Determining Your Organization's Value
Qualify for a free subscription to HealthLeaders magazine.
Generally, there are three approaches to a valuation, Nelson says, and which one is right depends on what areas an organization is most interested in:
- Cost or asset valuation
- Sales or market comparison
- Income or cash flow
“We didn’t use our valuation to determine what we were going to pay,” says Balko. “We used it as part of our due diligence. So we used it to get a handle on what to expect.”
Though the reasons may vary as to how a valuation is used, it is a key part of the merger or acquisition process. “The resultant effect of the valuation process can drive strategic and operational decisions that affect the ability of hospitals to provide care to patients,” says Nelson.
With the ever-changing economicclimate that finance leaders are dealing with, doing a valuation preemptively can be an eye-opening experience. “It is important for communities, governing boards, and leaders of hospitals and health systems to continually develop and report the value of the enterprise,” says Nelson.
Karen Minich-Pourshadi is a Senior Editor with HealthLeaders Media.
- Ratcheting Up Patient Experience Has a Downside
- 12 Hires to Keep Your Hospital Out of Trouble
- Meaningful Use Payment Adjustments Begin
- HL20: Lee Aase—Who's Behind @MayoClinic
- 'Mega Boards' Could be Rural Healthcare Disruptor
- Taming Time and Moving Healthcare Data
- 1 in 5 Eligible Hospitals Penalized for HACs
- A Christmas Wish List for US Healthcare
- HL20: Sam Foote, MD—The Courage to Speak Up
- HL20: Derek Angus, MD—An Intense Focus on Care