Posted at 07:46 AM in Income Approach & Methods, Medicare, Noncompete Agreements, Regulatory Matters | Permalink | Comments (0) | TrackBack (0)
AHLA/BVR’s Guide to Healthcare Valuation is now available. The Guide, edited by Mark Dietrich, is co-published by the American Health Lawyers Association and Business Valuation Resources. http://cpa.net/?page_id=427
Posted at 02:00 PM in Healthcare Reform, Income Approach & Methods, Market Approach, Medicare, Music, Noncompete Agreements, Reasonable Comp, Regulatory Matters, Seminars & Publications | Permalink | Comments (0) | TrackBack (0)
Frank is one of the premier resources to CPAs in the healthcare consulting and valuation communities. He now has available at http://www.frankcohen.com/html/products.html the Top 50 CPT Codes by billed services utilization (count) frequency, charge frequency and others for 2009. I order this material from Frank every year and it saves countless hours of analysis - already have 2009 on hand. Good valuation work work requires CPT analysis, particularly with the Medicare Bonus of 10% to Primary Care Physicians based on specified CPT codes.
Posted at 01:58 PM in Income Approach & Methods, Medicare, Seminars & Publications | Permalink | Comments (0) | TrackBack (0)
This topic is more like one of the Zombies in Night of the Living Dead as opposed to the arguably cute Eveready Bunny; nonetheless, it keeps on goin.'
It has come to my attention that one reason for the inaccurate, improper and altogether wrong use of the Cost Method to value physician practices for hospital acquisition is due to the fact that the version of the 1996 IRS EO CPE text on Valuation of Medical Practices ( eotopicq96.pdf at http://www.irs.gov/pub/irs-tege/) does not contain Exhibits A and B which are referenced therein - and quite clearly (let me say it again, QUITE CLEARLY) demonstrate that Business Enterprise Value was determined using the DCF Method under the Income Approach (that's the Income Approach, Beavis) not the Cost Approach. The Cost Approach was only used to allocate the Intangible Value determined under the Income Approach to specific intangibles, as is clearly stated elsewhere in the document, to wit: "The value of goodwill can be allocated to specific intangible assets; the value of the latter is limited to the value of the former, as calculated under the income approach. For example, if the total value of the individual intangible assets exceeds the total value of the medical practice net of the aggregate fair market value of the tangible assets, the amount of value that can be allocated among the intangible assets is more limited. Also, it is important to note that intangible value may not always be present in a medical practice."
Posted at 09:12 PM in Income Approach & Methods, Medicare, Valuing Goodwill | Permalink | Comments (0) | TrackBack (0)
I'll be leading a 4 hour seminar on the Healthcare Reform legislation, sponsored by the Mass Society of CPAs, on June 4. For location and registration information, visit www.mscpaonline.org. This post contains links to various sources of additional information that attendees or others may find interesting.
After spending something north of 40 hours in the past several weeks studying the legislation and learned commentaries thereon, coupled with north of 30 years working in the industry, I feel ready for this undertaking.(!)
My BLOG Posts on Reform before the legislation passed are located here
http://cpanet.typepad.com/cpanet/healthcare-reform/#tp
On Medicare Advantage
http://cpanet.typepad.com/cpanet/2009/09/a-closer-look-at-medicare-advantage.html
On self-insuring employers - a MUST read!
http://cpanet.typepad.com/cpanet/2009/07/self-insurance-vs-health-insurance.html
Additional Sources of Information:
CBO letter to Congressman Lewis stating that "discretionary" costs in the range of $115 billion necessary to administer the Reform legislation were not included in the scoring of the legislation. This will increase the deficit and eliminate any claimed reduction in same.
http://www.cbo.gov/ftpdocs/114xx/doc11490/LewisLtr_HR3590.pdf
American Medical Association study of insurer market concentration http://www.ama-assn.org/amednews/2010/03/08/bil20308.htm, http://www.southernstudies.org/AMA%202007.pdf
Centers for Medicare and Medicaid 2009 Statistics containing detaled infromation about Medicare recipients, physicians, etc.
http://www.cms.gov/ResearchGenInfo/02_CMSStatistics.asp
Barclays Capital Managed Care Industry Analyst Joshua Raskin, one of most insightful individuals on Health Insurance and Medicare Advantage. Reports are available through brokerages such as Fidelity.
Health Affairs podcast of a webinar they did with four former CMS officials, including Bruce Vladek, Tom Scully and Gail Walensky, on CMS and Reform
http://www.healthaffairs.org/issue_briefings/2010_04_09_cms/2010_04_09_cms.php
FTC/DOJ July 2004 White Paper on Anti-Trust issues in the Healthcare Industry.
http://www.ftc.gov/reports/healthcare/040723healthcarerpt.pdf
Tax Foundation Analysis: Health Care Reform: How Much Does It Redistribute Income?
http://www.taxfoundation.org/files/ff222.pdf
Law Firm Sonnenschein Summary, with an excellent topical summary of affected areas.
http://www.sonnenschein.com/docs/Health_Care_Reform_Side-by-Side.pdf
Kaiser Family Foundation on Reform, perhaps the best summaries of all non-tax aspects of the legislation.
http://healthreform.kff.org/ (generally)
The Best Summary!
http://www.kff.org/healthreform/upload/8061.pdf
Kaiser Family Foundation Subsidy Calculator where you can determine the government subsidy to individuals to purchase insurance
http://healthreform.kff.org/Subsidycalculator.aspx
Kaiser Family/Alliance for Health Reform Podcast on Private Insurance Changes, a superbly done summary of what the insurance reforms really mean.
http://www.kff.org/healthreform/ahr043010video.cfm
Controlling Health Care Spending in Massachusetts: An Analysis of Options
http://www.mass.gov/Eeohhs2/docs/dhcfp/r/pubs/09/control_health_care_spending_rand_08-07-09.pdf
Benefits firm Hewitt Associates' announcement of the results of their survey of companies taking advantage of a $5 billion Early Retiree Reinsurance Program in the Reform legislation to pay the cost of early retirees age 55-64.
http://www.hewittassociates.com/Intl/NA/en-US/AboutHewitt/Newsroom/PressReleaseDetail.aspx?cid=8475
Extract of the Reform legislation on the 10% Primary Care Bonus to be paid by Medicare for the 5 years 2011-2015 on defined E&M codes (99201-99215,99304-99340,99341-99340) and other related extracts.
http://www.stfm.org/Sec%205501-%20Primary%20Care%20Bonus%20Payment1.doc
http://www.stfm.org/advocacy/issues/reform.cfm
Discussion of the temporary increase in Primary Care payments for Medicaid patients to Medicare rates in 2013 and 2014.
http://www.kaiserhealthnews.org/Stories/2010/April/06/Medicaid-Expansion-And-Payment-Increase-Causes-Mixed-Feelings-For-MDs.aspx
Posted at 07:50 PM in Healthcare Reform, Income Approach & Methods, Market Approach, Medicare | Permalink | Comments (0) | TrackBack (0)
I will be posting additional resources here for the May 12 webinar
CBO letter to Congressman Lewis stating that "discretionary" costs in the range of $115 billion necessary to administer the Reform legislation were not included in the scoring of the legislation. This will increase the deficit and eliminate any claimed reduction in same.
http://www.cbo.gov/ftpdocs/114xx/doc11490/LewisLtr_HR3590.pdf
American Medical Association study of insurer market concentration http://www.ama-assn.org/amednews/2010/03/08/bil20308.htm, http://www.southernstudies.org/AMA%202007.pdf
Centers for Medicare and Medicaid 2009 Statistics containing detaled infromation about Medicare recipients, physicians, etc.
http://www.cms.gov/ResearchGenInfo/02_CMSStatistics.asp
Barclays Capital Managed Care Industry Analyst Joshua Raskin, one of most insightful individuals on Health Insurance and Medicare Advantage. Reports are available through brokerages such as Fidelity.
Health Affairs podcast of a webinar they did with four former CMS officials, including Bruce Vladek, Tom Scully and Gail Walensky, on CMS and Reform
http://www.healthaffairs.org/issue_briefings/2010_04_09_cms/2010_04_09_cms.php
FTC/DOJ July 2004 White Paper on Anti-Trust issues in the Healthcare Industry.
http://www.ftc.gov/reports/healthcare/040723healthcarerpt.pdf
Tax Foundation Analysis: Health Care Reform: How Much Does It Redistribute Income?
http://www.taxfoundation.org/files/ff222.pdf
Posted at 10:15 PM in Healthcare Reform, Medicare, Seminars & Publications | Permalink | Comments (1) | TrackBack (0)
Business Valuation Resources will be publishing a new book Guide to Valuing Physician Practices containing principal contributions by me along with several other authors on valuing medical practices, including a detailed look at various analytical approaches to such factors as CPT codes, RVUs, Technical Component Revenue and MGMA data. Here is the link
Posted at 05:00 PM in Income Approach & Methods, Market Approach, Medicare, Reasonable Comp, Regulatory Matters, Seminars & Publications | Permalink | Comments (0) | TrackBack (0)
My article with longtime colleague and collaborator Kathie Wilson on Understanding and Using the Technical and Professional Component of Ancillary Revenue will be published in the April Edition of Business Valuation Update. I am also pleased to report that another article I wrote, Why Transaction Structure Affects Value and Other Nuances of Valuing Medical Practices, will be published in the Spring edition of CPA Expert. Both pieces address issues I will also discuss in the March 16 seminar for VPS.
Thought for the Day: Always stand upwind of the fan.
Posted at 03:39 PM in Income Approach & Methods, Medicare, Reasonable Comp, Regulatory Matters, Seminars & Publications, Valuing Goodwill | Permalink | Comments (0) | TrackBack (0)
I had several discussions today concerning alternatives to the Income Approach when valuing medical practices for sale to a hospital. At the risk of repeating myself, the hypothetical investor of the fair market value standard is interested in income returns; is risk adverse (see any text book discussion of the CAPM and diversification); views normalization adjustments cautiously, and does not anticipate synergistic opportunities from the investment, e.g., a lower cost of capital than the target entity on a stand alone basis, revenue to the acquirer over and above that available to the target on a stand alone basis, etc. Synergistic expectations are a feature of Strategic Value, not Fair Market Value. As such, they are not consistent with appraisal for the healthcare industry where Stark, the AKS, or tax exemption issues are present.
One issue that sometimes presents itself in an appraisal is the relevance of the Market Approach. My article Healthcare Market Structure And Its Implication For Valuation Of Privately Held Provider Entities: An Empirical Analysis appeared in the Summer 2008 Edition of Business Valuation Review and addresses many of the peculiar issues that exist with this Approach in the Healthcare Industry. In order to use "comparable" transactions in a regulated healthcare valuation, the appraiser must be cognizant of the underlying motivations of the parties who engaged in the reported transaction. If the value of past, present or future referrals were considered in the determination of the transaction price, the data would be "tainted" and not an appropriate source of a multiple, of course. For transactions that are not fully reported - which is just about all of them - there is insufficient data from which the appraiser can assess the motivations of the transacting parties. Furthermore, as I have said many times, "The Plural of Anecdote is not Data." Finally, there is a substantive question as to whether "market" data available only to a restricted audience is appropriate for use in a fair market value appraisal. "Market" data contemplates hypothetical buyers and sellers who have reasonable access to relevant facts. Confidential data is not consistent with that requirement.
Posted at 10:43 PM in Income Approach & Methods, Market Approach, Medicare, Regulatory Matters, Seminars & Publications, Valuing Goodwill | Permalink | Comments (0) | TrackBack (0)
The article Prices Don't Drive Regional Medicare Spending Variations published online at Health Affairs might be better titled Isolating the Effect of Price and Utilization on Medicare Spending Variations but whatever you call it, it is fascinating reading. It seems to call into question many of the conclusions one might draw from looking at raw Medicare spending data. If anyone can find the link to the Online Appendix mentioned in the article as being available in a 'link to the right of the online version,' please let me know.
http://content.healthaffairs.org/cgi/content/abstract/hlthaff.2009.0609v1?rss=1
Posted at 05:54 PM in Healthcare Reform, Medicare | Permalink | Comments (0) | TrackBack (0)