What is fair market value in the healthcare industry?
Fair market value (FMV) is the price that an asset would sell for on the open market, assuming that both the buyer and seller are reasonably knowledgeable about the asset, are behaving in their own best interests, are free of undue pressure, and are given a reasonable time for completing the transaction. In the healthcare industry, FMV is often used to determine the value of medical equipment, real estate, and intellectual property.
Why is fair market value important in hospitals?
It is important in hospitals because it helps to ensure that transactions are conducted fairly and in compliance with regulations. For example, the Stark Law prohibits hospitals from paying their physicians for referrals, unless the payments are made at FMV. The Anti-Kickback Statute also prohibits hospitals from offering inducements to physicians in exchange for referrals. Using FMV, hospitals can help protect themselves from these legal violations.
How is fair market value determined in hospitals?
There are a number of methods that can be used to determine FMV in hospitals. Those ways include:
•Comparable sales: This method compares the assets being valued to similar recently sold assets.
•Income approach: This method estimates the value of the asset based on the income it generates.
•Cost approach: This method estimates the value of the asset based on the cost of replacing it.
Who can perform fair market valuations in hospitals?
Fair market valuations in hospitals can be performed by a variety of professionals, including appraisers, accountants, and lawyers. It is important to choose a qualified appraiser familiar with the healthcare industry and the asset being valued.
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