Corporate Compliance

Consider third-party fair market value appraisals to ensure compliance

Compliance Monitor, May 9, 2012

Compliance officers should consider independent third-party appraisals when evaluating the fair market value of their physician agreements and business arrangements.

Michael Blau, a partner at Foley & Lardner, LLP, in Boston, advises hospitals to scrutinize their fair market appraisals to ensure they accurately reflect the complete transaction, use supportable valuation methods, and can withstand government scrutiny. “I think that the government is beginning due diligence evaluations, and I don’t think they are taking valuations on their face as much as they have previously,” says Blau.

Hospitals have an “obligation under a number of federal and state laws to ensure the relationships they enter into, particularly with physician staff,” are consistent with fair market value, says Daryl Johnson, MAcc, AVA, managing partner at HealthCare Appraisers, Inc., in Delray Beach, Fla.

This article is adapted from an article which originally appeared in the April Strategies for Health Care Compliance published by HCPro, Inc.