Healthcare Financial Services

healthcare financial services, selling a medical practice, buying a medical practice

Finance is the backbone of all industries, and healthcare is no exception. Healthcare is complex, with economic decisions having a lasting impact on health systems and providers. The rapid changes concerning reimbursement along with the movement to value-based care and industry consolidation can present challenges to decision-makers to stay abreast of the changes and have the resources to address the issues. Coker is prepared to help healthcare organizations face their financial challenges and improve their financial standing.

Business transactions between healthcare entities often warrant the advice of third-party healthcare advisors. Coker offers a wide range of healthcare financial services including fair market value (FMV) and commercial reasonableness opinions for physician compensation valuation and business valuation engagements. Additionally, we provide valuation advisory services, alignment due diligence, healthcare revenue cycle and reimbursement analyses, and general financial advisory services.

Coker understands what health systems and provider groups are facing and has the experience and proficiency to assist in a variety of areas. Support can range from performing pro forma analyses as part of the strategic planning process, functioning as a third-party valuation consultant on contemplated healthcare transactions, helping to develop compensation strategies for physicians and mid-level providers that are adaptive to the changing reimbursement landscape, to ensuring that the payments to physicians are consistent with applicable compliance standards.

Coker’s healthcare financial services team works with prominent health law firms, health systems, ancillary service providers, physicians, medical groups, and other entities across the country and all sizes of organizations to ensure they have the resources needed to make smart economic decisions and be financially viable in the future.

Physician Compensation Valuation—Fair Market Value Opinions

To ensure that economic arrangements between healthcare entities oftentimes, physicians and a hospital/health system) are appropriate and market-based, Coker provides compensation valuation FMV and commercial reasonableness.

For compliance purposes, FMV and commercial reasonableness opinions relative to any type of physician compensation arrangement are helpful in ensuring that the compensation provided is market-based and the overall arrangement makes sound business sense. For example, if a hospital contracts with a physician for a medical directorship, the hospital needs to ensure that the compensation represents  FMV and there is a solid business case for providing said compensation.

Our services can range from reviewing individual physician arrangements to enterprise-wide reviews of all physician arrangements in place. The types of services reviewed can include employment arrangements, call pay arrangements, professional services agreements, hospital-based subsidy arrangements, Accountable Care Organizations (ACO)/Clinically Integrated Networks (CIN) distribution methodologies, administrative services arrangements, and more.

Physician Compensation Development and Redesign

The growth in hospital-employed networks calls for the standardization of compensation and the development of compensation models that allow for success in both the fee-for-service and fee-for-value environments. A key part of Coker’s healthcare financial services is working with health systems to develop new value-based compensation models or revising existing compensation plans to reflect the current market dynamics. This can be for both currently employed providers as well as providers who are in the midst of joining the employed network. Coker will consider current physician compensation strategies and work collaboratively with key stakeholders (health system, physicians, etc.) to develop a compensation plan that is responsive to the current reimbursement landscape.

Commercial Reasonableness Opinions

Performed separately or in conjunction with a fair market valuation, Coker can provide a commercial reasonableness opinion on any healthcare transaction to help document the rationale or business case for the transaction in question.

Business Valuation

Coker can function as the independent third-party valuator for contemplated healthcare transactions on behalf of either the buyer or the seller. When hospitals acquire other hospitals, physician practices, ambulatory surgery centers (ASCs), or other enterprises, the value of the entity must be determined. This can result in a need to value assets, not services, or any entire business enterprise. The assets/business can range from a particular set of tangible assets to a carve-out of a service line in a hospital. We value medical practices, diagnostic imaging centers, ambulatory surgery centers, laboratories, hospitals, and many other entities. Our experienced healthcare appraisers, certified by the American Society of Appraisers, perform these healthcare business valuations for a wide range of transactions, including healthcare mergers and acquisitions.

Valuation Advisory

Coker reviews valuations completed by other firms. This occurs often for ambulatory clients who are selling a medical practice or ASC, and the acquirer underwrites the valuation. Coker reviews the valuation for methods, assumptions made, accuracy in calculations, etc., to help our client (the practice) get maximal value for their assets.

In addition to functioning as an independent third party in a valuation capacity, we can provide valuation advisory services, assisting in performing preliminary valuation due diligence to determine the value of the entity our client is planning to sell or acquire. Coker functions in a consultative capacity, providing buy-side or sell-side due diligence.

Alignment Due Diligence

The Coker team has significant experience in assisting entities contemplating an alignment transaction. Coker is available to assist in the background, developing financial pro formas and other analysis to support potential transactions. This support is similar to buy-side/sell-side due diligence from a valuation perspective, but with more focus on the contemplated/anticipated services arrangement.

As consolidations accelerate, health systems need assistance in vetting potential partners, either as the acquiring party or the one being acquired. Coker provides financial, cultural, and strategic due diligence assistance to not-for-profit and for-profit hospitals throughout the country.

Hospital Revenue Cycle and Reimbursement

There is not one healthcare organization that does not consistently and proactively focus on improvement of their respective revenue cycle management (RCM) components. Coker utilizes not only its significant experience in healthcare revenue cycle, but assigns its colleagues with entity specific experience (past chief financial officers, central business office directors, vice president/RCM, patient account executives) in assisting clients with all aspects of revenue cycle. Many times, simply an objective, outside perspective is all that’s needed to remediate RCM operations and establish anticipated metrics and improve results.

Clinical Integration

An additional healthcare financial service being completed by Coker relates to clinically integrated networks (CINs). As CINs grow in popularity and prevalence, the need increases for experienced counsel on how dollars earned through the CIN should be distributed to all constituents, i.e., participating providers, hospital partners, or retained within the CIN. Coker provides assistance on financial distributions for both physician-sponsored and hospital-sponsored CINs.

General Financial Advisory

Coker is willing and able to undertake many other projects where clients need assistance.

Contact Coker Group to speak with one of our qualified healthcare business consultants and learn how we can assist your organization through our healthcare financial services.