Q: What are some of the trends you are seeing in the types of projects ASCs are seeking loans for? What types of loans are they receiving?
Anthony Mai: I am seeing still a lot of request for start-up financing. I am also seeing request for acquisition financing in which a hospital sells its ASC to a newly formed LLC consisting of the hospital and physicians. The loans that they usually receive are full payout loans with terms ranging from 5-7 percent.
Q: What is the critical information ASCs need to present to banks to ensure the best loan possible?
AM: If the bank really understands ASCs, the most important piece of information is the physician production. What I mean is the specialty, number of cases they intend to bring to the center, the reimbursement for those cases. Second would be the proforma, which would spell out the expenses and expected profit (or loss) in the first year. Third would be the financial condition of the physicians in the group
Q: After an ASC has identified the bank it wants to secure the loan from, what should be the first few steps to start and move the process along effectively?
AM: The more complete package you can give them, the easier the underwriting process. If information trickles in it takes longer. Also, physician interviews can drag the process longer if they are difficult to reach.
Q: What are typical mistakes ASCs make in the loan process that hinders their ability to secure a good loan?
AM: Physician credit. When we do our due diligence and a physician has problems, it effects everybody at the center because if it cannot be explained, banks may not except their personal guarantee and then banks have to scramble to restructure the deal to compensate for that. If you have something that may effect [the deal], you tell the banker so he can act instead of react.
Q: Is there a good rule of thumb for how long an ASC should plan the loan application and approval process to take?
AM: Depending on the size of the transaction and the size of the bank 30-45 days should be enough time to secure a credit approval
Contact Anthony Mai at amai@sunnb.com. Learn more about Sun Healthcare Finance.
