Part 1 The use of artificial intelligence (AI) is rapidly evolving and the demand for data is rapidly growing. Many industries are finding ways to deploy AI technology to improve efficiencies, increase sales, lower costs and automate processes. In the healthcare space, hospitals, insurers, medical device companies, and pharmaceutical companies are generating, collecting, acquiring and utilizing data for AI and value-based arrangements. Generally speaking, the more data the better. As such, data is valuable. But the question is, just how valuable? This question is now being raised and will continue to grow in popularity. Data in the healthcare space is used to … [Read more...]
MSOs, MSAs & FMV, ETC
The management services organization (MSO) business model seems to be really popular of late. This is especially so with telehealth businesses since most are structured as an MSO and friendly PC model. HVG is regularly asked to issue an FMV opinion on the management fee related to a management services agreement (MSA). Here is a short explanation of how appraisers should estimate the FMV of management services. As an appraiser, we encounter certain unique challenges when it comes to opining to an FMV management fee. First, in certain states with restrictions on fee-splitting and/or where the corporate practice of medicine (CPOM) is in force the management fee cannot be contracted … [Read more...]
Specialty Pharmacies & FMV of Pharmacy Management Services
According to the National Association of Specialty Pharmacy, a specialty pharmacy is a state-licensed pharmacy that solely or largely provides medications and services for people with chronic or complex health conditions. Specialty medications are more complex and expensive than most prescription medications and may be taken orally but are often injected or infused. Specialty drugs are prescribed for the treatment of various chronic diseases and conditions, such as cancer, hepatitis C, rheumatoid arthritis, HIV/AIDS, multiple sclerosis, cystic fibrosis, organ transplantation, hemophilia, allergies, heart failure, and stroke. Specialty drugs account for approximately 50% of the … [Read more...]
Behavioral Health Market – Current Overview
The impact of COVID-19 has been unprecedented and staggering, with behavioral health services witnessing a positive demand shock across the U.S. during the pandemic period. Demand for behavioral health services jumped significantly in 2020, with a sharp rise in suicide attempts and drug overdoses. According to a report by McKinsey & Company, the US saw a 50% increase in the prevalence of behavioral health conditions as a result of the COVID-19 pandemic. In 2020, mental health providers faced decreased revenues and increased costs, all as demand spiked. Clinicians who had in-person daily visits witnessed a devastating income loss owing to the stay-at-home restrictions imposed. However, … [Read more...]
Another DME company convicted for paying for leads.
In this case [https://www.justice.gov/opa/pr/jury-convicts-medical-equipment-company-owners-27-million-fraud] the defendants were found guilty of paying a fixed fee for patient leads (i.e. paying for patients). The defendants paid a fixed rate per DME patient to a call center/lead generator in exchange for prescriptions and patient paperwork completed by telemedicine doctors. The defendants paid illegal bribes and kickbacks to a call center in the Philippines that provided signed doctor’s orders for orthotic braces and other DME. Generally speaking, a DME company may pay a fixed fee for an “unqualified lead” but may not pay a fixed fee for a “qualified lead”. … [Read more...]
Physician FMV Comp. in VBAs – A Paradigm Shift in How We Think About Value
To expedite the evolution and widespread adoption of Value Based Arrangements (VBAs), I believe we need to alter how we think about physician compensation value. The healthcare compliance industry has mostly considered the FMV of physician compensation to be defined by what’s in the salary surveys. More specifically, appraisers have relied on the market approach to safely support or prove the FMV of a physician’s time and efforts. However, I believe it’s time for a paradigm shift to help promote VBAs and gain comfort on how physicians are compensated. A few prominent healthcare attorneys have mentioned to me that their appraisers will only value a physician’s time/efforts on an hourly … [Read more...]
FMV of Remote Call-Coverage
Unless you’ve been living under a rock, most of you have seen the explosive growth and wide-spread adoption of telehealth over the past year. It’s no longer the “wave of the future”; it’s the current reality. One form of telehealth is called live-interactive videoconferencing and is most commonly used for remote call coverage. Remote call coverage is being heavily used by rural hospitals and medical centers to connect rural providers and their patients to specialists located at distant sites. This service enables the rural hospital to secure the much-needed coverage of a specialist who is otherwise difficult to recruit, and locum rates are exorbitant. In addition, … [Read more...]
Minority Membership in ASCs – Is a Minority Discount Warranted?
In the business valuation community, a discount is sometimes applied to the equity value of a minority ownership stake in a business. This discount often referred to as a discount for lack of control (“DLOC”), is to account for the various control privileges that a minority owner doesn’t possess. Control shares are normally more valuable than minority shares because they contain a bundle of rights that minority shares do not enjoy. … [Read more...]
Genetic Testing Lab Kickback Scheme: Another One Bites the Dust…
By now, it’s probably no surprise to healthcare compliance professionals that there’s been a lot of enforcement in the genetic testing lab space. Over the past two or three years, there have been countless settlements, investigations, and indictments related to how genetic labs obtain their referrals. In this particular case, Ark Laboratory Network submitted patient DNA samples to various labs but was compensated in an improper manner. Ark made a deal behind the scene to be paid a percentage of Medicare reimbursements and/or a flat fee per DNA sample. The kickback scheme was covered up by issuing sham invoices to laboratories that purportedly reflected services provided at an hourly … [Read more...]
Fair Market Value of Professional Services Agreements – The Proper Way
Many health systems and hospitals will contract with private physician groups to provide professional services to its facilities. Some of the more common specialties we see contracted for are neurosurgery, orthopedic surgery, and urology. When hospitals and physician groups enter into a professional services agreement (PSA) the contracted fee must be fair market value (FMV) to comply with the federal Anti-Kickback Statute and sometimes the Stark Law (depending on how it’s structured). Every thorough FMV opinion and appraisal should start with some basic assumptions and theories. This FMV QuickRead will go over the three common valuation approaches and the most appropriate assumptions … [Read more...]
