Special Topics Review: NAVIGATING THE LABYRINTH: ACADEMIC MEDICAL CENTER FLOW OF FUNDS

FMV Considerations for Academic Medical Center Funds Flow Arrangements

Academic medical centers (“AMCs”) funds flows are complex. Further, AMCs operate in a highly regulated environment with compliance considerations that range from the healthcare fraud and abuse laws to IRS inurement regulations to the rules that govern Medicaid supplemental payments.

Carnahan Group is pleased to announce that we have published a short paper on fair market value considerations for clinical, operational, and mission support funding for AMCs entitled Navigating the Labyrinth: Academic Medical Center Funds Flow.

The three-page paper includes an overview of AMCs generally, a description of typical AMC affiliation arrangements, and a summary of fair market value considerations for three main AMC funds flow categories:

1.Provider Services
2.Operational Support
3.Academic and Research Mission Support

The academic and research mission support funding component, specifically, is unique to AMCs, and reliable benchmarks for this type of funding are scarce. We worked with healthcare financial research firm Scope Research to compile academic and research mission support benchmarks for AMCs who report relevant payment details publicly. The 2022 study found that academic and research mission support represented 2.1% of AMC health system revenue, at the median, and 40% of the combined provider services and operational support funding included in the arrangement, also at the median.

If you are working with an AMC to update or establish their Academic Affiliation Agreement(s) and related funds flow methodologies, don’t hesitate to reach out to us with questions or to obtain an independent third-party fair market value and commercial reasonableness analysis.

Click here to view the full-length version of the article Navigating the Labyrinth: Academic Medical Center Funds Flow.

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