Case Studies
The Challenge:
The law firm’s client had developed a large single specialty medical group providing hospital-based clinical services. The system and participating physicians were sued by competing medical groups, alleging violation of the state’s corporate practice of medicine act and illegal fee splitting. Our challenge was to support legal counsel in defending their client’s group structure and demonstrating that compensation arrangements were consistent with the market.
BDC Advisors provided expert evaluation of the group’s professional services agreement, demonstrating that the business arrangement and compensation method are consistent with market standards. We constructed an economic framework to validate the fairness and reasonableness of the group’s management fee using a three-fold analysis: market comparability, purchase price reasonableness, and physician compensation pre- and post- transaction. Our work successfully supported the law firm’s defense of its client that management fees paid for professional services were consistent with fair market value and that the fee structure was consistent with the value of services rendered.