On the other hand, the reason hospitals return practices to the physicians is they aren't worth much. The safest route is getting a valuation of the practice's worth today - and the likelihood is that the valuation will be much lower, Jedrey says. That gives both sides assurance that it is objective and protects the hospital from kickback allegations if it is used as the basis for purchase. The law states that whatever you pay is a fair-market value payment at the time of the transfer of the assets. That will be shaped by how the deal was originally done.
Intangibles are where the big money is.
Suppose the physicians leased office space and owned their equipment when the hospital affiliate stepped in and assumed the lease and bought the equipment. All that's necessary now is for the physician PC to again take over the lease and buy back the equipment at fair-market value. This can be tough on physicians because they need working capital to start over but will have to use the money they have to pay the hospital. Plus the first few months of accounts receivable still belong to the hospital. The hospital could possibly loan money to the doctors to get them back on the road to independence, but the loan must carry fair-market value interest and be adequately secured, Jedrey says.