CHAPTER 16
The Threshold of Commercial Reasonableness
16.1 Definition of Commercial Reasonableness
16.2 Commercial Reasonableness Analysis
For decades, with the enactment of tax code provisions for exempt organizations in 1954 and the enactment of Anti-Kickback Statutes in 1972, the valuation standard of Fair Market Value has been an important threshold of regulatory scrutiny of healthcare transactions.1 Accordingly, valuation professionals have been called to develop appraisals and render opinions as to the Fair Market Value of healthcare enterprises, assets, and services.
Beginning in the late 1980s with the promulgation of the Stark I laws, a second threshold, referred to as Commercial Reasonableness, emerged as a focus of regulatory scrutiny for healthcare transactions, an activity that has recently seen significant growth.2 Consequently, the development and rendering of Commercial Reasonableness opinions are an increasingly important service offered by healthcare valuation professionals. Rendering a Commercial Reasonableness opinion requires that a specific set of core competencies be mastered by the valuation analyst, apart from, but related to, the more traditional knowledge, skill set, and experience required in providing the more traditional appraisal activity of rendering ...
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