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Healthcare Valuation, 2 Volume Set, The Financial Appraisal of Enterprises, Assets, and Services

ISBN: 978-1-118-83297-4
1904 pages
March 2014
Healthcare Valuation, 2 Volume Set, The Financial Appraisal of Enterprises, Assets, and Services (1118832973) cover image

Description

A timely look at the healthcare valuation process in an era of dynamic healthcare reform, including theory, methodology, and professional standards

In light of the dynamic nature of the healthcare industry sector, the analysis supporting business valuation engagements for healthcare enterprises, assets, and services must address the expected economic conditions and events resulting from the four pillars of the healthcare industry: Reimbursement, Regulation, Competition, and Technology. Healthcare Valuation presents specific attributes of each of these enterprises, assets, and services and how research needs and valuation processes differentiate depending on the subject of the appraisal, the environment the property interest exists, and the nature of the practices.

  • Includes theory, methodology, and professional standards as well as requisite research, analytical, and reporting functions in delivering healthcare valuation services
  • Provides useful process tools such as worksheets and checklists, relevant case studies, plus a website that will include comprehensive glossaries and topical bibliographies

Read Healthcare Valuation for a comprehensive treatise of valuation issues in the healthcare field including trends of compensation and reimbursement, technology and intellectual property, and newly emerging healthcare entities.

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Table of Contents

Foreword xi

Preface xiii

Acknowledgments xxiii

About the Author xxv

Disclaimer xxvii

Volume 1

Introduction 1

Chapter 1: The Chronology of U.S. Healthcare Delivery: From Caduceus to Corporatization 5

Chapter 2: Reimbursement Environment 85

Chapter 3: Regulatory Environment 261

Chapter 4: Competition 465

Chapter 5: Technology 531

Chapter 6: Healthcare Reform 631

About the Companion Website 675

Index 677

Volume 2

Introduction 1

Chapter 7: Basic Valuation Tenets 5

Chapter 8: Valuation Approaches and Methods 39

Chapter 9: Costs and Sources of Capital 175

Chapter 10: Planning and Process for Healthcare Valuation Engagements 215

Chapter 11: Inpatient Enterprises 271

Chapter 12: The Valuation of Outpatient Enterprises 405

Chapter 13: The Valuation of Other Healthcare-Related Enterprises 605

Chapter 14: The Valuation of Tangible and Intangible Assets 709

Chapter 15: Healthcare Services 863

Chapter 16: The Threshold of Commercial Reasonableness 929

Epilogue 975

Appendix: Subject Property Interest 979

Bibliography 983

Glossary 1061

About the Companion Website 1085

Index 1087

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Reviews

“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 Services by 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]

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Press Release

March 24, 2014
National Healthcare Valuation Experts Hail New Book

John Wiley & Sons is pleased to announce the release of Healthcare Valuation: The Financial Appraisal of Enterprises, Assets, and Services (WILEY; March 2014; Hardcover and e-book; $140; ISBN: 978-1-118-83297-4). This two volume, authoritative text provides a timely and robust treatment of the healthcare valuation process in an era of dynamic healthcare reform. Written by healthcare industry thought leader Bob Cimasi, Healthcare Valuation includes detailed descriptions of how the specific attributes of each type of enterprise, asset, or service influences the research needs and valuation process required to develop a credible and supportable opinion of value.

Cimasi is the CEO of Health Capital Consultants, LLC a nationally recognized healthcare financial and economic consulting firm headquartered in St. Louis, Missouri, since 1993. Cimasi has more than 30 years of experience in serving clients in over 45 states, with a professional focus on the financial and economic aspects of healthcare service sector entities including feasibility analysis and forecasting; valuation consulting and capital formation services; healthcare industry transactions including joint ventures, mergers, acquisitions, and divestitures; certificate-of-need and other regulatory and policy planning consulting; and, litigation support and expert testimony.

Mr. Cimasi has served for many years as faculty in both an academic and professional basis for continuing education courses, and he has provided testimony before federal and state legislative committees and has served as an expert witness in numerous court cases. He is a nationally known speaker on healthcare industry topics, the author of several books, including A Guide to Consulting Services for Emerging Healthcare Organizations (John Wiley & Sons, 1999),  The U.S. Healthcare Certificate of Need Sourcebook (Beard Books, 2005),  The Adviser’s Guide to Healthcare (AICPA, 2010), and Accountable Care Organizations: Value Metrics and Capital Formation (Taylor & Francis, 2013), as well as numerous chapters, published articles, research papers and case studies, and is often quoted by healthcare industry press.

Bob Morrison, ASA BV/IA, Business Valuation Discipline Chair of the American Society of Appraisers, states, “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 Services by Bob Cimasi provides a valuable framework for any business valuer endeavoring to value healthcare-related business interests.”

Robert Schlegel, ASA, MCBA, Past International President of the American Society of Appraisers, states, “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.”

Richard M. Wise, FASA, MCBA, FCBV, FRICS, CVA, FCA, CPA, CA, Former President of the Canadian Institute of Chartered Business Valuators, states,  “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.”

Chris M. Mellen, President of Delphi Valuation Advisors, Inc. and co-author of Valuation for M&A: Building Value in Private Companies, states, “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.”

Michael Gregory, ASA, AVA, PE, Former IRS Territory Manager responsible for valuation specialists covering fourteen states, states, “Shannon Pratt’s Foreword 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.”

Howard Lewis, Executive Director, Institute of Business Appraisers, and Former National Program Manager of the IRS Engineering and Valuation Program, states, “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.”

Robert L. Wilson, Jr., Healthcare Group Practice Area Leader, Smith Moore Leatherwood LLP, states, “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.”

Lari B. Masten, MSA, CPA, ABV, CFF, CVA, ABAR, Masten Valuation, LLC, Past Chair & Current Member of NACVA Executive Advisors Board, states, “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.”

John Paglia, Ph.D., CFA, CPA, Associate Professor of Finance, Director of Pepperdine Private Capital Markets Project at Pepperdine University, states, “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.” 

Featuring practice aids, including professional tools, proven techniques, and tested forms, this timely book reviews the regulatory, reimbursement, competition, and technological trends of the environment within which healthcare enterprises, assets, and services operate and are transacted in an era of healthcare reform.

Key features:

  • Explores healthcare industry sectors including: inpatient providers such as general acute care hospitals; specialty and surgical hospitals; long term acute care hospitals; and community access hospitals, as well as service care hospitals.
  • Features coverage of professional providers including physicians; mid-level providers; technicians/paraprofessionals; and, alternative medicine practitioners.
  • Looks at short-term care facilities such as ambulatory surgical centers; independent diagnostic testing facilities; cancer treatment centers; dialysis facilities; and rural health clinics.
  • Incorporates useful process tools such as due diligence worksheets and checklists, as well as relevant case studies to illustrate practical application of key concepts.
  • Covers long-term care facilities including skilled nursing facilities; assisted living facilities, and home health care facilities.
  • Offers a companion website with comprehensive glossaries and topical bibliographies.

An authoritative work, Healthcare Valuation: The Financial Appraisal of Enterprises, Assets, and Services delivers a thorough and straightforward exploration of the requisite research and analytical processes for the development of valuation conclusions and opinions, as well as in-depth guidance related to delivering credible and supportable healthcare valuation reports. The Foreword was written by Dr. Shannon Pratt, DBA, CFA, FASA, MCBA, CM&AA.

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