For medical practices hospitals and other healthcare organiz

For medical practices, hospitals, and other healthcare organizations, the value of the whole is usually more than the sum of the values of the organization\'s individual assets. Explain why this is so.

Solution

Assumption: The question asks about valuation of whole healthcare organization > sum of its assets.

Solution:

I guess this applies to all other entities in the world. One word for this phenomenon is \"Synergy\" or \"Synergistic benefits\"

The sum of values of organizations indvidual assets will give only tangible value of the physical goods but medical organization like hospitals have intangible asets like emotional attachment, brand recognition, peoples perception with it. These all things add more revenue by attracting more patients to it. This form significant part of organization valuation.

The organization (e.g., hospital, clinic, nursing home) provides infrastructure and other complementary resources to support the work and development of care teams and microsystems. The organization is a critical lever of change in the health care system because it can provide an overall climate and culture for change through its various decision-making systems, operating systems, and human resource practices.

The organization encompasses the decision-making systems, information systems, operating systems, and processes (financial, administrative, human-resource, and clinical) to coordinate the activities of multiple care teams and supporting units and manage the allocation and flow of human, material, and financial resources and information in support of care teams. The organization is the business level, the level at which most investments are made in information systems and infrastructure, process-management systems, and systems tools.

Patients value attnetion given by doctors, care provided by his/her team, accurate dignosis of disease (path labs) etc which will add to value of organization and not captured by the value of individual assets.

Thus,For medical practices, hospitals, and other healthcare organizations, the value of the whole is usually more than the sum of the values of the organization\'s individual assets.