ASCs, physicians 'very attractive' to investors: 5 trends from KPMG

There were 245 healthcare mergers and transactions in the second quarter, 7 percent below the deal average last year and 41 percent lower year over year, according to a KPMG report.

Physician practices and ASCs are attractive to investors, with significant upside as more procedures move outpatient. There were around 100 deals involving physician groups in the second quarter, accounting for around 42 percent of all deals.

Five trends from the report:

1. In mature markets, where 75 percent of procedures examined are performed in ASCs and physician offices, investors are targeting physician groups. "In those areas, physician assets could become very attractive, particularly as short-term investments. Target companies in mature markets will likely have ambulatory assets and conduct significant volumes at nonhospital sites of care," according to the report.

2. Providers with ambulatory care assets are able to more effectively increase services performed outside of the hospital and participate in value-based care arrangements, according to the report.

3. Insurers could play a bigger role in transitioning care to outpatient surgery centers in the future. The report notes investors may "partner with payers to identify other services that can be shifted from the hospital and to secure favorable professional rates for performing these services in office or ASC settings," according to the report.

4. There is significant opportunity in immature markets, where fewer than 30 percent of procedures studied had transitioned to ASCs and physician offices, for investors to accelerate outpatient surgery. Independent physician groups stand to earn higher professional fees and facility revenue as owners of their own practices and surgery centers, which is attractive to investors.

But immature markets are also risky since shifting services outside the hospital could lead to provider concentration and changing referral patterns.

5. Investors in immature markets are more likely to pursue fee-for-service specialties including ophthalmology and orthopedics. They are also investing in technology and equipment so physicians can perform procedures and diagnostics outside the hospital, according to the report.

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