3 Current Trends Impacting ASC Transactions

ASCOA CEO Luke M. Lambert discusses three current trends impacting surgery center transactions.

1. Hospitals are more interested in surgery centers. Three years ago, hospital interest in surgery centers was nowhere near the level it is today, says Mr. Lambert. Hospitals are now looking to acquire ASCs and further consolidate their markets. "Hospitals have always had a big piece of the pie, but now they're starting to buy up surgery centers, physician practices and other healthcare entities," he says.

2. Out-of-network centers aren't selling. Buyers are afraid of ASCs with a high percentage of out-of-network cases. As a result, traditional buyers won't make high offers for these ASCs and their owners are surprised by the low offers. "There's a gap between what buyers will pay and how much physicians will sell for," says Mr. Lambert. "So, few transactions are happening with OON centers."

3. Economy forces quick solutions. Given the tighter credit conditions of the last few years, ASCs must find solutions to financial problems quickly as failure to do so could impact the life of the facility, says Mr. Lambert. In the past, lenders and physician-investors were more tolerant and willing to keep supporting a troubled center as it worked to right itself. Today they take a much more critical look. Lenders are quicker to stop cashflow and for physicians, "there has to be a quick path to profitability or they close it down and shift attention to something better," Mr. Lambert says.

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