Valuation Services

Valuation Services

Medgate provides independent, third-party, fair market valuations for a variety of entities and relationships including:

The objective of our fair market value appraisal is to determine whether the proposed financial relationship or payment reflects fair market value for the services or assets.

In making our appraisals, we apply the definition of fair market value set forth in the Phase III, final September 5, 2007 Stark II regulations:

Fair market value means the value in arm’s-length transactions, consistent with the general market value. “General market value” means the price that an asset would bring, as the result of bona fide bargaining between well-informed buyers and sellers who are not otherwise in a position to generate business for the other party, or the compensation that would be included in a service agreement as the result of bona fide bargaining between well-informed parties to the agreement who are not otherwise in a position to generate business for the other party on the date of acquisition of the asset or at the time of the service agreement. Usually, the fair market price is the price at which bona fide sales have been consummated for assets of like type, quality, and quantity in a particular market at the time of acquisition, or the compensation that has been included in bona fide service agreements with comparable terms at the time of the agreement, where the price or compensation has not been determined in any manner that takes into account the volume or value of anticipated or actual referrals. (42 CFR � 411.351)

We define commercial reasonableness based on whether the arrangement would make commercial sense if entered into by a reasonable entity of similar type and size and a reasonable physician of similar scope and specialty, even if there were no potential referrals.

We come to a Fair Market Value Conclusion based on market data.

We also define the term of the validity of the value.

A physician’s work can be defined based on the hours served or relative productivity of the physician’s activity. The value of the work can be based on a number of factors including market rates for hourly pay, work relative value units and other criteria. Fair market value of compensation is based on the specific circumstances and services contemplated. This information is combined with benchmark data for physicians with similar roles or specialties.

The value of the medical record includes the cost of the supplies required to recreate the documents. However, consideration should also be given to the staff’s time required to initially create the documents. Electronic medical records also have value.

Our staff has over 25 years’ experience in valuing medical practice furniture and equipment. The fair market value of furniture and equipment is determined by applying both a market approach and a cost approach. We are provided a summary description of the furniture and equipment and the original cost of the assets. Preferably an on-site visit is scheduled to inspect the items. However, we can offer an opinion based on a “desk review” when an on-site review of the assets is not practical.

Under the market approach, the value of the furniture and equipment would be determined based on the purchase price of such furniture and equipment, independent of any purchase discounts.

Assembled work force defines the value of the practice’s staff with consideration given to the cost of recruiting, hiring and training the staff that is in place.

The collectible value of the outstanding accounts receivable considers historical collection trends, payer mix, fee to reimbursement levels and related considerations.

Goodwill is the intangible value of an entity above the value of its assets. As it relates to medical practices, goodwill is often found in the value of medical records and assembled work force. However, other factors should be considered.

Are your owned and managed practice office leases properly administrated / well managed? Do you need to consolidate the locations of these practices? Do you need to develop a professional office building for these or other medical practices?

MMA’s affiliate, MMA Real Estate Advisors, LLC (“MMAREA”), is a boutique real estate company dedicated to serving the commercial real estate needs of physicians and other health care providers. The real estate needs of health care providers are unique and MMAREA is uniquely qualified to meet these needs.

MMAREA services include

Tenant/Landlord Representation for Leasing

  • Negotiation of a New Lease. Once a general market area has been determined the next step is to identify all of the properties that are capable of meeting the needs of the practice. Once identified it is important to solicit competitive lease bids from the various landlords to determine the best location, with the best pricing, and with the most favorable lease terms and conditions. This involves reviewing and negotiating the lease and assuring that all the necessary terms and conditions that are important to our client are included.
  • Sub-lease of space from or to another entity. Sub-leasing space on a full time basis or as a time-sharing arrangement can often be the best solution. We have experience with proper documentation and defining the details of the business issues of sharing or subleasing space.
  • Lease Renewal. Just like with a new lease the goal is to minimize the rent and maximize the tenant’s benefits which include tenant improvement funds to update or modify the space. The best terms are achieved by creating a competitive environment with the existing landlord and engaging a real estate broker to review and negotiate the lease.
  • Office Relocation. A current location may no longer meet the needs of the practice. The new needs must be defined and knowledge of the properties that will meet the new needs.
  • Office Expansion. Negotiating space expansion is as important as negotiating a new lease.
  • Lease Administration. Accurately managing operating expense charges and negotiating issues between the tenant and the landlord requires experience and expertise.

Development or Redevelopment Consultant

  • Selection of property manager office and/or site selection.
  • Project budgeting and feasibility analysis.
  • Facility design – building and interior space planning.
  • Assist with arranging financing, including equity sources.
  • Construction management.
  • Third party leasing agent.
  • Asset management services, including lease administration.

Site or Building Acquisition

  • Identify and underwrite a site or a building for purchase and occupancy by a medical user.
  • Perform and manage the “due diligence process” for the purchaser to avoid unexpected site improvement costs.
  • Own verses lease analysis.

Facility Design

We have designed thousands of medical offices. We emphasize thorough programming of space requirements and understanding of patient and staff traffic flows prior to proceeding with design. We understand medical practices and are well qualified to translate a client’s descriptions of spatial needs into functional, aesthetically pleasing, cost effective facilities. Our facility planning services include space planning, interior design, equipment planning, construction administration and project management.

MedGate's professional staff presently includes individuals with expertise and experience in virtually all aspects of healthcare management consulting and valuation. All of our consultants share the common characteristic of having a strong understanding of healthcare economics and the mindset of the physician in private practice, combined with a technically sophisticated approach to medical practice management.

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