What is "strategic partnering" and how will it benefit you and your endoscopy center?
Strategic partnering is when you form a partnership with one or more entities that can help your center grow, become more profitable and increase the value of the center and the distributions to the partners. A strategic partnership should result in your center having a strategic advantage in your market.
A strategic partner is a partner that brings more to the table than just money. While money is important, in most cases money is not the sole goal. Since buyers almost always want the sellers to retain a significant (usually 49 percent or greater) interest in the ASC, it is in the seller's best interest to partner with a company and/or hospital that will bring expertise that improves the business to the table, as well as money. This defines the strategic advantage.
From a strategic perspective, the best buyers are still the ASC management companies that have investment capital and that can bring expertise in recruiting, contracting, case costing analysis, billing and collection, A/P and A/R and purchasing savings to the table. Each of these areas of expertise can help your center improve its business and generate more profits and distributions. In many cases, a hospital that is willing to provide access to its hospital contracts can be a strategic partner, but this is a relationship that must be carefully managed. This is why a three-way deal between the ASC, an ASC management company and a local hospital can be a very practical and workable strategic alliance, especially if accountable care organizations become dominant. We call it "the best of both worlds" alliance – ASC management expertise and access to better paying contracts, in an environment that values the ASC as the high quality, low cost provider.
Partnerships with private equity firms that are "rolling up" groups of ASCs are generally not "strategic." Private equity roll-ups, or leveraged buy-outs, are engineered by investment firms to buy a group of ASCs and then sell them at a profit to a higher bidder. These are not strategic, as the private equity buyers most often know very little about operating an ASC and can't help your ASC business grow. While the investment bankers may make lots of money, your individual ASC business is not likely to be greatly enhanced by the transaction. And at the end of the day, you don't know who your eventual owner or partner will be.
The goal of strategic partnering: Partnering with an ASC management company and/or a hospital in a strategic partnership offers your center strategic advantages that result in tangible financial and operational benefits to the ASC physician-partners.
Learn more about ASCs Inc.
Related Articles on ASC Transactions and Valuation:
Memorial Sloan Kettering Submits CON Application for $322M Outpatient Surgery Center
Private Equity Group Plans Renovations for Pinnacle Surgery Center Property in Arizona
Summit Health Names Pennsylvania Surgery Center After Dr. Roy Himmelfarb
Strategic partnering is when you form a partnership with one or more entities that can help your center grow, become more profitable and increase the value of the center and the distributions to the partners. A strategic partnership should result in your center having a strategic advantage in your market.
A strategic partner is a partner that brings more to the table than just money. While money is important, in most cases money is not the sole goal. Since buyers almost always want the sellers to retain a significant (usually 49 percent or greater) interest in the ASC, it is in the seller's best interest to partner with a company and/or hospital that will bring expertise that improves the business to the table, as well as money. This defines the strategic advantage.
From a strategic perspective, the best buyers are still the ASC management companies that have investment capital and that can bring expertise in recruiting, contracting, case costing analysis, billing and collection, A/P and A/R and purchasing savings to the table. Each of these areas of expertise can help your center improve its business and generate more profits and distributions. In many cases, a hospital that is willing to provide access to its hospital contracts can be a strategic partner, but this is a relationship that must be carefully managed. This is why a three-way deal between the ASC, an ASC management company and a local hospital can be a very practical and workable strategic alliance, especially if accountable care organizations become dominant. We call it "the best of both worlds" alliance – ASC management expertise and access to better paying contracts, in an environment that values the ASC as the high quality, low cost provider.
Partnerships with private equity firms that are "rolling up" groups of ASCs are generally not "strategic." Private equity roll-ups, or leveraged buy-outs, are engineered by investment firms to buy a group of ASCs and then sell them at a profit to a higher bidder. These are not strategic, as the private equity buyers most often know very little about operating an ASC and can't help your ASC business grow. While the investment bankers may make lots of money, your individual ASC business is not likely to be greatly enhanced by the transaction. And at the end of the day, you don't know who your eventual owner or partner will be.
The goal of strategic partnering: Partnering with an ASC management company and/or a hospital in a strategic partnership offers your center strategic advantages that result in tangible financial and operational benefits to the ASC physician-partners.
Learn more about ASCs Inc.
Related Articles on ASC Transactions and Valuation:
Memorial Sloan Kettering Submits CON Application for $322M Outpatient Surgery Center
Private Equity Group Plans Renovations for Pinnacle Surgery Center Property in Arizona
Summit Health Names Pennsylvania Surgery Center After Dr. Roy Himmelfarb