Assessing the Value of Radiologist Services with an Imaging Center Acquisition

Published by Becker’s Hospital Review

With the recent enactment of the Multiple Procedure Payment Reduction and the increased equipment-utilization rate (used to calculate Medicare reimbursement) contained in the American Taxpayer Relief Act, reimbursement pressures on physician-owned imaging centers are intensifying. These centers, many of which are facing declining profits and looming capital expenditure needs, provide potential acquisition targets for hospitals and health systems seeking to grow and strengthen their outpatient imaging service line. With certain acquisitions, it may be important to engage the radiologists to provide management or professional interpretation services to the center post-transaction.

These post-transaction service arrangements are generally executed through a professional service agreement. To mitigate regulatory compliance risk (federal Stark law, anti-kickback law or, for federal tax-exempt organizations, IRS regulations) and to validate the fairness of the compensation terms, an independent valuation firm may be procured to assess if the compensation terms of a PSA are consistent with fair market value. This article describes primary factors that a valuation firm considers in assessing compensation for management and professional interpretation services.

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