reduced by 0.77 percent the Physician Fee Schedule to all services because CMS failed to meet the one percent net reduction target for misvalued codes in 2016. In this article, the author discusses how ...

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The Utilization of the Market Approach

In Appraising Outpatient Enterprises Healthcare related outpatient enterprises provide services that do not require hospital admission and may be performed outside the premises of a hospital. Similar to valuation of any business, valuations of outpatient enterprises should include consideration of the three general approaches to valuation (i.e., the income approach, the market approach, and the asset/cost a ...

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Determination of the Appropriate Standard of Value

An In-Depth Series on Healthcare Valuation This first installment will discuss Fair Market Value, the most prevalent standard of value in the healthcare industry, and why this is the required standard of value for most healthcare transactions. This article will also discuss the premise of value, which further defines the circumstances of the transaction, and how to determine which methods may be applicable ...

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Common Misconceptions Regarding Healthcare Entity Valuations

Five Remaining Leading Misconceptions (Part II of II) The following discussion summarizes and responds to common misconceptions many analysts have with regard to the valuation of healthcare entity property and/or services transfers. These analyst misconceptions typically involve a misunderstanding of one or more of the relevant regulatory provisions. These analyst misconceptions typically relate to an erron ...

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Common Misconceptions Regarding Healthcare Entity Valuations

Five of the 10 Leading Misconceptions (Part I of II) The following discussion summarizes and responds to common misconceptions that many analysts have with regard to the valuation of healthcare entity property and/or services transfers. These analyst misconceptions typically involve a misunderstanding of one or more of the relevant regulatory provisions. These analyst misconceptions typically relate to an e ...

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Appropriate Use of Extraordinary Assumptions and Hypothetical Conditions

Healthcare Valuation Considerations when Valuing Outpatient Services With healthcare evolving, how can practitioners project the future benefit stream related to outpatient services? In this article, the authors discuss the use of hypothetical and extraordinary assumptions. They argue that use of these assumptions requires careful consideration as they can have a significant effect on value. In addition, th ...

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Understanding Compensation per Work RVU

The Structure of Physician Compensation The structure of compensation for hospital/health-system employed physicians is a constant struggle for administrators with the rise of physician practice acquisitions and subsequent employment of these physicians. Based on estimates from Jackson Healthcare1, approximately 35 percent of all physicians are employed by a hospital/health-system. As a result, the issue of ...

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The Imperative of Considering the Concept of Highest and Best Use in Healthcare Valuation (Part 1 of 2)

Traditional valuation methodologies have relied upon the analysis of historical accounting and other data as predictive of future performance and value. However, this may not hold true with every economy, industry, or even every enterprise within an industry, over time. For example, the turbulent status of the healthcare industry over the last five decades, since the passage of Medicare in the 1960s, has in ...

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Legal Implications for Hospital Boards, In-House Counsel, and Management to Consider to Avoid a Broken Deal

Merger and acquisition activity in the healthcare industry has increased over the past few years. The playbook used in the past has shifted. In this article the authors share their views on whether and when to announce the deal, the importance of conducting pre-deal due diligence, appearing before the Board of Directors, understanding the constituents that are needed to succeed, and conducting pre-market du ...

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Regulatory Tripwires and the FMV Implications of Health Systems Losing Money on Employed Physicians

Valuators Take Note Fair market value is key to compliance with both the Stark Law and the Anti-Kickback Statue. Solid, well-reasoned valuations can be essential in establishing compliant arrangements, and these must consider practice losses as applicable. In this article, Lynn Gordon, Esq., states that it is “prudent to have a valuation in place that supports compensation as fair market value,” especially ...

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Valuing Stand-Alone Ancillary Service and Technical Component (ASTC) Enterprises under Hypothetical Conditions

In this article, Robert Cimasi and Matthew Wagner provide a roadmap of the valuation and legal issues valuation professionals confront valuing a medical practice that also provides ancillary and technical component (ASTC) services. The fact that the ASTC services are often integrated with the professional services of a practice does not restrict the ASTC service line from having value separate and aside fro ...

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Valuation of Hospital System Targets

Insights from the Analysis of Mega Transactions By scrutinizing data from large transactions, valuation experts can glean important information and insights into current healthcare valuations. In this article, Collin McDermott and Bridget Triepke summarize SEC filings, review the implied valuation of large healthcare mergers—based on the purchase price—and provide a detailed review of the fairness opinions ...

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IRS Proposes New Changes to Cafeteria Plan Elections and Lookback Period

  On September 18, 2014, the Internal Revenue Service (IRS) issued two new notices—one proposing changes for when a taxpayer can revoke healthcare coverage in a cafeteria plan and enroll in a plan on the health insurance marketplace exchanges; the second notice proposes an approach for how to measure the lookback period for determining who is a fulltime employee when an employee changes positions withi ...

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IRS Rewriting Tax Law?

  Among many legal challenges to the validity of the Affordable Care Act (ACA), is Halbig vs. Burwell. The challenge concerns a passage in the statute, when literally read as worded, makes federal tax credits for insurance programs available only to those enrollees in states that have created a state-designed and operated healthcare exchange. Read as it currently exists, the statute does not allow for ...

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Intangible Assets in Healthcare

Approaches and Methods Used to Realize Income from Licensing IP Assets This article discusses valuation topics related to a subset of intangible assets which are most applicable to healthcare businesses. Business valuation professionals are often engaged to value specific intangible assets, either as part of a detailed business valuation or after a transaction has been completed. When valuing healthcare-ori ...

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Healthcare Reimbursement Models to Change, Affecting Valuation

  Reimbursements from insurers, made to healthcare facilities for the care they administer, are an essential part of the valuation of hospitals, clinics, outpatient care centers and other facilities. As if that exchange wasn’t complicated enough, it’s about to go through another transition that very well may impact the valuation of all healthcare institutions. According to a new white paper released by ...

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