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Types and Levels of Medical Practice Appraisal Services 

By Dr. David Edward Marcinko; MBA

Staff Writers

Medical office valuation is as much art as managerial accounting science. And, most physicians are unaware that – much like CPT® codes and office visits – there are several levels of acuity which may be obtained for various reasons.

Although not standardized, the following are typical valuation engagement types for the industry.

Comprehensive Valuation 

An extensive service designed to provide physician-owners and/or potential purchasers with an unambiguous opinion range on the value of a medical practice, Ambulatory Surgery Center or healthcare entity. It is supported by all procedures that appraisers deem relevant to the engagement with onsite visit mandatory.  This valuation type is suitable for contentious situations like divorce, partnership dissolution, sale, etc.

The report includes a formal written Opinion of Value suitable for litigation support activities like depositions and trial. It is also useful for external reporting to bankers, investors, the public, etc.

An onsite visit is usually included. This valuation type generally adheres to appropriate USAP [Uniform Standards of Professional Appraisal Practice] guidelines

Limited Valuation

This type of engagement is the next step down in acuity from a comprehensive appraisal as it lacks the performance of additional procedures that are suggested in an USPAP appraisal.  This type of assignment can be considered an “agreed upon procedures” appraisal that should be used in circumstances where the client is the only user of the appraisal, or as an organic internal practice growth ingredient; but not for external reporting. 

An onsite visit is usually not needed for this US mail or fax delivered valuation. A formal Opinion of Value is not rendered.  

Informal Ad-Hoc Valuation 

This is the lowest level engagement where the appraiser is to provide a very gross and non-specific approximate indication of value based upon the performance of limited benchmark procedures of the firm.

No onsite visit is needed. Neither a written report nor an Opinion of Value is rendered.  May be a voice based consultation. 

Forensic Investigations  

These services are comprehensive, extra-ordinary, expensive and used for medical income and personal asset determinations and tracings; but not as an essential component of most medical practice valuation services. Often used in criminal investigations, and/or upon IRS, legal and/or FBI request. 

C.Y.A. 

This report is an opinion whether or not a medical practice valuation is required. It is ideal for the physician client or health law attorney who is unsure if a practice has value or as a way to “cover your assets.” 

Conclusion 

The above impressions and levels of service are subject to change depending on circumstances and the operating policies and procedures of the individual appraiser, or consulting firm. Nevertheless, they represent a cogent basis for further investigation. 

What have your medical practice appraisal and valuation experiences been like? 

More information: http://www.springerpub.com/prod.aspx?prod_id=23759

Filed under: Practice Worth |