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Ext. PublicationSuccess Story: Structuring an Imaging Joint Venture to Strengthen Market Position
Health Care Valuation Services
Health Care Valuation Services
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The Client
The client is a not-for-profit hospital in the Midwest focused on delivering accessible, high-quality care to its community. As part of its outpatient services department, the hospital provides diagnostic imaging, which plays a critical role in patient diagnosis and care coordination. With a regional reach, the organization is committed to maintaining competitive, cost-effective services while adapting to shifting patient preferences and market dynamics. It operates in a competitive local market where cost transparency and patient choice increasingly influence where care is delivered.
The Challenge
The hospital was experiencing a gradual shift in outpatient imaging volume to a local freestanding operator, driven in part by patients and providers becoming increasingly aware of pricing differences. While the freestanding operator was seeing higher volumes, profits were not keeping pace due to low reimbursement rates and staff cost inflation, creating an evolving and complex market dynamic.
In evaluating its options, the hospital considered building its own freestanding imaging center but determined the strategy would yield low returns due to significant upfront investment, continued competitive issues, a delayed execution timeline and lack of in-house resources. As a result, leadership needed to identify a financially viable path forward that would preserve market share, remain cost-competitive and support long-term sustainability.
The Process
As the hospital pursued discussions with the freestanding imaging operator to explore a joint venture structure, Weaver’s health care valuation team supported the effort as the parties aligned on a model designed to deliver mutual benefits. The hospital would contribute managed care contracting capabilities along with integrated care coordination services. The operator would provide modern imaging equipment and specialized management capability to run a high‑volume, efficient operation. Both organizations anticipated operational and financial synergies through co‑ownership in the joint venture.
Our valuation analyses included:
- Performing a fair market value (FMV) analysis of the assets each organization would contribute, forming the basis for determining appropriate ownership percentages within the joint venture
- Developing FMV opinions for key supporting elements, including real estate rent rates, management fees and both professional and technical revenue components
These analyses required careful consideration of reimbursement dynamics, operating costs and capital investment requirements to ensure all inputs were accurately reflected within the valuation models.
Throughout the engagement, our team worked collaboratively with stakeholders to:
- Gather and validate financial data across multiple sources
- Address complexities related to reimbursement assumptions and cost structures
This data‑driven approach helped leadership evaluate the proposed structure and assess feasibility as discussions progressed.
The Deliverables
Weaver provided the hospital with a valuation framework and supporting analyses to guide ownership structuring within the proposed joint venture, enabling leadership to determine equitable ownership interests within the joint venture. Weaver also summarized key valuation assumptions and findings in an executive‑level overview to support leadership decision‑making.
Together, these deliverables offered transparent, defensible documentation that supported agreement between the hospital and the imaging operator. The analyses also supported accelerated planning discussions related to equipment investment, staffing models, operating hours and management responsibilities, helping both parties move forward with confidence in forming and ultimately establishing the imaging joint venture.
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Success Story