Fair Market Value of Lithotripsy Services Agreements

Hospitals and ambulatory surgery centers often elect to contract with a third party for the provision of certain lithotripsy services. Typically, these agreements are structured on a per procedure basis and the services provided are extracorporeal shock wave lithotripsy (“ESWL”) and/or laser lithotripsy. ESWL is a non- invasive procedure that uses targeted high intensity acoustic pulses, or shockwaves, generated by a lithotripter machine to break up kidney stones so that they can be more easily passed through the patient. Laser lithotripsy is also a non-invasive procedure that uses a ureteroscope and laser to break up the kidney stones. These procedures tend to be performed on an outpatient basis and can be provided in several formats: fixed site, transportable, and mobile.

When structuring lithotripsy services agreements, it is imperative to understand the expected services to be provided and the fee structures. Our team has valued over 170 lithotripsy agreements and VMG has an extensive database to allow for proper benchmarking with future cases. We continue to interview numerous industry professionals to understand underlying cost structures that come with lithotripsy. In addition, we have experience valuing similar equipment-based arrangements between facilities and providers.

Compliance

Today’s local, state and federal healthcare regulations are extremely complex. It is common for the third-party lithotripsy provider to have physician-ownership or a physician affiliation; therefore, compensation for the services should be set at fair market value to represent best practices for compliance purposes. The potential penalty for performing procedures without proper consultation to verify a fair rate poses significant risk. Documentation illustrating that lithotripsy and other similar equipment-based arrangements have been set at fair market value can ensure regulatory compliance, assist clients without experience in valuation, and provide both parties with comfort that the agreement is consistent with fair market value.