Thinking about selling your ASC? Read this first

Preparing an ambulatory surgery center (ASC) for sale requires considerable resources, both in time and expertise. Many ASC owners, however, wait too long to solicit advice on these complex transactions, which can result in a lower selling price and less advantageous nonfinancial terms, including governance, retirement provisions and ongoing management contracts.

Despite these risks, going it alone remains a common occurrence, especially with a fast-consolidating U.S. healthcare market that places a premium on ASCs, which offer high-quality care, low costs, improved outcomes and fit well into the national dialogue on healthcare reform. According to the Advisory Board, three main factors are driving the migration of surgeries from an inpatient to an outpatient setting: lower costs for payers, patient convenience and physicians recognizing a financial opportunity in the market.

Today, 66 percent of all surgeries in the United States are performed in an outpatient setting, according to the Agency for Healthcare Research and Quality. When will the opportunity level off? It’s difficult to say, but the past may be prologue — at least in the near term — recent Advisory Board research suggests:

“In 2017, ASC volumes increased by 22.9 percent nationally. In 20 of the top 50 largest U.S. markets, ASCs more than doubled their market share between 2015 and 2016. And looking ahead, the U.S. ASC market is expected to surpass $40 billion by 2020.”

Hospitals and national ASC companies will continue to be the core drivers of the acquisition market. Why? Hospitals are looking to trim spending and gain market share while providing quality care by partnering with ASCs. And national ASC companies are aggressively adding to their portfolios and are aiming to integrate both vertically and horizontally.

Due to macroeconomic trends and the increase in acquisition activity, physician owners are increasingly weighing their next steps: it is becoming more difficult to remain independent in a market that now favors scale and market share. Regulations intended to curb excess capacity, new federal reporting requirements, competition for high-quality physicians and downward pressure on reimbursements are just a few of the challenges today’s physician owners face. With current valuations in the high single digits to low double digits, an ASC sale can mitigate these risks and provide favorable capital gains tax treatment on the proceeds.

For many physician owners, selling an ASC is the culmination of years of financial and personal investment. Sellers only have one chance to get it right, and physicians generally don’t have the time or expertise to address the complex and myriad financial, operational, legal and regulatory issues involved.

If a transaction is a possibility for you, it is advisable to consult with a knowledgeable advisor who can benchmark financial performance, identify areas for improvement, boost interim profitability and, ultimately, maximize valuation for an eventual sale. It is not possible to be knowledgeable about market transaction without the experience of many deals, both past and current.

Interested in learning more about the options for selling your ASC? Merritt Healthcare Advisors is the industry’s leading healthcare advisory firm focused exclusively on representing owners of healthcare businesses, surgical facilities and practices that are considering a strategic transaction, whether it is partnering with another group, selling an interest in their business or growing their business through acquisitions. We offer:

  • M&A expertise: We leverage our investment banking background, and as registered securities brokers, we have both the experience and the qualifications required to manage this extremely complex process.
  • Practice and outpatient surgery center focus: As the only firm with actual “owners” experience, we have unique knowledge that comes from owning, developing and managing our own facilities. This insight enables us to best understand and present your business.
  • Unmatched experience: Our leadership team has more than a century of combined experience working in healthcare and has successfully completed over $2 billion in transactions on behalf of our clients.
  • Proven process: Positive outcomes are the result of a deep understanding of your business, transactional expertise, knowledge of the Seller and Buyer communities and the ability to most effectively package, market and manage the sales process.
  • Exceptional results: By eliminating risk for the owners, effectively positioning your organization, creating the most effective marketing piece, validating our projections and the integrity of the offering, creating the most competitive environment for your business and then understanding how to push potential buyers to agree to the terms of the deal we want, we make a significant impact on the financial and non-financial outcomes of your sale.

[1] “ASCs are growing even faster than you think. How can hospitals respond?”Advisory Board (March 2019)

[2] “Statistical Brief #223,” Agency for Healthcare Research and Quality (May 2017)

[3] Ibid.

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