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6 Things to be Mindful of When Developing Your ASC's Financial Package

Written by Joan Dentler, President and CEO, and Erin Carr, Financial Analyst, Avanza Healthcare Strategies | February 10, 2014

Joan DentlerYou know the line about "You only have one chance to make a first impression." How you present your ASC's financial information to a lender, potential investor or an acquisition suitor is similar to that first encounter. The information you provide and how it is presented can make a significant difference in how your ASC is perceived.

After working with numerous organizations interested in acquiring ASCs and assisting their acquisition teams in sifting through mounds of spreadsheets, financial tables and data, we have come up with six critical things to keep in mind when developing your ASC's financial package.

Erin Carr1. Bigger isn't necessarily better. Your organization may run 24 disparate financial reports on a monthly basis. Your financial package is not where they all belong. Remember: This document is not a data depository but rather a strategic executive level document that highlights and communicates the key drivers of financial performance.

2. Find the altitude between the weeds and the clouds. You can't be all things to all people, but for this exercise, you need to try. Anticipate the different audiences who will receive this package, knowing that what your lender may want to see could differ significantly from what a physician investor is interested in reviewing.

Provide enough detail to be substantial enough for a keen financial eye but keep it understandable enough that it could be absorbed by a healthcare neophyte. A line item that you have been closely monitoring over the past three months may be at top of your mind, but is it significant enough to warrant inclusion in your financial package? Always ask yourself this question: Is the information material to the financial health of our organization?

3. Presentation is paramount. Tables are good, but graphics are better. There is a reason the phrase "a picture is worth a 1,000 words" is overused. The concise visual communication of data can be extremely compelling. Your financial package is not complete without narrative, footnotes and annotations through which you discuss the data and explain any variances or numbers that fall outside the norm. Although you will likely be presenting your financial package, the document needs to be able to stand on its own.

Professionalism and accuracy are non-negotiables. Spelling errors and columns that don't add up will lead to loss of credibility. If you are preparing a financial package, there is usually something big at stake. Don't let something seemingly small ruin your opportunity.

4. Benchmarking is big. Regardless of whether you call it comparative analysis or benchmarking, it is critical. Business isolationism can be fatal, and you need to demonstrate to your audience that you are committed to continuous performance improvement through benchmarking.

Be proactive, as every interested outside party is going to ask, "How does your information compare to others in your market and the industry as a whole?" Accept you will never have an apple-to-apple comparison in your financial package. Explain why you are an orange. Don't be paralyzed by the differences between your facility and others. Rather, embrace and explain the variances. Remember: benchmarking is more art than science.

5. Templates are timesavers. Rarely is your financial package a "one and done" exercise. Whether you are developing your financial package for bank financing or negotiations with hospitals or physicians, it will need to be a dynamic document that can be revised and updated without having to reinvent the wheel.

Effective replication can be realized through the use of predesigned templates. Not only is this efficient reporting, but it is consistent reporting. Consistency is usually correlated with stability and competency — two impressions you want to plant in the mind of your audience.

6. Don't hide the bad. While it may seem counterintuitive, make sure to share any obvious weaknesses. They are likely to be uncovered anyway, so identifying them upfront will serve to show you are aware of areas in need of improvement.

You can be offensive and not defensive, and use this as an opportunity to explain the deficit and spell out a plan for corrective action.

Reap the rewards of careful preparation  
Things move quickly in today's environment. You can't always predict when you may be approached by a potential investor or suitor, or need quick access to capital.

Putting all of your financial information together in a professional package is a smart undertaking, and doing so in advance rather than when you are under the gun will help ensure the package is accurate and complete. By presenting a strong financial package to potential partners, you will put your ASC in the best position for success and to take advantage of any strategic opportunity that comes your way.

Joan Dentler is president and chief executive officer of Avanza Healthcare Strategies, which provides healthcare organizations with strategic guidance, with a focus on outpatient services and community collaborations. For more than 25 years Ms. Dentler has been consulting on, developing or operating hospital outpatient services, ambulatory surgery centers and community health initiatives.

Erin Carr is financial analyst for Avanza Healthcare Strategies. She has served more than 100 ambulatory surgery centers, hospitals, physician practices, hospice organizations, rehabilitation centers, skilled-nursing facilities and other healthcare organizations across the country. Among other things, Ms. Carr provides financial modeling for new programs, due diligence for acquisitions, and impact analysis for program migrations.

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