| The health care industry consists of public,
private and nonprofit institutions. This industry is often grouped
into distinct sectors: providers, payers, and life science
companies. Providers are businesses that administer patient care
such as physicians, hospitals, nursing homes, home health agencies,
ambulatory surgical facilities and other specialty health care
companies. Payers are companies that pay for patient care, including
insurance companies, HMOs and PPOs. Lastly, the life science sector
includes biotechnology, pharmaceutical, medical devices and e-health
companies.
The health care industry, already a booming industry, continues
to grow rapidly. According to the U.S. Department of Health and
Human Services, health care expenditures were approximately $2.0
trillion in 2005 and comprise 16.0 percent of gross domestic
product, the single largest sector of the U.S. economy. Provider
expenditures account for 80.0 percent of this $2.0 trillion market,
with the balance comprised largely of pharmaceutical, medical
equipment and medical product costs. National health care
expenditures have outpaced overall U.S. economic growth since 2000
and are projected to continue as the baby-boom generation ages. By
2016, total health care expenditures are projected to grow to $4.1
trillion or approximately 19.6 percent of GDP.
To contain costs, the industry has seen an increased level of
merger and acquisition activity. Health care providers continue to
consolidate to operate more effectively in an environment of tight
reimbursement. Many smaller companies will be unable to survive in
an era of rising costs and increasing regulatory complexity. Among
payers, competitive elements are behind the rising number of
transactions. HMOs are attempting to build scale and offer services
nationwide to their customers. In the life sciences arena, annual
expenditures for pharmaceuticals continue to rise, creating a large
backlash among patients and payers. Therefore, companies are
aggressively purchasing and licensing technology from biotech firms
for less than it would cost to develop these programs internally.
For medical technology companies, innovation is the key to maintain
market position. Most companies are finding that they have to
continually buy new technologies to maintain leverage in the sales
channel.
For more than three decades, our health care practice, comprised
of experts in financial, tangible asset, and real estate valuations,
have provided valuation services to nearly all segments of the
industry. Our valuations are prepared in accordance with
professional standards mandated by Uniform Standards of Professional
Appraisal Practice (“USPAP”) as well as accounting and other
professional associations. Our professionals average 22 years of
experience, a factor which differentiates us from many of our
competitors.
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