There are a number of different types of health care facilities and each type serves its own sub-market and its own specialized clientele.  Health care facility appraisals usually deal with the valuation of; hospitals, long-term care / skilled-care facilities, assisted-living facilities, medical clinics and doctor’s offices.  Most real property appraisers are retained to form a value opinion of the real property for lenders, partners, courts and / or for tax purposes.  “Going-concern” appraisals can also be completed on health care facilities, however significantly more expertise is required to appraise the entire business operation including the real property.

Most health care facilities appraised are “for profit,” corporately owned assets with a certified or licensed bed count of between about 50 and 300 beds.  The number of certified or licensed beds is often the unit of comparison selected by appraisers for analysis within their reports.  Some facilities have beds dedicated to a certain type of service, like acute carte or Alzheimer’s care.  When the business operation is appraised, these differences are important to the actual and forecasted income and expenses of the facility.

Facilities, like nursing homes, often provide different levels of care.  Basic care includes services required to maintain a resident's activities of daily living.  Basic Care includes personal care, supervision and safety.  Skilled care requires the regular services of a registered nurse for treatments and procedures.  Sub-Acute care is comprehensive inpatient care designed for someone who has had an acute illness, injury, or chronic illness.  The level of care provided is also important since compensation from private parties and the government via Medicare is tied to the care provided.

Assisted-Living facilities usually offer their residents in a licensed care facility: meals, housekeeping, transportation, laundry, activities, therapy, pharmacy and speech programs.  Assistance with the Activities of Daily Life (ADL) are also offered to Assisted-Living facility residents including: eating assistance, bathing, grooming, dressing, moving, walking and toileting.  Emergency call and medication management are also often included as part of the monthly residence fee.

When appraising health care “going-concerns” like Assisted-Living facilities it is important to analyze the facility’s average service rates and compare them to those charged in the market.  Rates usually include a “package” of services that can typically range from $ 1,600 to $ 4,500 monthly.  Rates are stratified, and increase in relation to the size of the room and generally for the 3-tiered range of services discussed.  Monthly service rates for Alzheimer residents, who need specialized care, can be found in the $ 3,500 to $ 7,500 per month range.  The actual gross income of a facility per bed should mirror the potential income per bed based on market supplied rates.      

An expense analysis can also be completed based on market data, if it is available, with consideration being given to operating ratios provided on similar business operations.  Actual expenses versus those expected given a review of the market is an analysis this is required since actual expenses can be skewed by accounting practices.