At the Becker's ASC 21st Annual Meeting in Chicago on Oct. 23, guest speaker Stuart Neiberg, CPA, CFA, director of HealthCare Appraisers, outlined key topics impacting the valuation of ASCs.
Located in Delray Beach, Fla., HealthCare Appraisers offers fair market value consulting and valuation services for health care businesses nationwide.
"The standard value in most healthcare transactions is fair market value," said Mr. Neiberg. "Valuation is forward looking." Mr. Neiberg detailed how the following factors can enhance ASC value for prospective investors looking ahead.
ASC value enhancers
Multispecialty. While multispecialty ASCs come with their own set of challenges, centers with different types of cases are more attractive to investors, according to Mr. Neiberg. Multispecialty centers maximize facility use to bring in more revenue.
Diversification. A diverse group of surgeons lowers risk by broadening the ASC's customer base, making it a more attractive investment.
Owner performance. Value increases at an ASC with a high percent of cases performed by owners or physicians who are financially motivated, according to Mr. Neiberg. This indicates a stable business with owners invested in success.
Little debt. ASCs that accrue little debt over time are lower risk investments.
Vision for future. A history of seeking new owners and an expectation of continued distribution shows a center is focused on extending the life cycle of its business, according to Mr. Neiberg.
Growth. Proven increase in sales and earnings indicates a successful ASC and enhances value. Reimbursement growth is less certain, according to Mr. Neiberg.
Commercial payer network. ASCs predominantly in networks with commercial payers are seen as lower risk investments, according to Mr. Neiberg.
Barriers to entry. There are requirements and regulations in many states to opening new ASCs. For example, a certificate of need is required in some states to demonstrate a demand for a new facility in a community. "Where I'm from in Florida, it's like the wild west. Anyone can open an ASC; there are no government regulations," said Mr. Neiberg. For new ASCs, low or no barriers to entry enhance value. For established ASCs, higher barriers to entry make an existing center more attractive to investors.
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