Healthcare property should be assessed for various reasons. There are some basic rules governing its valuation and it needs a multi-disciplianary team.
Healthcare refers to efforts to protect people’s mental, emotional or physical well-being. It also refers to endeavours to restore health in all the abovementioned areas.
One shouldn’t confuse healthcare for health care. Healthcare refers to the industry or system through which we get services for protecting and restoring well-being. On the other hand, health care refers to specific activities professionals undertake to protect and restore health.
The healthcare enterprise may be divided into emergency, rehabilitative, hospice, and long-term care. Other variants include preventive, primary, home care, diagnostic, and palliative healthcare.
Types of Healthcare Assets we Assess
We categorise healthcare assets using two primary criteria; their nature and their uses.
Classification by Nature
Tangible Assets
Tangible assets include property such as land, buildings and improvements. Movable assets such as furniture, equipment and fixtures also fall under this category. Other properties under this category include cash and inventory, such as medicine and reagents. Accounts receivable and supplies are also in this group.
Intangible Assets
Intangible assets are more distinctively related to the healthcare industry than tangible assets. They are pretty valuable and contribute to the overall value of healthcare assets. They include permits, easements, rights to use, zoning waivers and leasehold interests.
Skills and training possessed by the workforce and rights to the custody of patient records are intangible assets. Identifying the skills available in a hospital is one of the comonest reasons for health care intangible assets valuation.
How does something intangible qualify to be a asset? It needs to be legally identifiable as existing. Furthermore, it should be possible for an institution or person to legally own and transfer it to others.
See related: Dubai property valuation
Classification by Use
Nursing Homes, Supported Living and Hospices
These facilities fall under the healthcare category of hospices and long-term care institutions. The establishments are equipped to various levels, thus they comprise of both tangible and intangible assets.
Surgeries and Acute Hospitals
These are hospitals where people get healthcare services such as diagnosis, treatment, surgery, prescription, etc. We assess the buildings, equipment, leases, patents, and other tangible and intangible assets.
Equipment creates the difference between surgeries, acute hospitals, and long-term care facilities.
Healthcare Property Valuation Principles
The following are fundamentals of healthcare valuation.
Anticipation
This rule looks to the future of the facility. Benefits projected to accrue to the property under assessment form a part of its value. Anticipation is one of the reasons why some people consider healthcare property valuation a part of strategic consultancy.
Change
This principle holds that the property under assessment and the environment in which it exists is constantly changing. Therefore, as valuers, we try to include any foreseeable changes in the valuation process.
Substitution
Substitution considers whether there exists an alternative to the property under assessment. The existence of an equally or more desirable and effective option reduces the demand for the property, thus reducing its value.
Conformity
The value of a property depends on the level to which it conforms to its surroundings. Such harmony increases the facility’s ability to meet its intended needs, thus increasing its worth.
Contribution/Utility
A healthcare property’s value comes from its contribution to the entire enterprise. How useful is it?
Trends for Healthcare Property Valuation
Trends for healthcare valuation are based on four fundamental pillars; regulation, competition, reimbursement and technology.
Regulation
Healthcare related transactions are subject to government regulations globally. Governmental scrutiny may cause hospitals an associated enterprises to take measures to reduce exposure to liability.
Some of these measures include hiring doctors as independent consultants, not permanent employees. Having doctors under such terms may reduce liability but it also denies the facility ownership of doctor’s training and patents.
Reimbursements
Private and public insurance companies reimburse healthcare facilities for treating their customers. This trend informs the assessment of both hospitals and insurance companies. Medical insurance companies are part of the healthcare industry.
Competition
This trend aligns with the principle of substitution. Your property is likely to reduce in value if there is a more efficient competitor.
Technology
Innovative technology is likely to be more efficient than traditional methods. Thus your property accrues or losses value depending on whether it is in tandem with technological trends. Technological advances may render some of the property you currently hold obsolete and therefore very low value.
Conclusion
Effective healthcare property valuation assesses all aspects of an enterprise. It includes the assessment of healthcare establishments offering long-term, short term and complementary services.
We assess both tangible and intangible assets. These include building, equipment, furniture, intellectual property, and leases. Our work is based on principles and trends specific to healthcare property valuation. Contact us to further discuss your case.
