• Eric J. Yetter

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.

For more information on selling your ASC and Physicians First's investment banking solutions for doctors, download our current reports here.

This post is for informational purposes only and does not constitute an offer, invitation, solicitation, or recommendation to buy, sell, subscribe for, or issue any securities. While the information provided herein is believed to be accurate and reliable, 127 Capital, LLC (“Physicians First”) and Ashland Securities, LLC make no representations or warranties, expressed or implied, as to the accuracy or completeness of such information. All information contained herein is preliminary, limited and subject to completion, correction or amendment. It should not be construed as investment, legal, or tax advice and may not be reproduced or distributed to any person. Certain Principals of Physicians First are registered representatives of Ashland Securities, LLC Member FINRA, SIPC. Physicians First and Ashland Securities, LLC are separate and unaffiliated entities. Securities and Investment Banking Services are offered through Ashland Securities, LLC.