Valuations normally happen with two goals in mind in a medical group practice:
- Valuing the business (Physician owners sometimes get divorced, after all.)
- Valuing services.
The reasons, however, are more a matter of compliance. Stark Law, the Medicare Anti-Kickback Statute and other federal regulations limit the types of business relationships into which physicians can enter and mandate a commercial reasonableness known as fair market value (FMV).
Differences in methodology that underpin valuation work can have a significant impact on a medical group practice’s costs as they relate to physician compensation. That’s where Timothy Smith, CPA, ABV, principal, TS Healthcare Consulting LLC, enters the picture.