5 Initial Steps to Selling a Surgery Center

Rachel Fields -

Luke Lambert, CFA, MBA, CASC, CEO of ASCOA, gave a presentation titled "A Step by Step Plan for Selling Your ASC – How to Maximize the Price, Terms and Results and How to Handle the Process" at the 9th Annual Becker's Orthopedic, Spine and Pain Management-Driven ASC Conference in Chicago on June 9, 2011.

During the presentation, Mr. Lambert gave an overview of his company's approach to selling a surgery center. Here are the first five points he discussed:

1. Build owner consensus. Mr. Lambert says physician owners need to be committed to selling the ASC before the selling process begins. He outlined pros and cons for physician owners; pros included achieving better payor contracts through hospital alignment and diversifying physician assets, while cons included losing control of the center and paying perpetual management fees.

2. Obtain confidentiality agreements from potential buyers. Obtaining confidentiality agreements means identifying potential buyers — the local hospital and industry management companies — and creating a confidentiality agreement to allow the sellers and buyer to "test the waters" with each other.

3. Create and distribute a book of information on the ASC. The book of information on the ASC should include an executive summary, description of the center, history of financial performance, payor and competitive environment, ownership breakdown and owner profiles, among other information, Mr. Lambert said.

4. Collect proposals. Mr. Lambert said when surgery centers request proposals from potential buyers, the owners should explain exactly how they want the proposals to appear. Otherwise, the owners may get a lot of information that they can't compare side-by-side. He recommended asking buyers to lay out how much of the center they want to buy, how they will treat the existing management contract and their pricing offer, among other details.

5. Select strongest suitors and meet. Once the owners have received proposals from potential buyers, Mr. Lambert said they should select two or three favorites and meet to negotiate a letter of intent. Owners should try to create competition for the center by talking to several buyers at once; Mr. Lambert said it can be difficult to anticipate the most aggressive buyer, so surgery center leaders should go into the negotiation with an open mind.  

Learn more about ASCOA.

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