Fair Market Valuation (FMV)
A Fair Market Valuation is required for almost all significant financial transactions involving facilities and referral sources. To ensure clients receive the most accurate valuations, Carnahan Group uses guidelines set forth by the Appraisal Foundation and complies with AICPA and NACVA.
Fair Market Value
Revenue Ruling 59-60 defines “fair market value” as “the price at which the property would change hands between a willing buyer and a willing seller when the former is not under any compulsion to buy and the latter is not under any compulsion to sell, both parties having reasonable knowledge of relevant facts.”
Influencers on Valuation
The above ruling stipulates that the following factors must be carefully considered in any valuation:
- Intangible values such as goodwill
- Financial ability to generate an ongoing dividend stream
- Earnings capability
- Type of business and financial and market history
- Economic outlook for the industry in which the business resides
- Financial condition of the corporation as well as the book value of its stock
- Size of the block of stock requiring a valuation
- Market value of stocks actively traded on an exchange or over-the-counter market of similar corporations engaged in similar lines of business
Fair Market Valuation Scope of Services
Physician Compensation Analysis
To ensure your facility employs physicians at a fair market value that maximizes profit, our analysts conduct interviews with administration, as well as physicians, to assess their qualifications and experience. Compensation plans are developed and tailored to your specific needs and serve as great incentives to physician groups.
On-Call Coverage Agreements
By combining client-specific information on services performed at your facility with Stark methodology, Carnahan Group determines the fair market value of each on-call coverage agreement. Increasingly, hospitals enter these agreements by paying physicians on a per diem basis to ensure adequate coverage of their emergency departments.
Professional Services Agreement
Typically, these agreements involve collections or subsidy agreements between hospitals and physician groups. In exchange for a guaranteed compensation floor, physicians provide essential services to a hospital. Other types of professional services agreements include payments to a physician or physician group on a per study basis.
Employment Agreements and Medical Directorships
Physicians are always your potential referral source. When hospitals employ physicians or hire medical directors; an unbiased, third party opinion is often essential to maintaining a positive working relationship. By reviewing specific contractual information and applying Stark-approved methodology, Carnahan Group ensures fair market value for physician compensation.