Calculating the Fair Market Value of a Hospital During a Pandemic


Meadows Regional Medical Center, a licensed acute care hospital in Vidalia, Georgia, was contemplating a sale and to perform a financial analysis of the hospital and determine the fair market value of its assets and operations. The hospital needed a partner with deep healthcare expertise that could provide a nuanced and accurate valuation, as well as provide expert witness testimony as part of the formal review by the Georgia Attorney General’s Office in compliance with the Georgia Hospital Acquisition Act.


In spring 2019, Meadows engaged Stroudwater Associates to perform a preliminary financial analysis and valuation in order to evaluate bids from potential partners. Our team began collecting detailed data from financial statements, personnel information, hospital departments, and other background information. We also conducted interviews with key stakeholders in the hospital, including C-suite executives, board members, and physician leaders to understand what they were looking for in a mutually beneficial partnership, what services they wanted to maintain or open, and what types of capital improvements they hoped to make in the future.

Mid-valuation, the COVID-19 pandemic hit, changing Meadows’ financial picture in real-time and complicating the process. The hospital suddenly had greatly diminished revenues and volumes, particularly in high-margin services like surgeries. Our experience in healthcare consulting services helped us understand the hospital’s short-term and long-term financial situation. We remained an independent third-party consultant, answering questions about the impact of the pandemic, sharing insights from what we were seeing with other healthcare clients across the country, and giving advice on matters like how to best allocate CARES Act funding.


Stroudwater calculated the fair market value of Meadows’ assets and operations by synthesizing three traditional approaches according to industry standards:

  1. Income approach: Determining value based on the present worth of the expected future economic benefits to the owners
  2. Market approach: Calculating value by comparing the transaction of similar assets and business interests in the marketplace
  3. Cost or net value approach: Estimating value based on the value of (or cost to replace) all of the business’ underlying assets, both tangible and intangible

Based on a combination of the income approach (50%), market approach (35%), and cost approach (15%), we estimated a final fair market value of $64.5 million. Stroudwater provided expert witness testimony at a hearing conducted by the Georgia Attorney General’s Office, staying on schedule despite changing processes and circumstances. In 2021, Nashville-based HCA Healthcare finalized a deal to purchase Meadows Regional Medical Center for $73 million.