Scott Becker, a partner at McGuireWoods and publisher of Becker’s Healthcare, asked speakers at a confab to discuss the most interesting issues in healthcare valuation they’re seeing. Here are some of the issues the speakers identified.
1. Emergence of quality provisions. In Becker’s words: “Physicians are increasingly being compensated for providing high-quality care, and quality provisions have begun working their way into physician contracts. …. good quantitative information available to show what physicians earn for producing quality outcomes, said Jim Carr, partner at HealthCare Appraisers.”
2. Rise in unusual partnerships. “On the transaction side, what has been interesting is a trend for really unlikely parties joint venturing,” said Greg Koonsman, senior managing director and founder of VMG Health.
He cited the partnership between nonprofit Baylor Scott & White Health and for-profit Tenet Healthcare. “In the Baylor-Tenet deal, that transaction had to be at fair market value or at a range of fair market value because Baylor, being tax exempt, has to approach the valuation of the JV appropriately to protect its tax exempt status,” said Mr. Koonsman.
3. Use of benchmarks. In Becker’s words, “Assuming it is not efficient to do a valuation for every physician that is hired, hospital compliance officers increasingly want information they can benchmark off of. Although this may work for many physician compensation arrangements, it is not the best method to use in all cases, according to Jonathan Helm, managing director in the professional service agreements division at VMG Health. ‘If someone is an outlier you would probably want a separate valuation,’ he said.