Part 1 of 2 of an article entitled, "The Imperative of Considering the Concept of Highest and Best Use in Healthcare Valuation", by HCC CEO Robert James Cimasi, MHA, ASA, FRICS, MCBA, CVA, CM&AA, and HCC President Todd A. Zigrang, was published on March 26, 2015 in NACVA and the Consultants’ Training Institute’s QuickRead Newsletter.
The article describes that while traditional valuation methodologies have relied upon the analysis of historical accounting and other data as predictive of future performance and value, this may not hold true with every economy, industry, or even every enterprise within an industry, over time. For example, the turbulent status of the healthcare industry over the last five decades, since the passage of Medicare in the 1960s, has introduced intervening events and circumstances that have had a dramatic effect on the revenue, expense, and subsequent net economic benefit stream of enterprises operating in the healthcare marketplace. Accordingly, the “road map of historical performance” of healthcare related enterprises becomes less predictive of future performance. In this first article, of a two-part series, the authors focus on the various standards of value applicable to healthcare engagement and conclude discussing the highest and best use standard.