Whether selling a minority share to a new physician owner or a majority share to a larger partner, many ambulatory surgery centers will undergo some kind of sale during their life cycles.
At the Becker's 13th Annual Spine, Orthopedic & Pain Management-Driven ASC Conference + The Future of Spine, Amber McGraw Walsh, JD, partner at McGuireWoods, moderated a panel of three ASC industry experts. During the panel, the thought leaders addressed three important issues for ASC leaders considering a sale.
1. ASC transaction activity. The level of acquisition activity differs from market to market, but generally speaking the ASC industry is in the midst of a consolidation period. "There have been waves of consolidation since 1995," said Thomas Mallon, MBA, CEO of Regent Surgical Health. "The wave right now is being driven by hospitals."
De novo project are also still occurring, albeit at a slower rate in certificate of need states. The private equity sector is even casting an eye to the ASC market. "The capital market is looking for investment vehicles," said R. Blake Curd, MD, board of directors chairman of Surgical Management Professionals. "People are interested, thought they may not have been a few years ago."
2. Attractive attributes. For ASC leaders looking to attract a new partner, whether a physician owner, hospital or management company, they must consider what qualities will attract the best possible partner. "For me it is the people: the partners and physicians," said Dr. Curd. "I would rather have a struggling center with great partners than a profitable center with disengaged physicians."
Factors outside of the center's four walls can also attract quality partners. "We want to see a good market," said Mr. Mallon. "We find the best markets are diverse payer markets. [We also look to see] if the health systems are healthy. If they are struggling, the market is over bedded. The payers are having their way with the whole market."
3. The importance of valuation. Valuation inherently lowers compliance risk for any ASC sale. "Any transactions involving a health system typically have a higher compliance risk, but we see it across the board," said Kevin McDonough, CPA, managing director of VMG Health. "One hundred percent-physician-owned centers are coming to us."