Fair Market Value of
I.V. Hydration Therapy Service Management Fees
I.V. hydration therapy clinics have become very popular during the past several years. Entrepreneurs nationwide have not only discovered a new market but new challenges as well.
Medical providers, like physicians and nurse practitioners, cannot be employed by corporations or non-physicians in states that ban the Corporate Practice of Medicine like California, New York, and Texas. In states that ban the Corporate Practice of Medicine, management arrangements are often used to clearly distinguish the services provided by licensed medical providers, like doctors and nurse practitioners, from those provided by non-medical laypeople.
For example, a medical provider may prescribe and bill for hydration services under his or her license, while using the clinic office space, support staff, equipment, supplies, and back-office business support of a management company owned by a non-medical businessperson.
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Fair Market Value of IV Hydration Therapy Service Management Fees
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Under turnkey management arrangements, for-profit management companies charge independent medical Professional Corporations (PCs) management fees to provide facilities, equipment, supplies, business services, and non-medical staff. According to surveys, fixed percentage rates of medical practice revenues are the most common form of physician practice management fees.
The big question is, “What should medical providers pay management companies for management services for I.V. hydration?”
The correct answer is “it depends”, but general ranges are available based on authoritative cost surveys administered by the American Medical Association. The American Medical Association, Medicare, and the medical specialty societies spend appreciable time each year administering practice expense surveys and compiling data on the practice expenses for every physician service provided under all physician specialties. This practice expense data can be analyzed to separate medical provider compensation from non-medical clinic expenses for different types of I.V hydration therapy services.
Let us assume the management company provides a complete turnkey I.V. hydration therapy clinic for a medical provider to use. Under this scenario, we would expect management fees to generally range from 80% to 84% of revenue. This assumes plain and simple hydration therapy. That means the medical provider just shows up to someone else’s facility. There is not any special cocktail provided to the patient during hydration.
If there is a special hydration cocktail, then management fees could range from 85% to 88% of total revenues.
These management fee ranges assume that the medical provider is walking into a complete turnkey hydration clinic that is already setup and ready to provide services.
These management fee estimates may fluctuate a lot depending on the state and local market. Medical provider salaries and clinic expenses are very different in Mississippi and San Francisco. A valuation professional would need to review the specifics of your actual arrangement to give you a formal Fair Market Value opinion.
