The value of ASCs & other ancillary services — 5 things investors watch

Ancillary services such as ASCs, labs, physical therapy and imaging services provide an opportunity for private placement memorandum investors to gain an additional return on investment, according to a JDSupra post authored by McGuireWoods Associates Chris DeGrande and Leah Eubanks.

Five things investors consider:

1. The government has closely monitored ASCs for fraud and abuse, so investors structure ownership and investment terms with caution.

2. When considering an ancillary investment, investors consider how the service compliments patient care and convenience. Services that are needed and provide value to the patient are typically seen as strong investments.

3. If investors believe an ancillary generates a "disproportionately high amount of revenue," they will examine whether the business is complying with regulations before making an investment.

4. Ancillary services comprise a significant portion of revenue for the oncology, urology and podiatry sectors, so these sectors are expected to experience considerable investment activity.

5. Investors will examine the provider's current and future patient base to determine which ancillary services may benefit patients, while keeping in mind the Stark Law's in-office ancillary services exception.

More articles on turnarounds:
5 must-read articles for the ASC industry this week: March 8-14
Jennifer Duke chosen as ValueHealth's new market development president: 3 details
4 ways ASCs can help teams adopt new technology

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