There are four main benefits to engaging a healthcare valuator for your healthcare appraisal. An independent valuations professional provides you with the following:
These are crucial benefits that assist you as you operate your business. While intangible, knowledge and experience have a significant impact when it comes to incorporating fair market value (FMV) into your valuation, a legal requirement incorporated into a number of healthcare transactions.
Healthcare rules and regulations are incredibly complicated and complex, and are designed exclusively for the healthcare industry. This means that someone who is involved with valuations outside of the healthcare market may not be fully aware of what is applicable and what isn’t applicable in a given situation. It also makes it harder to address issues or questions that may arise during the course of the valuation.
A great example of a case in which knowledge was at the forefront is U.S. ex rel. Singh v. Bradford Regional Medical Center. In this case, a valuation was performed following standard valuation methodologies. However, the valuation considered the value of referrals and the hospital was found to be in violation of the Stark Law.
Instead of having to find someone willing to take on the extra time needed to learn about the healthcare industry, choosing a healthcare valuator up front is much easier. They will utilize their background and expertise to produce a more nuanced valuation for your business. They will also be capable of working more efficiently, taking less time to produce the needed appraisal.
Physician owners, and others involved in healthcare business operations for ambulatory care centers, will likely require valuations infrequently. These are simply not regular, recurring events for small businesses. The fact that healthcare appraisers have the experience of multiple valuations within the field increases the value of their involvement.
Experience also plays a part in the time frame of a valuation. A healthcare valuator can manage client expectations by providing a more accurate assessment of how long a particular valuation might take, which helps eliminate frustration. The more experience a healthcare valuations professional has with a specific situation, the more efficiently and accurately the valuation can be completed. This has an impact on the cost of the valuation, as well as the valuator’s credibility.
This is one of the most important elements to consider when hiring a healthcare valuator. You need a credible, independent expert to ensure that people agree that the valuation report accurately portrays fair market value for the business, equipment, services, etc. Fair market value is a standard codified within healthcare laws, so credibility is essential when complying with healthcare rules and regulations.
By hiring a professional that specializes in healthcare valuations, rather than someone who works within multiple industries, you and the valuation of your business will be more credible. People are more likely to accept the standpoint of someone who focuses exclusively on the healthcare market.
This is also why you need an independent, third-party valuations professional. Someone that is not associated with the business that provides a valuation is seen as more credible than a valuation done in-house. While there may be some wiggle room for a ‘do-it-yourself valuation’ within healthcare law, it’s better to hire someone to complete the valuation in order to protect credibility.
As mentioned above, the credibility of the valuation is a major benefit that comes from hiring a professional, independent healthcare valuator. This credibility then serves as a form of protection. A healthcare valuator is believed to have derived a fair market valuation that matches the current market. This reduces the possibility of a disagreement and problems that might arise later on.
Put together, these benefits make it clear that when you need a valuation done over the course of running a healthcare business or during a healthcare M&A transaction, you would be wise to hire a healthcare valuator. Without the help a professional valuations expert, you risk losing the credibility of your valuation and your business.