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Used Medical Imaging Equipment Valuations: FMV versus OLV

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While the automotive industry can easily point to Kelley Blue Book for current and depreciated values, putting a firm value figure on diagnostic imaging equipment has no similar benchmark for standardization. Moore's Law (the observation that the number of transistors in a dense, integrated circuit doubles approximately every two years), rapidly developing software, and a seemingly endless scope of imaging modalities and manufacturers are just a few of the factors keeping the "Blue Book" level of relative ease and consistency out of reach.

Of course, everyone who asks, "What is my imaging system worth?" would love to have an immediate answer with as many zeros as possible. The aforementioned factors, however, combined with the circumstances of your decision to sell, mean the proper response to this question requires that even more questions be asked. We'll breakdown the key questions below to help you learn what to expect as you bring your used diagnostic imaging equipment to market. 

Fair Market Value vs. Orderly Liquidation Value

If this is your first trip to the equipment valuation rodeo, there are a couple of terms you'll need to know: Fair market value (FMV) and orderly liquidation value (OLV). Here are quick definitions for you:

Fair Market Value: FMV is an estimate of the market value of a property, based on what a knowledgeable, willing, and unpressured buyer would likely pay for it to a knowledgeable, willing, and unpressured seller in the market. In a sale transacted at FMV, logistical costs are negotiated as either part of the final price, or a discount off the top of the final price.

Orderly Liquidation Value: This is the price your equipment would fetch if it were sold today; as-is, where-is. It may not be the highest number you could get, but it gets liquidation done and over with quickly and generally puts the onus for removal and transportation squarely on the purchaser.

Like we said earlier- there's no Kelley Blue Book for imaging equipment, but Block Imaging is about as close as you can get. With 130+ employees and offices in both the US and Japan, our line of sight on imaging modalities is broad and global, and our understanding of FMV vs. OLV nuance is deep.

Key Valuation Questions

The following are some questions you'll likely get when seeking equipment valuation. Your answers will help determine whether you'll be best served by an FMV, and OLV, or something in between.

What's the age/condition of the system? These basic details are essential for anyone hoping to give an accurate (i.e. fair) valuation; date of manufacture, age of key components (if they've been replaced), level of volume/usage, etc. Additionally, many systems can be upgraded over time. Using MRI as an example, many Philips Intera systems can be upgraded to the Achieva platform. Hitachi Airis II open MRI units can be upgraded to Airis II Elite. Knowing if the equipment or its software has received upgrades/revisions could have a significant effect on market value.

What's your time frame? If the circumstances of your sale demand a quick turnaround, you might be better served by offering it at, or around, OLV. It's not optimum dollar, but when time is of the essence, a concession on price can speed things along.

Do you intend to replace what you're selling? While replacement is a common endgame for equipment sales, there are a variety of other circumstances that bring used systems to the market. To borrow another example from MRI, the GE CXK4 magnet has been used across many different GE MRI platforms. Many times the CXK4 magnet itself can remain bolted to the floor while the front end electronics, and gradient amplifiers are completely replaced and updated. It is possible to offer an FMV for just the magnet, or just the front end electronics.

Will your valuation results be presented to a bank? Or are they solely for liquidation purposes? Some customers only need an e-mail valuation for a given exercise, while others require a more formal document with pictures, equipment specifications, etc in order to present to a bank or board meeting.  Block Imaging stands ready to support your FMV / OLV needs big or small.  We’ve participated in FMV assessments ranging from single modalities, to large outpatient imaging companies with 30+ campus locations.

The Takeaway

Block Imaging can provide both Fair Market Values (FMVs) and Orderly Liquidation Values (OLVs), depending on your needs.

Some of our clients seek assistance with FMVs in order to consolidate multiple office locations, or to recast an existing lease.  Others reach out for OLVs for a 1245 Recapture, a method of determining equipment depreciation for tax purposes.  Another client was in need of a full FMV analysis in order to help determine asset values for bringing on a new physician partner into their practice.

While these are a few examples of standard requests, Block Imaging stands ready to customize an equipment valuation to meet your specific needs.

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