The Market for ASC Sales – Four Key Traits Buyers Look For
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.
FOCUS Managing Director and Healthcare Team Leader