Healthcare Industry E-Flash

Diagnostic Imaging Joint Ventures in Danger

Healthcare providers that currently operate or are considering developing a joint venture for providing diagnostic imaging services will need to closely monitor recent developments in the states of Florida and Louisiana. Both states have had recent movement to investigate claims of Stark and Anti-Kickback violations and to make certain joint ventures per se illegal. The primary issue in these investigations has been that physicians are purchasing the full complement of technical and professional services necessary to provide imaging services at a lease rate that is below, sometimes substantially below, the fee they will bill.

This type of heightened regulatory activity can have a tremendous impact on the value of the joint venture. When contemplating entering a joint venture such as this, you should not only consult legal counsel but also ensure that a sound valuation of share price has been performed that considers the additional level of risk involved in this type of investment. If you are already participating in a joint venture of this nature, now is the time to review the share buy back provisions of your operating agreement to protect your investment as much as possible in the event of an unwind.

For more information regarding the details of the type of transactions under scrutiny, please see an article by David Armstrong in the Wall Street Journal on July 28, 2005 or the Statement of Position issued in June 2005 by the Louisiana State Board of Medical Examiners. For copies of either of these documents or questions regarding valuation issues with any healthcare organization, please email or call Carol Carden at ccarden@valuepointconsulting.net or (865) 558-8118.

ValuePoint Consulting Group, LLC
Valuation, Forensic & Litigation Consultants
www.valuepointconsulting.com
Contact:  Carol Carden, CPA/ABV, AM, CFE