Current and Emerging Trends in Buying Selling and Valuing Ambulatory Surgery Centers

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Current and Emerging Trends in Buying, Selling,
and Valuing Ambulatory Surgery Centers

• December 7, 2012

Presenters
Blayne Rush President Ambulatory Alliances
Curtis Bernstein Managing Director Sinaiko
Healthcare Consulting
Joshua Kaye Partner DLA Piper
Moderated by Robert Kurtz of Kurtz Creative
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What do you see as the typical pricing of deals
today?
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How are the prices determined?
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Fair Market Value

• Required standard under the Anti-Kickback Statute
• Hypothetical willing buyer and seller
• Arms length transaction
• Known and knowable at date of transaction
• May take into account any improvements that can
  be obtained by any hypothetical buyer

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Investment Value

• Willing seller
• Specific buyer
• May take into account synergies of a specific
  buyer
• Better managed care contracts
• Reduced costs
• Specific capital structure

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Market Value

• Actual value resulting from auction of business
  on open market
• Willing buyers compete against other willing
  buyers for the business
• Buyers are only willing to offer amounts that
  provide acceptable returns
• All offers made at arms-length

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Who are the typical buyers and what are they
looking for in a center?
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Due Diligence

• Case Mix
• Cases performed by physician owners
• Payor Mix
• Current contracted rates with managed care payors
• In network vs. out of network
• Expenses
• Ability to save on supply costs / Group
  Purchasing Organization
• Specialties
• Ability to Grow / Capacity
• Certificate of Need (CON)
• Non-compete agreements

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What are the key transaction and valuation
differences in selling to physicians versus
selling to a corporate buyer?
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Fair Market Value

• When a not-for-profit entity or physicians are
  involved in the transaction, FMV must be the
  standard of value
• Cannot purchase an interest from a physician at
  above FMV or sell an interest to a physician
  below FMV
• Generally corporate partners will not pay above
  FMV
• Corporate seller to corporate buyer (both for
  profit) is not governed by the FMV standard
• Purchase of SCA from HealthSouth

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What do you see as the prospect of selling a
center with heavy out-of-network and how are
buyers valuing out-of-network centers?
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Are multiples going up or down?
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What should someone expect from the ASC buying
and selling processes?
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What does an ASC need to do to syndicate to new
physicians?
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What are the most significant trends affecting
partnerships with a hospital or another corporate
buyer?
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Co-Management
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Joint Venture
Co-Management
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What are the key transaction and diligence issues
to address when undertaking a sale?
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Can an ASC profit from anesthesia in light of
recent OIG opinions?
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QA
Curtis Bernstein Sinaiko Healthcare
Consulting [phone] curtis.bernstein_at_sinaiko
.com www.AltegraHealth.com
Joshua Kaye DLA Piper [phone] joshua.kaye_at_d
lapiper.com www.DLAPiper.com
Blayne Rush Ambulatory Alliances (469)
385-7792 blayne_at_ambulatoryalliances.com
www.AmbulatoryAlliances.com