What are Fair Market Value Opinions, and why are they important?

What are Fair Market Value Opinions, and why are they important? In the below video, Kay Ferrell, Director at Carnahan Group, responds.

A fair market value opinion is a professional assessment of the value of an asset. These opinions are used in many different types of transactions, including mergers and acquisitions, estate settlement, real property tax assessments, and divorce settlements. In healthcare systems specifically, these opinions can be used to help determine the value of assets for purposes such as Medicare cost reporting or commercial real estate financing.

When it comes to valuation matters in healthcare organizations there are five levels that must be considered: 1) Intangible Value 2) Historical Costs 3) Replacement Cost 4) Fair Market Value Opinion 5) Liquidation Value.

The most commonly utilized valuation methodologies include discounted cash flow analysis (DCF), income approach (IA), cost approach (CA), and market comparison approach.

The COVID-19 pandemic has drastically increased federal support, including Medicare advance payments and grants known as the Provider Relief Fund, and have made over $280 billion available under these programs. (source) This helps illustrate it’s more important than ever to have a fair market value opinion at reach.