ASCs perform elective surgical procedures not requiring overnight hospitalization. ASC patients receive a spectrum of procedures, from simple diagnostic colonoscopies to complex orthopedic spine procedures. ASCs are well known as being a low-cost provider as compared to hospitals. In general, Medicare and commercial insurances pay ASCs substantially less than they pay hospitals for identical procedures and continue to threaten ASCs with more cuts in reimbursement. This pressure has left surgery center owners to find new ways to be successful. The Bloom Organization says this type of consolidation is one of those ways.
“Surgery centers are all about providing top quality service to their communities at a lower cost than the competing hospitals,” says Henry Bloom, founder of The Bloom Organization. The Bloom Organization, an ASC consulting firm, was engaged to lead the deal. “By bringing the activity of two surgery centers into one, these two ASCs were able to maximize revenue and minimize costs without sacrificing quality of care,” Mr. Bloom continued.
Mr. Bloom cautions ASC owners to work with a professional on such a transaction. “These types of deals aren’t getting any easier,” says Mr. Bloom. “A strict regulatory environment, evolving payer market, rising costs, saturated markets … these are just a few of the many things that make it hard to a get a deal done these days … let alone getting it done right,” he continued.
Both centers are located at 1905 Clint Moore Road in Boca Raton, Fla., but on different floors within the building. The 25 physician partners of the two ASCs specialize in gastroenterology, ophthalmology, orthopedics, pain management, podiatry and ENT. South Palm ASC performed over 6,700 cases annually while Boca ASC performed approximately 4,800. However, with two ORs and three endoscopy suites, the South Palm ASC was underutilized. The two ASCs decided to join forces by bringing all the Boca ASC partners and their cases into South Palm ASC.
“Because there was so much activity in the two centers and so many different parties to the transaction, we had to be thorough with our analysis to help the physician owners make a decision that was in their best interest,” said Chris Janis, director of finance for The Bloom Organization. Mr. Janis explained, “We were able to illustrate that a two part transaction was the way to go. The consolidation of the centers provided for more operating efficiencies, lower overheard, and better payor contracts, while the sale to an outside investor gave the doctors a liquidity event and someone to help grow the center.”
The Bloom Organization says this type of activity in the rest of the ASC arena is not likely to slow down anytime soon. “It’s an extremely busy time for us right now,” says Bob Goettling, a principal of The Bloom Organization. “We are happy that we were able to put together this transaction for all the physicians. I know this was a challenging and unfamiliar territory for them, so I am glad we were able to help them navigate through the complex business deal. In the end, it is The Bloom Organization’s job to structure and manage a good deal so the doctors can focus on what they do best — and that’s taking care of patients.”
Learn more about The Bloom Organization.
