On April 19, students in ACC 321 (Intermediate Financial Accounting) were treated to a talk by Miami alum Paul Shade ‘03, founder and managing partner of Principle Valuation LLC. The company primarily works with hospitals and health systems to accurately estimate the life of their fixed assets (i.e., “asset relifing”), ultimately improving their operating margins.
The talk provided students with a view of the economic implications of accounting in the healthcare industry. With many hospitals currently struggling to make profit, Shade said, the increased operating margin from switching to Principle Valuation’s asset relifing methodology results in many opportunities for health organizations to “reap perpetual benefits,” such as:
- improving their bond and credit ratings
- lowering their interest rates and insurance premiums
- allocating capital on items that would provide greater benefits to the organization
- leveraging the information they gain from asset relifing in purchasing contracts with suppliers
Before asset relifing was introduced by the work of Principle Valuation, the industry only relied on a few resources to estimate the useful lives of depreciable hospital assets, which are updated every few years. However, data accumulated by Principle Valuation, based on information from at least 500 hospitals and updated much more frequently than others, indicate a more accurate picture of how long organizations can expect to be able to use their assets.
In response to a student’s question on the company’s interaction with auditing firms, Shade said that the company’s estimates have always been received well, and firms are satisfied with the substantial supporting data. Principle Valuation’s clients include many big names in the hospital industry, including Cleveland Clinic (Ohio), Banner Health (Arizona), and Lee Health System (Florida).
After the presentation, students were given the opportunity to ask questions about the business and seek advice as they prepare to enter the workforce. Also present to answer questions was Shade’s wife Heidi (‘03 Marketing), who is a cofounder of the pet food boutique Bredwell.
Students raised questions about the relationship between auditors and the firm, how business development worked, the benefits of working in a smaller firm, and other career-related questions. Shade noted that while the firm is small, it works with some of the largest organizations in the industry. He also stressed the importance of taking the opportunity to work in person at the office–there’s so much more advantage to being present where decisions are made and new solutions are created.
We thank Paul and Heidi Shade for taking the time to come back to campus and speak with our accountancy students!
