How do I know when it’s time for me to consider selling my ASC?

Great question. You want to consider selling your ASC when an outside investor can add the most value to the partnership and right as you are peaking with what you can do with the center. This can occur at different stages for different surgery centers. There are buyers and sellers at all stages. It is tough to anticipate a future decline in business, so it is necessary to determine where the surgery center business is and where it is headed. Easy right?

I recommend that you think of your ownership shares in your surgery center as you would shares in NIKE, Facebook, GE, etc.; value can go up or down almost anytime.

Let’s take a look at the thought process in a more strategic fashion. What we do if we are brought in early enough in the decision making process is to recommend doing a SWOT (Strength, Weakness, Opportunities, Threats) analysis. There are others that you could use to get to the same place, but it is the one most of us have heard about and it is fairly easy and straightforward.

A SWOT analysis guides you to identify the positives and negatives inside your Ambulatory Surgery Center business (S and W) and outside of it in the external environment (O and T). This will help you to develop a full awareness of your situation, which will help with creating a plan and making the decision. Do you hold or sell, and what is your path forward if you sell or hold?

You can list internal and external opposites side by side. Answer these simple questions: what are the strengths and weaknesses of your physician group, your ASC, your market, and your efforts or actions, and what are the opportunities and threats facing it?

Some of the elements typically found in a SWOT for a surgery center:

Strengths 

  • Young, engaged partners
  • Multi-specialty case mix
  • Well paying long term contracts

Weaknesses

  • Low volume
  • High debt
  • Disengaged partners
  • Low paying contracts
  • Overbuilt center

Opportunities

  • Ability to take on more cases or expand
  • Improve payor contracts (e.g. an ASC that sold with payor contracts at 100% of Medicare. This was a huge buying point for the strategic buyer because it was an easy opportunity to increase revenue shortly after they bought the center.)
  • Recruitable surgeons in the market
  • Lower expenses
  • Improve business best practices
  • Internal cases that can be brought to the center
  • Able to establish a direct to patient marketing program

Threats

  • Competing Hospitals
  • In-office procedural rooms
  • Competing ASCs
  • Fractured partnership/disgruntled partners

The major threat to success in the SWOT is “the competition.” So it can help to think of the competition in a broad sense as you consider threats to your success.

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Category: Selling My Ambulatory Surgical Center
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