In our last newsletter we discussed the reasons why an equipment appraisal is needed. Properly accounting for and reporting capital assets not only demonstrates accountability, but also provides accurate costs of the items and presents information for maintenance and replacement. Acquiring an accurate appraisal for your equipment is crucial to any healthcare project. Whether you are planning a merger or acquisition, or require an appraisal for insurance purposes, it is important to understand some commonly used methods for evaluation.
In-house staff: Healthcare facilities have called on their own staff to evaluate equipment. There are some downfalls to using hospital employees. Using an in house employee to appraise a potential merger or acquisition will lead to biased, subjective results. Also, the in house staff does not have direct market knowledge of equipment.
CPA / Accounting firm: If a CPA firm is hired by a hospital for asset valuation, it will review the equipment as ‘line items on a spreadsheet.’ Most equipment will be evaluated by its book value, or will utilize a general depreciation scale. This does not provide a clear picture of the value of the asset, because a CPA firm utilizes accounting principles to determine the value, rather than current market conditions. Business valuation firms do not understand when technology changes and would not be able to assess the condition of the equipment. (i.e., OEM’s have obsoleted an equipment line and the item will need to be replaced even though it is only a few years old.)
Equipment Appraisal company: Healthcare facilities have the option to use a company that specializes in equipment appraisal. Using an equipment company for appraisal will give a clear understanding of the equipment’s current condition and value. These companies understand the market the best and know current conditions. For example, an equipment company can assist with evaluations of any type of medical setting: Imaging Centers, ASC’s, Physician practices, etc.
It is important for facilities to understand which method is necessary for their current equipment evaluation needs. Some questions to consider:
• Is stressing current staff by taking on additional appraisal duties worth the employee drain?
• Is it necessary to pay for a CPA firm’s pricey services when only the assets need to be evaluated and the other details have been taken care of?
• In the case of an acquisition, does the facility understand what will need to be replaced once a practice is bought?
Manage Resource Group, Inc. is a medical equipment management company assisting hospitals with inventory, appraisal, and resale services. With over 25 years industry experience, our team of professionals provide clients a valuable cost analysis for daily equipment management, facility acquisitions, and reconciliation of asset ledgers.
“Helping to assess, inform, and empower healthcare providers with their
equipment management needs.” For more information on MRG’s services,
visit our website or contact us at (440) 289-6490.