In determining the fair market value of a healthcare entity, Intellego must consider the cost (or asset-based) approach, income approach, and market approach. Each approach includes several methodologies which can be considered.
The cost approach is a general way of determining the value of an asset or service by quantifying the amount of money required to replace the asset or service. The income approach allows the appraiser to determine the value of a business, business ownership interest, security, intangible asset, or service using one of several methods that convert anticipated economic benefits into a present single amount. Lastly, the market approach determines the value of the business, business ownership interest, security, intangible asset, or service by using one of several methods that compare the subject interest to similar interests that have been sold or contracted for in the marketplace.
For purposes of determining fair market value of a healthcare enterprise, asset, or service, Intellego consults healthcare regulation and regulatory guidance included in Stark Law and the Antikickback Statute, as well as general fair market value regulation (both industry and government) and regulatory guidance provided by the American Society of Appraisers, Uniform Standards of Professional Appraisal Practice (USPAP), CFA Institute, and Internal Revenue Service (e.g., Revenue Ruling 59-60, Derby v. Commissioner, private inurement issues, etc.).