By Published On: November 3, 2016

With the economy on the rise again, an unlikely sector is reaping the benefits: Outpatient ambulatory surgery centers (ASC). The market for ASC sales has an extremely competitive buyer landscape but marketing your ASC might be the difference between a 5x and 8x+ multiple.

It is no secret that ASC management companies are under pressure to grow through acquisitions in order to meet investor expectations. ASCs offer something that hospital systems facing tough reimbursement and expense market can’t: lower cost of care.

Moreover, they add physician and patient satisfaction. Understanding what buyers are looking for in an investment is imperative to maximizing your center’s value.

Physician Owners – More is Better

The “more is better” rule applies heavily in the ASC market, both for single and multi-specialty centers. Single specialty centers with only one physician owner have proven to be the most difficult, but not impossible, to sell. Typically, buyers look for privately-owned ASCs consisting of around 15 to 20 physicians.

Pick Your Size – Buyers are Interested in a Variety of Ownership Arrangements

Buyers are interested in purchasing up to 75% of a facility, though larger ownership acquisition percentages are more common in large ASCs. Most commonly, the ideal ownership percentage is above 30%. There are three-way transactions where physician owners, a hospital system, and a management company are all involved. In these cases, the ASC management company is responsible for day-to-day facility operations and management services, while the hospital system contributes by providing patient volume and additional leverage with payors and supplies.

Price Reductions for Out-of-Network Situations

As a rule of thumb, in-network is better than out-of-network. Managed care contracts and the opportunity that comes with regularly re-negotiating them offer buyers stability – out-of-network arrangements simply have more risk.

Premiums Paid for Certificates of Need

According to Healthcare Appraisers, buyers report paying a premium of 0.25x to 1x above the multiple they would typically pay when the ASC has a CON.

To learn more about our healthcare investment banking services or to discuss your specific situation with no obligation please feel free to call.  We are happy to share our knowledge and help you understand your options. All conversations are strictly confidential.

Photo: Eric YetterEric Yetter

FOCUS Managing Director and Healthcare Team Leader

Direct: 615-477-4741

Eric Yetter is an investment banker focused on healthcare. His practice includes healthcare provider services, home health and hospice, and behavioral health. Mr. Yetter has completed a variety of healthcare transactions, many with private equity firms and PE-backed companies. His past clients include leading physician groups, healthcare facilities, and institutional healthcare investors. Mr. Yetter founded Physicians First in 2016, recognizing the emerging need for investment banking and advisory services for owners of physician practices, surgery centers and clinical businesses. The next four years saw record levels of physician-owner M&A activity and Physicians First became one of the nation’s most active advisors for transactions between private equity firms and medical practices. In 2021, Mr. Yetter agreed to merge Physicians First with FOCUS and lead the firm’s healthcare team. Mr. Yetter also has healthcare operating and investing experience. He was an early executive at Covenant Physician Partners (previously Covenant Surgical Partners), an acquirer and operator of ambulatory surgery centers and physician practices. The company built and operated an outsourced laboratory, an anesthesia business, and a revenue cycle management company. Covenant has grown into a major player in healthcare services and is currently backed by private equity firm KKR. Prior to Covenant, Mr. Yetter held operating roles at Volkswagen Group of America and Brainlab, Inc., an image guided surgery company. While at Brainlab, Mr. Yetter worked with leading neurosurgeons and hospitals to implement cutting edge technology and improve patient outcomes. Mr. Yetter is a licensed attorney (currently inactive) and earned JD and BS degrees from Vanderbilt University, graduating with high honors. He is a FINRA licensed investment banker.
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