Editor's note: Lynn Clement is chief research officer at KJT Group Inc., a Honeoye Falls, N.Y., research firm. Chris Claeys is the firm’s senior director, analytics and consulting. The authors gratefully acknowledge Jerry Arbittier and Brian Fischer of SurveyHealthcare for the data collection and their input in the interpretation of the results. They also thank Maria Cristina Antonio of Novo Nordisk for her input on the study design and interpretation of the results.
Fair market value (FMV) is a challenging issue, complicating the research process and can be felt at every level of our industry. As the demand for insights increases, the pressure to control clinician compensation has also increased. This has led to a fragile push and pull; with increased demand and declining response rates, market research and sample partners are often forced to undertake complex recruits with declining or highly variable incentives. Hence, we are faced with unanswered questions, such as, what is the impact to the insights we gather? What is the impact to our industry overall? What can we do as an industry to protect our most valuable asset and ensure the integrity of our data and insights? What is fair market value?
Fair market value is the price, expressed in terms of cash equivalents, at which property would change hands between a hypothetical willing and able buyer and hypothetical willing and able seller, acting at arm’s length in an open and unrestricted market, where neither is under compulsion to buy or sell and when both have reasonable knowledge of the relevant facts1.
The three universally accepted approaches to determining FMV are2:
The market approach or “a general way of determining a value indication of a business, business ownership interest, security or intangible asset using one or more methods that convert anticipated economic benefits into a present single amount.”
The cost approach o...