Healthcare MSA Valuation

The Healthcare Valuation professionals at
Marshall & Stevens provide independent value opinions for healthcare enterprises, agreements, facilities and assets. We understand that our work is an integral part of an important transaction or compliance process. We are recognized for providing supportable analyses and insightful reports using a service-oriented approach.

Valuation of Management Services Agreements (MSAs)

Healthcare is a highly regulated industry, and as such, it is imperative for healthcare providers to make sure that their organizations pass government scrutiny. A common business practice for healthcare providers is to form a Management Services Agreement (MSA) with a Management Service Organization (MSO), which will contractually provide management services to the healthcare provider(s). Typically, an MSO will employ non-physician staff to provide non-medical services such as management information systems services, accounting, bookkeeping, billing and collection services. As payment for these services, the MSO receives a management fee based upon a percentage of the healthcare providers’ net revenues.

MSOs allow healthcare providers to concentrate on delivering high-quality healthcare services while leaving the business support practices to others. However, there are many laws that MSOs and healthcare providers must stay compliant of or face severe consequences, primarily the Stark Law and Anti-Kickback Statute at the Federal Level. In addition, each state has its own laws that require compliance. Within these bodies of law, the government stipulates that contracted compensation in a professional service arrangement between referring parties, such as MSAs, be set at Fair Market Value.

The Stark Law and the Anti-Kickback Statute have civil and criminal liability for any violation. A violation of the Anti-Kickback Statute is subject to civil monetary penalties in the amount of $50,000 per violation plus damages of not more than three times the total amount of remuneration offered, without regard to whether a portion of the remuneration was offered for a lawful purpose. A violation of the Stark Law can result in many different penalties. For instance, the health services provided may not qualify for Medicare reimbursement, or any payment received will need to be refunded. Additionally, any person who “knows or should know” that a referral violates Stark will be liable for up to $15,000 civil money penalty per claim.

In order to establish a safe, compliant, profitable and effective MSO, one of the requirements is to determine whether the MSA demonstrates a fair market value agreement. The determination of the fair market value of an MSA is critical for compliance with existing laws and regulations.
Marshall & Stevens Healthcare Valuation professionals have the skills, expertise, and industry knowledge to assess if the fees within the MSA are at fair market value.

How Marshall & Stevens can help with MSA Valuation

Our MSA Valuation team collaborates with our internal multi-disciplinary professionals to provide the value analyses and fresh independent opinions to fiduciaries, financing sources and investors for public and private company transactions.

Equity Compensation Valuation

The valuation of equity as compensation is a requirement for tax reporting, Internal Revenue Code 409a, and financial reporting, per FASB ASC 718 – Compensation – Stock Compensation.

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Fairness Opinions

A Fairness Opinion from a disinterested valuation firm provides decision makers with an independent analysis of the transaction, unbiased by commissions and other potential conflicts.

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Intangible Asset Valuation

Intangible assets are assets that, while lacking physical form, have value and can, in many cases, add value to other assets, services and businesses. Some intangible assets can be integral to the value of an...

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Frequently Asked Questions

  • Marshall & Stevens understand the highly regulated healthcare industry. We provide independent valuations of physician and dental practices, management services organizations (MSO’s) and agreements (MSA’s), clinics, hospitals, and assets.

  • The accelerated depreciation benefits (tax savings) from a cost segregation analysis on acquired real estate (sometimes just tenant improvements) can typically pay for a material percentage of the transaction costs and/or multiple financing payments.

     

  • Financial reporting compliance requires a determination of fair lease rate.

    A large percentage of transactions include lease agreements that are not at current fair market value. This is more often the case when the owner of the business is also the owner of the real estate.

    In the acquisition of a medical practice, for instance, the acquiror must not pay a higher than market rate to acquire or lease the property from the seller.

     

  • Each audit firm has their preference for the way certain financial instruments should be valued. We initiate a call with the audit team before performing the analyses to reduce the potential for delays and surprises.

     

  • We review financial projections against past performance, comparable company performance, and industry forecasts. We ask for support from our clients, as necessary, to make us comfortable with their projections and to provide an explanation in our valuation report.

     

The Marshall & Stevens Difference

Marshall & Stevens provides Fairness and Solvency Opinions, valuation analyses, investigative accounting, and expert witness services to assist public and private clients with their important transactions and litigation matters.

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Client Highlights

Here are a few client success stories from ​public and private companies we’ve worked with

MSA Valuation Contacts at Marshall & Stevens

David Gaynor

ASA, CEIV

National Practice Leader

Background

David A. Gaynor, ASA, is a National Practice Leader for our Financial Valuation Practice and Managing Director of our Healthcare Valuation Practice. Mr. Gaynor’s responsibilities include overseeing the delivery of valuation services to the Firm’s financial valuation clients.

Mr. Gaynor has more than 22 years of consulting experience, specializing in the valuation of businesses and business interests, intangible assets, liabilities, and complex securities in connection with mergers and acquisitions, financing, estate and gift tax planning, charitable contributions, litigation support services, strategic planning, fairness opinions, Employee Stock Ownership Plans (ESOPs), accounting matters, and recapitalizations. Mr. Gaynor has served clients in a wide variety of industries, including the healthcare, food & beverage, restaurant, consumer products, telecommunication and manufacturing industries.

Prior to joining Marshall & Stevens, Mr. Gaynor led the Healthcare Valuation Group at Crowe, LLP. He has also been employed at CohnReznick, LLP and EisnerAmper, as well as Management Planning Inc. and Pluris Valuation Advisors, LLC.

Mr. Gaynor earned a Bachelor of Science in Finance from The College of New Jersey in Ewing, NJ.

Mr. Gaynor is an Accredited Senior Appraiser (ASA) in business valuation with the American Society of Appraisers. In addition, Mr. Gaynor is a Member of the Appraisal Issues Task Force (AITF), a Board Member of the Towson University Family Network, and a Member of the Montgomery Township, NJ Budget and Finance Committee. Mr. Gaynor is a frequent writer and speaker on valuation topics.

Professional Highlights

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  • Member, Appraisal Issues Task Force
  • Board Member, Towson University Family Network 
  • Member, Montgomery Township, NJ Budget and Finance Committee
  • Marshall & Stevens, Inc.
    December 2019-present 
      ‣
    Managing Director, Northeast Financial Valuation Practice Leader, 2023-present 
      ‣ Managing
    Director, 2019-2023
  • Crowe
    February 2014-November 2019
      ‣
    Managing Director, Healthcare Valuation Services Leader, 2019
      ‣ Senior Manager, 2014-2019
  • CohnReznick LLP 
    Senior Manager, 2012-2014
  • Pluris Valuation Advisors LLC
    Vice President, 2010-2012
  • Management Planning, Inc. 
    Vice President, 2008-2010
  • Valuation Research Corporation
    Vice President, 2007-2008
  • Crowe Horwath LLP
    Manager, 2004-2007
  • EisnerAmper
    Supervisor, 2002-2003

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