Medical practice valuations may have dangerous side effects
Abstract: The complex regulatory regime that governs health care relationships and transactions has a big impact on the valuation process — especially when a medical practice is being valued prior to sale. Concepts such as fair market value (FMV) and “commercial reasonableness” are critical to compliance with federal regulations. As a result, considerations of investment value or strategic value, which are common in other industries, may be inappropriate in the health care arena. This article shows how to correctly apply the income, market and asset approaches for a medical practice valuation, while a sidebar explains how a valuation serves as a powerful tool for diagnosing potential compliance issues.