Financial Valuation and Litigation Expert
My article on replication cost in physician practice valuation should be available shortly in the February/March Edition of Valuation and Litigation Expert.
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My article on replication cost in physician practice valuation should be available shortly in the February/March Edition of Valuation and Litigation Expert.
I heard from my colleague and AICPA Conference Committee member Ron Finkelstein yesterday that I received a 4.93 on the 5.0 scale for knowledge for my presentation in November at the AICPA Healthcare Conference (see previous posts). My friend Reed Tinsley - who will be on the panel for the February 8 Teleseminar for Business Valuation Resources on the Caracci and Delaware Open MRI cases and current industry trends - got comparable scores for his Conference presentation (and, admittedly, better presentation scores!).
The changes in the work RVU component of the RBRVS scheduled for implementation this year can generate a dramatic increase in the revenue for a given practice; a lesser effect can occur from the practice expense RVU changes. For instance, CMS estimated that Internal Medicine practices would see an average increase of 5% in 2007 as a result of the increased value of office-based E&M services, among others. The purpose of this post is to emphasize that the ACTUAL increase a practice can expect cannot be determined without first doing a basic CPT code analysis - as Frank Cohen and I indicated in our recent (Fall 2006) CPA Expert article.
The typical IM practice in the Medicare database has about 30% of its established patient visits coded Level 4 and 55% coded Level 3. The increase in the value of the Level 4 code, however, is about 18% while the Level 3 increase is about 23%, using the fully phased in PE RVU values. This is dramatically different than the 5% estimate by CMS! A practice using primarily these codes and not providing in-hospital services (such as where a hospitalist is used) will see a very different change in revenue than the generic 5%.
I hope to have news early next month that an article I wrote taking a different tack than the tax-effecting mizzenmast on the now famous Delaware Open MRI sloop will be published. In any event, we will cover the salient points in the Feb 8 Business Valuation Resources Teleseminar.
Private Equity Transactions are part of the healthcare acquisition world. Seems as though rates of return not adequate to support stock prices in the public sector are more than sufficient to attract private equity capital. I would appreciate hearing from those of you who have experience in this area.
I was honored to be one of the recipients of the AICPA "Volunteer of the Year" award for Business Valuation. My thanks to ABV Committee Chair and co-recipient Kevin Yeanoplos, CPA/ABV, ASA for his dedication to the preservation of the ABV credential.
Happy New Year! On February 8, 2007, I will be participating in a Teleseminar for Business Valuation Resources (www.bvresources.com), with my colleagues Carol Carden, CPA/ABV, AM, Don Barbo, CPA/ABV and Reed Tinsley, CPA, CVA. Titled Healthcare Valuation in Light of Recent Court Cases we will consider the implications for healthcare valuation engagements of the Circuit Court of Appeals Caracci decision and the Delaware Chancery Court's decision in Delaware Open MRI. The former is of particular note for exempt entities faced with the possibility of Intermediate Sanctions and for the use of the market and cost approaches. The latter is significant due to the apparent ignorance of impending changes in the payment for MRI by the Medicare program and the resultant overstatement of value under the income approach. The primary focuses of our presentation will be the limitations of the market approach and the importance of being aware of impending changes when using the income approach.
We will also discuss the current state of valuation in the various industry subsectors as Carol, Don and I did in our January/February 2006 articles in Business Valuation Update. We'll have a discussion of what factors influence valuation results in different areas of the country as a result of different market forces: Carol's practice is based in the South and Southeast, Don and Reed in the Southwest, and mine in the Northeast and Mid-Atlantic, but we or our firms do work in the other areas of the country, including the Midwest and West.
Finally, we'll look at the analysis and reactions to Reed and my article in the December 2006 edition of The Health Lawyer, from the American Bar Association. We undertook a comprehensive analysis of regulatory issues in healthcare valuation, particularly with respect to noncompetes and the market approach. The Teleseminar format includes the opportunity to direct questions via phone or e-mail to the panel and I look forward to hearing from you.
