Key Observations on ASC Transactions in 2013
Mr. Park began the presentation by discussing a few market drivers for ASC sales and mergers. He said all signs are pointing to maturation in the industry: Growth in ASC development has leveled off, same center growth has flat-lined and ASC supply exceeds physician demand in most markets. Mr. McDonough said he expects continued consolidation of ASC management companies as a natural byproduct of any mature industry.
There has also been an uptick in de novo development. "This time last year, we presented trends in the ASC industry, and this year we see more revival of de novo development," said Mr. Park, but this is also offset by some consolidation from struggling ASCs.
Recruiting and retaining physician investment will likely continue as a great challenge for ASCs. Mr. Park pointed out that ASCs are competing for physician owners. "Hospitals are upping physician employment to develop integrated networks. ASCs and physician-owned hospitals rely on the same physician investor pool." This year, the number of eligible physicians per ASC and POH declined to17 physicians, said Mr. Park. That's about a 40 percent decline from 2001.
Mr. McDonough shared some key observations on ASC buyers. "Most of these haven't changed from year to year," he said. Common buyers include acute-care hospitals, who view ASC acquisitions as a relatively straightforward way to affiliate with physicians. Many ASC management companies are acquiring ASCs as part of a broader strategy to hit a critical mass and expand their presence in markets in which they already have a footprint.
More competing ASCs are also popping up as buyers. "Five years ago, we really didn't talk about other ASCs being in the transaction market, but over the past two to three years we've seen a significant uptick," said Mr. McDonough. "In many markets, you have too many ASCs and not enough physicians. What it comes down to is these entities trying to do a better job utilizing capital."
More Articles on ASC Transactions:Surgery Center Transactions: Outlook for Today's Market
How Healthy Is the ASC Transaction Market? Q&A With Colin McDermott of VMG Health
Outlook for ASC Development & Transactions: 8 Key Trends
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