FEATURE


focus on initially is management, Knight says. “You need a capable, clearly defined management team in place running the


daily opera-


tions of the business. This is some- thing buyers are going to look for, and these responsibilities should not fall heavily on the shoulders of the physician owners.”


When a strong management team is in place, it can focus on ways to make an ASC’s operations more effi- cient, Prives says. “There are technol- ogies on the market that can help in this area. They require an investment but can make a notable difference in performance. If there are any con- cerns on the compliance end, smaller ASCs may want to engage an out- side vendor that can perform a thor- ough evaluation of their operation and make recommendations for tighten- ing the house.” Look to improve other areas likely


to draw scrutiny from buyers, Long says. “Examine how effectively you manage your overhead. Buyers do not want to see irresponsible spending. Make sure you are also doing a good job with your revenue cycle. Critical to these and other areas of an ASC’s operation is the performance of the administrator. Monitoring this indi- vidual is key. If you have an adminis- trator poorly managing revenue and/ or expenses, you are probably leaving money on the table.” To learn more about potential


buyers and gain a better understand- ing of what they are looking for in an acquisition, seek them out, Long says. “There are a wealth of oppor- tunities for ASC principals to net- work with buyers at industry events. These are great places to get a feel for the market and start a dialogue with prospective partners. That rela- tionship building can justify the cost of attending a meeting.” Those events, he adds, also present the opportunity to meet service pro- viders that can assist with the sale pro-


cess. “There are consulting and valua- tion firms able to fill in knowledge and experience gaps.” Also investigate whether individ-


uals with whom your ASC already has a relationship can help, Prives says. “If your accountant and/or legal counsel have been involved in ASC deals before, they may be able to help you determine the price range for your surgery center and possible interested buyers.” Get creative if cost for services is a concern, Prives says. “For example, a smaller ASC could jointly engage an investment banker with a neigh- boring ASC to help cut down the cost of the banker marketing the ASCs to potential buyers.”


Long-Term Planning If selling your ASC is not on the immediate horizon but something you are considering for several years down the road, Knight says there are longer term projects that can help better position your ASC. “Work to diversify your revenue by adding physicians, procedures and even spe- cialties. If you have just a few physi- cians focusing on a specific specialty and performing a limited amount of procedures, that is going to nega-


tively affect your ASC’s appeal and its valuation.”


Start monitoring your financial per- formance and the drivers of that per- formance more closely, Long says. “Knowing your business is key. Your shareholders and upper level man- agement should have a good sense of the performance of your center— as opposed to just performing cases and turning out volume—so they can be effectively engaged in bringing about improvements.” Weigh whether your ASC should to


work better balance its payer


mix, Knight says. “Understand your ASC’s breakdown of in-network ver- sus out-of-network reimbursement from payers. Most buyers looking to get into this market have a perceived higher risk from an ASC that is more out-of-network than in-network. Making sure you are not too heav- ily involved in one or the other could be beneficial.” Finally, always keep an eye on the future as much as the present, Prives says. “You want to know your his- torical revenue and understand your potential revenue. Buyers will look at both figures and where they fall will be key in helping ensure your ASC receives offers worth considering.”


ASC FOCUS SEPTEMBER 2018 |www.ascfocus.org 15


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