Overall, half of the respondents said they observed multiples increasing over the past year.
Here is what to expect for ASCs in CON states and centers with high OON volume:
1. Many buyers are willing to pay a premium for ASCs in a CON state. The typical premium is:
• Less than 0.25 multiple: 26 percent
• 0.36 to 0.5 multiple: 42 percent
• 0.51 to 0.75 multiple: 11 percent
• Greater than 1 multiple: 16 percent
Twenty-six percent said they wouldn’t pay a premium.
2. Out-of-network can be a risky proposition for buyers. However, the case mix threshold for out-of-network cases varies based on buyer preference. Around 71 percent of the respondents said 20 percent OON case mix was their risk threshold; another 19 percent reported 40 percent OON was the highest risk they’d take. Ten percent of the respondents didn’t have a threshold.
3. Buyers typically adjust the valuation model and pricing for out-of-network centers. The majority, 68 percent, convert revenue to in-network during the valuation. The remaining respondents reported:
• Adjusting multiples downward: 14 percent
• Applying higher risk factor and discount rates: 5 percent
• Combination of techniques: 5 percent
• Walk away — too much risk: 5 percent
Five percent of respondents reported they couldn’t generalize about their valuation adjustments.
4. When buyers adjust multiples for OON cases, the magnitude of reduction is typically:
• Greater than 2.0 multiple: 57 percent
• 1.51 to 2.0 multiple: 21 percent
• 0.51 to 1.5 multiple: 14 percent
• Less than 0.5 multiple: 7 percent
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