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Nine Key Factors Driving Hospital Valuations


There are nuances in providing valuations for virtually every type of business entity ranging from retail outlets to a manufacturing operation to a personal services firms. But valuations for hospitals and other organizations in the health care field are especially daunting.

Currently, hospitals face some unique challenges, including difficult economic conditions, increased competition and burdensome reporting requirements. In addition, the provisions in the healthcare law -- the Affordable Care Act (ACA) -- are kicking in, which is further complicating matters.

Keeping that in mind, below are nine of the main factors that might affect valuations of hospitals. For purposes of this article, we focus on general acute-care hospitals. Different standards may apply to other types of hospitals -- such as long-term acute-care, rehabilitation, critical access, psychiatric and specialty surgical hospitals -- that aren't addressed here.

This list is by no means all-inclusive. As previously mentioned, the new health care law provisions taking effect will have a dramatic impact. Just like other industries, hospitals are subject to the economic environment around them. Finally, a plethora of laws and regulations govern and define fair market value for the health care industry. All of these are critical factors that are generally reflected in hospital valuations.

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