Foreword
Preface
Acknowledgments
About the Author
Disclaimer
Introduction
The Four Pillars of the Healthcare Industry
Structure of this Text
Reader Tools
Chapter 1 The Chronology of U.S. Healthcare Delivery
1.1 Foundation of U.S. Healthcare
1.2 Early 1900s
1.3 1930s–1950s
1.4 1960s
1.5 1970s
1.6 1980s
1.7 1990s
1.8 2000-2010
1.9 ACA Constitutionally Challenged
1.10 Conclusion
Chapter 2 Reimbursement Environment
2.1 Overview
2.2 Healthcare Revenue Cycle
2.3 Current Reimbursement Environment
2.4 Public Payors
2.5 Private Payors
2.6 Methods of Reimbursement
2.7 Emerging Reimbursement Trends and the Impact of Healthcare Reform
2.8 Conclusion
2.9 Key Sources
2.10 Acronyms
Chapter 3 The Regulatory Environment
3.1 Overview and Trends
3.2 Tax Regulations
3.3 Fraud and Abuse Regulations
3.4 Competition
3.5 Privacy Regulations
3.6 Safety Regulations
3.7 Corporate Practice of Medicine and Related Provisions
3.8 Licensure, Certification, and Accreditation Regulations
3.9 Conclusion
3.10 Key Sources
3.11 Acronyms
Chapter 4 Competition
4.1 Overview
4.2 Economics of Healthcare
4.3 Supply and Demand in Healthcare
4.4 Porter's Five Forces of Competition
4.5 Barriers to Free Market Competition in Healthcare
4.6 Historical Reform Efforts and their Effect on Competition
4.7 Conclusion
Chapter 5 Technology
5.1 Overview
5.2 Management Technology
5.3 Clinical Technology
5.4 Conclusion
5.5 Key Sources
5.6 Acronyms
Chapter 6 Healthcare Reform
6.1 Overview
6.2 Initiatives Leading to Healthcare Reform
6.3 Drivers of Healthcare Reform
6.4 Patient Protection and Affordable Care Act (ACA)
6.5 Paying for Healthcare Reform
6.6 Future of the ACA
6.7 Conclusion: Future of U.S. Healthcare Delivery in an Era of Reform
6.8 Key Sources
Chapter 7 Basic Valuation Tenets
7.1 Economic Principles
7.2 Financial Valuation Concepts
7.3 Conclusion
7.4 Key Sources
7.5 Acronyms
Chapter 8 Valuation Approaches and Methods
8.1 Valuation Methodology
8.2 Alternative Valuation Techniques
8.3 Risk Assessment
8.4 Discounts and Premiums
8.5 VIII. E Related Valuation Assignments
8.6 Conclusion
8.7 Key Sources
8.8 Acronyms
Chapter 9 Costs and Sources of Capital
9.1 Healthcare Financing Options
9.2 Cost of Capital
9.3 Conclusion
Chapter 10 Planning and Process for Healthcare Valuation Engagements
10.1 Defining the Engagement
10.2 Developing the Valuation Opinion
10.3 Conclusion
10.4 Key Sources
Chapter 11 Inpatient Enterprises
11.1 Hospitals
11.2 Long-Term Care
11.3 Typical Valuation Considerations
11.4 Conclusion
11.5 Key Sources
11.6 Acronyms
Chapter 12 The Valuation of Outpatient Enterprises
12.1 Overview of Valuation Considerations Pertinent to Outpatient Enterprises
12.2 Professional Practices
12.3 Freestanding Outpatient Ambulatory Enterprises
12.4 Home Health and Hospice Enterprises
12.5 Conclusion
12.6 Key Sources
12.7 Acronyms
Chapter 13 Other Healthcare Related Enterprises
13.1 Management Services Enterprises
13.2 Third party payors
13.3 Supply Side Enterprises
13.4 Conclusion
13.5 Key Sources
13.6 Acronyms
Chapter 14 Tangible and Intangible Assets
14.1 Current and Future Trends Regarding Tangible Assets
14.2 Classification and Valuation of Tangible Assets
14.3 Current and Future Trends Regarding Intangible Assets Under the Four Pillars: Regulatory, Reimbursement, Competition, and Technology
14.4 Classification and Valuation of Intangible Assets
14.5 Conclusion
14.6 Key Sources
14.7 Acronyms
Chapter 15 Healthcare Services
15.1 Classification of Clinical Related Services
15.2 Classification of Non-Clinical Related Services
15.3 Establishing Fair Market Value and Commercial Reasonableness
15.4 Four Pillars of the Healthcare Services Industry: Regulatory, Reimbursement, Competition, and Technology
15.5 Valuation of Healthcare Services
15.6 Conclusion
15.7 Key Sources
15.8 Acronyms
Chapter 16 The Threshold of Commercial Reasonableness
16.1 Definition of Commercial Reasonableness
16.2 Commercial Reasonableness Analysis
16.3 Conclusion
16.4 Key Sources
16.5 Acronyms
Epilogue
Appendix A: Subject Property Interest
Bibliography
Glossary
About the Companion Website
Index
“Not all valuations are created equal. The valuation of healthcare businesses requires consideration of nuances created by industry practice and by regulations. Healthcare Valuation: The Financial Appraisal of Enterprises, Assets, and Servicesby Bob Cimasi provides a valuable framework for any business valuer endeavoring to value healthcare-related business interests.”
—Bob Morrison, ASA BV/IA, American Society of Appraisers Business Valuation Discipline Chair
“All appraisers dealing with healthcare subjects should have this necessary handbook. Healthcare valuation has emerged into a specialized field, requiring background, discernment and work experience in order to be effective. Healthcare businesses are constantly changing – the insight provided by Mr. Cimasi’s wealth of experience is indispensable.”
—Robert Schlegel, ASA, MCBA [Past International President of the American Society of Appraisers]
“Bob Cimasi’s Healthcare Valuation — The Financial Appraisal of Enterprises, Assets, and Services, is a timely and essential resource for any professional who is retained to provide valuation services relating to the healthcare industry. The book is extremely comprehensive, written by one of the most distinguished and recognized U.S. experts on the subject. In this user-friendly authority, the author shares with readers his in-depth knowledge of the industry as well as his many years of hands-on valuation experience, in a detailed, intelligible, and cogent manner. While geared to American appraisers, the book can also serve as an important compendium for use by my colleagues in Canada as well, whether for domestic or cross-border assignments. Bob Cimasi’s book is a highly valuable addition to the appraisal profession’s body of knowledge and is a definite must-read.”
—Richard M. Wise, FASA, MCBA, FCBV, FRICS, CVA, FCA, CPA, CA [Former President, Canadian Institute of Chartered Business Valuators]
“Brilliant! Bob Cimasi’s Healthcare Valuation is the definitive treatise for the complexities of valuation in the healthcare industry. This book successfully achieves its goal as both a resource and a reference, comprehensively explaining valuation theory and value drivers unique to healthcare entities in the context of healthcare reform and how we got here. It is a superb and insightful guide for healthcare finance and management professionals, as well as their professional advisors – not only appraisers, but also accountants, attorneys, bankers, and M&A advisors – and academia.”
—Chris M. Mellen, President – Delphi Valuation Advisors, Inc. and co-author of Valuation for M&A: Building Value in Private Companies.
“Shannon Pratt’s forward clearly articulates the outstanding quality of this text. Bob is an expert in the field. This text provides excellent background and with his firm grasp of the subject matter, Bob presents in depth commentary on all facets related to healthcare valuation including inpatient, outpatient, outpatient ambulatory, other related enterprises and healthcare services. In short this is a one stop service for anyone doing healthcare valuations.”
—Michael Gregory, ASA, AVA, PE [Former IRS Territory Manager responsible for valuation specialists covering fourteen states]
“Bob Cimasi’s new text is a critical resource for any financial analyst delving into the world of healthcare; without an understanding of the core regulatory and procedural elements governing healthcare operations and finance, the analyst risks generating a conclusion which could be unsupportable. This book should be on the desk of everyone working in the area of healthcare financial analysis.”
—James B Lurie, ASA, CBA, CVA, BVAL, Managing Member Emeritus, CapVal-American Business Appraisers, LLC
“Cimasi's Healthcare Valuation is a rare and unique asset to the community. From the Preface, which contains a fascinating historical perspective of the valuation profession to the concluding chapter on Basic Valuation Tenets, which looks at the profession from a rare economic perspective, Healthcare Valuation is the perfect book for these imperfect times.“
—Howard Lewis, Executive Director, Institute of Business Appraisers [Former National Program Manager of the IRS Engineering and Valuation Program]
“It is no secret that modern healthcare in the United States, and its valuation, is extraordinarily complex. As an added difficulty, the four pillars of the healthcare industry described by Bob Cimasi (regulation, reimbursement, competition, and technology) are in such a state of flux that the shifting landscape can overwhelm even the most seasoned healthcare professionals, executives, and advisors. That is why Mr. Cimasi’s heavily researched work, Healthcare Valuation, is so invaluable. It serves as a trustworthy and definitive resource for myriad questions ranging from the tenets of valuation to the true drivers of value. I predict it will soon become required reading for anyone involved in the field.”
—Robert L. Wilson, Jr., Healthcare Group Practice Area Leader, Smith Moore Leatherwood LLP
“Cimasi delivers again! Bob has provided an unyielding dedication to the profession of valuation and the healthcare industries over the past thirty years. He and his team have been dedicated to providing resources and sage guidance to practitioners and he does not disappoint with this latest endeavor. Healthcare Valuation: The Financial Appraisal of Enterprises, Assets, and Services is a valuable guide for healthcare providers and advisors alike.
—Lari B. Masten, MSA, CPA, ABV, CFF, CVA, ABAR, Masten Valuation, LLC [Past chair & Current Maember of NACVA Executive Advisors Board]
“Bob Cimasi’s latest book, Healthcare Valuation, provides a robust discussion regarding the capital markets and cost of capital as these topics relate to the healthcare transactional marketplace in an era of reform. Cimasi delves into those considerations that drive the healthcare capital markets, and the resulting impact on healthcare enterprises, providers, payors, and consumers as they navigate evolving models of care by investing in newly emerging healthcare organizations.”
—John Paglia, Ph.D., CFA,CPA [Associate Professor of Finance, Director of Pepperdine Private Capital Markets Project – Pepperdine University]
“Bob Cimasi’s new book, Healthcare Valuation: The Financial Appraisal of Enterprises, Assets, and Services, will be must-reading for valuation professionals --- generalists like me and specialists in healthcare valuations --- who need to get up to speed in dealing with the intricacies of “Obamacare.” The book is an up-to-the-minute analysis of the vast changes in this complicated and controversial new law, and it is written in a concise style that covers the waterfront of issues created by the changes.”
—Dick Thorsen, CPA/ABV, ABAR, CVA, CMEA [Past Member, Board of Directors & Vice President of the American Institute of CPAs]
"This book should be the keystone tool in a business appraiser's research library who conduct business appraisals in the ever changing healthcare industry. The book is packed with references and support for identifying and quantifying risk factors that impact the valuation of healthcare related businesses."
—Jeffrey D. Jones, ASA, CBA, CBI [President, Certified Appraisers]
