BVWire Issue #189-2 | June 13, 2018


Groundbreaking study debunks use of surveys for FMV of physician compensation

An article in an upcoming issue of hfm Magazine presents groundbreaking research and data analytics that challenge commonly held beliefs about survey data, physician compensation, and fair market value. Mark O. Dietrich (Mark O. Dietrich, CPA, PC) is the author of the peer-reviewed article, which will appear in the July issue of the journal of the Healthcare Financial Management Association (HFMA). He makes the case for the entire healthcare industry to rethink its approach to the FMV of physician pay.

What’s at stake: The government has been reaping hundreds of millions of dollars in fines from hospitals in lawsuits that have emerged out of the acquisition of medical practices. The thrust of the cases is the measurement of the FMV of physician compensation, which has typically been based on survey data. But this practice is often flawed because it is based on several false premises, including that the surveys have statistical significance for the 90% or so of physicians not included in the surveys. Also, survey data can be inconsistent with local-market conditions. The misuse of survey data leads to losses in acquired physician practices, which is the key quantitative analysis the government uses for the test for commercial reasonableness. Significant losses lead the government to believe that hospitals are paying for referrals, a violation of the Stark Law that triggers the big fines.

In the new article, Dietrich advises that the use of surveys should be limited to rough benchmarking and the focus should rather be on localized relative value unit (RVU) data that reflect actual local-market conditions. Dietrich discusses this issue and provides a complete alternative to the reliance on surveys to determine fair market value in the BVR/AHLA Guide to Valuing Physician Compensation and Healthcare Service Arrangements, which he co-wrote with Tim Smith (Ankura).

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CEIV quality monitoring FAQs

The AICPA and the Royal Institution of Chartered Surveyors (RICS) have released a series of FAQs that detail the much-awaited Quality Monitoring Program for the Certified in Entity and Intangible Valuations (CEIV) credential. All CEIV credential holders, whether members of the AICPA, ASA, or RICS, will be required to participate in the annual, proactive program. The FAQs include highlights of the process of the program, integration of a firm’s existing quality monitoring processes, timing of delivery, outputs of review, potential outcomes, and enforcement. Questions about the CEIV Quality Monitoring Program can be submitted to or

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Hints of optimism in the apparel industry

Although e-commerce keeps chipping away at traditional brick-and-mortar retail, “hints of optimism have emerged within the sector,” according to the Duff & Phelps “Quarterly Apparel Report” for spring 2018. The report identifies trends and provides insights across the apparel sector, including in-depth analysis of the global industry, focusing on key themes, issues, and opportunities. Try it on for size!

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Appraisal rights in M&A

In a recent presentation by attorneys from Cadwalader, it’s clear that appraisal rights continue to be an important topic in the M&A world. Slides 22 to 27 of the presentation cover appraisal rights, and one slide includes a series of factors they dub “Dell Compliant” that would make a deal more likely or less likely to reflect fair value.

The Delaware Court of Chancery first discussed the concept of being “Dell Compliant” in In re AOL Inc., 2018 Del. Ch. LEXIS 63. A digestof In re AOL and the court’s opinion are available at BVLaw.

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The Appraisal Foundation seeks board candidates

The Appraisal Foundation is currently conducting its annual search for qualified candidates to serve on the Appraiser Qualifications Board (AQB) and the Appraisal Standards Board (ASB). The AQB is responsible for establishing the minimum education, experience, and examination qualification criteria for real estate appraisers. The ASB is charged with developing, interpreting, and amending the Uniform Standards of Professional Appraisal Practice (USPAP). Familiarity with USPAP is a prerequisite of service on the ASB, and a minimum of 10 years of appraisal experience is required. Individuals selected for these positions will serve a term of one to three years starting on Jan. 1, 2019. The deadline for filing an application is August 17.

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ASA 2018-2019 election results

Robert B. Morrison (Morrison Valuation & Forensic Services) has been elected international president of the American Society of Appraisers (ASA). Other newly elected individuals include: Bruce A. Johnson (Munroe, Park & Johnson Inc.), business valuation discipline governor; Ernest A. Demba (Demba Valuation Services LLC) and Jack Young (NorCal Valuation Inc.) tied for the position of chair of the appraisal review and management discipline committee (there will be a runoff election); newly elected business valuation discipline committee members are: Nancy M. Czaplinski (Duff & Phelps), Matthew R. Crow (Mercer Capital), KC Conrad (American Business Appraisers), Gary T. Frantzen (Alvarez & Marsal), and Ryan A. Gandre (Stout). This committee has five open seats for members at-large. More election results can be viewed here. Those elected will officially take office on July 1.

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Global BV News

ASA joins iiBV

The American Society of Appraisers (ASA) is the newest member Valuation Professional Organization (VPO) of the International Institute of Business Valuers (iiBV). “As ASA moves to enhance and accelerate worldwide membership, we compliment our iiBV colleagues for the strength of global education that they have achieved, doing an admirable job of writing universal content so that it is internationally relevant in countries outside of the U.S.,” says Sharon A. Desfor, ASA International president. “The iiBV is delighted to be once again collaborating with the ASA in pursuit of high quality BV education to elevate the reputation and credibility of business valuers globally with users of valuation reports and government regulators. Their experience and leadership bring a wealth of knowledge to the iiBV and we are looking to ASA’s support in the iiBV’s pursuit of high quality BV education,” says Edwina Tam, chair of the iiBV board of directors.

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CAS translates Asset Appraisal Law

The China Appraisal Society (CAS) launched an English version of the Asset Appraisal Law, which is designed to strengthen international communication and cooperation. The law was enacted in 2016 and was the nation’s first asset appraisal law.

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BV movers . . .

People: Hillary Hughes of Prairie Capital Advisors Inc. is a recipient of a 2018 HER Women of Achievement Award, which recognizes the pioneering achievements of today’s women forging the path for others to make their mark … President Donald Trump has nominated Elad Roisman to serve as SEC commissioner; if confirmed by the Senate, he will succeed Michael Piwowar, who is stepping down from the position in July … Kerim Keser has joined Duff & Phelps as a managing director and head of the German, Swiss, and Austrian Transfer Pricing practice; he will be based in the firm’s Munich office … David Sumner has joined New York-based EisnerAmper LLP as a director in the Financial Advisory Services Group … Sheila Enriquez was elected managing shareholder of Houston-based Briggs & Veselka Co. effective July 1, assuming the role from John Flatowicz, who will continue his roles as an audit shareholder and member of the Executive Committee.

Firms: Atlanta-based Aprio LLP has acquired HPC, also based in Atlanta, which is a technology-driven, cloud-based accounting firm with a global footprint … Withum has joined with local business groups in New Jersey to create the Manufacturing Cabinet, an industry group to advocate for and otherwise serve manufacturers, which are on a comeback in the area; Jim Hannan, practice leader of Withum’s manufacturing, distribution and logistics service group, is one of the individuals spearheading the Cabinet … Calvetti Ferguson of Houston has acquired Fort Worth, Texas-based AuldridgeGriffin St. Cloud, Minn.-based BerganKDV and Minneapolis, Minn.-based Alliance Management have merged … Redwood City, Calif.-based Seiler LLP announced it has expanded its presence in Silicon Valley with the opening of an office in San Jose.

Please send your professional and firm news to us at

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CPE events

  • Healthcare Valuation: Approaches to Value and Common Pitfalls (June 13), with Nicholas Janiga (HealthCare Appraisers Inc.) and Fred Lara (HealthCare Appraisers). This is part of BVR’s Special Series presented by the BVR/AHLA Guide to Healthcare Industry Finance and Valuation.

    An overview of the healthcare regulatory environment and how it impacts the approaches to value in different appraisal disciplines: business valuation, real estate, M&E, and compensation.
  • Financial Modeling: Enhance Excel by Programming in R (June 19), with Clifford Ang (Compass Lexecon). This is part of a Special Series on Advanced Modeling and Methodologies.

    R is free software and one of the most popular programming languages with broad-based applications in finance. This will be an introduction to financial modeling and how R can complement your Excel valuation and analysis skills.

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New and Trending
LinkedIn Discussions

BV Experts Clash Over Statistics

The “Value” of Beer—and Breweries—Is Rising!

Q&A With Jim Harrington on the Duff and Phelps Cost of Capital Navigator

Your discussion could be featured here—BVR's LinkedIn group is a place for valuation professionals to share, discuss, and learn about compelling BV topics. If you're not already a member, request to join:

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We welcome your feedback and comments. Contact Andy Dzamba (Executive Editor) or Sylvia Golden, Esq. (Executive Legal Editor) at:
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In this issue:

Physician pay

CEIV inspections

Apparel biz

Appraisal rights

TAF search

ASA elections

Global news

BV movers . . .

CPE events

LinkedIn discussions


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