What do buyers typically do after they purchase an ASC to improve it? Can an ASC do any of that prior to the sale to increase the value of the center?

The actions that buyers of your surgery center would look at and possibly make adjustments to for improvements all relate to value drivers. More specifically they will look for every way to decrease cost, increase revenue and increase efficiencies.

Even in the most advantageous market, many owners of ASCs leave substantial money on the table when they sell their surgery center — most often because they do not truly have a handle on what they can do to maximize the multiplier basis (the metric buyers use to multiply and get a final price) or they don’t want to invest the required time and effort. However, the buyer will take the time and effort to make these changes after they purchase your center. So the question is do you want a multiple of the profit derived from the changes or do you want a percentage of those changes that you will get after the buyer makes the changes?


  • Look at your staffing levels and cost right size that.
  • Look at your cost per OR min and see if you can gain any efficiencies there.
  • Supply cost-surgery centers can reduce surgical supply costs by consolidating suppliers. As a standalone center you can push for price reduction, but an investor that has multiple surgery centers can typically get a better supply cost. You want to perform an analysis on the different suppliers currently used at the surgery center, this will help the materials manager identify which cases use the most supplies — often also the cases that are performed most frequently at the center — and work on cutting the number of companies from several down to one or two if you can get that price down by doing so. You need to know what you are spending per item for surgical cases. Many centers don’t track spending levels deeply enough and as a result there are lost profits. Physician preference items often cost the surgery center a great deal if the physicians don’t partner with the ASC to reduce materials costs. Make needed adjustments. As you determine which suppliers have the best deals, work with surgeons to consolidate their preference items for the lowest cost high quality provider.
  • Benchmark your costs against yourself and others.There are many benchmark surveys for most of the categories that you can turn to if need be.
  • Renegotiate your lease on the ASC space, equipment etc.
  • Renegotiate vendor agreements-all of them!
  • Renegotiate third party payor agreements-even if you have a year left.
  • New cases are the lifeblood of a successful ASC. Ask each partner and physician that is doing cases in your center if there are any cases that they could bring to the center that they are currently taking somewhere else. Then ask then what you could do to make them feel comfortable in bringing those cases to the center. I would also create a spreadsheet that lays out what a few more cases-use the cases that each surgeons is currently doing and the payor mix, would mean to the bottom line of the surgery center. You want to capture all the cases that you can and that add to the profitability of the center. This would increase the value for the buyer after the sale or the sales price for the physicians.
  • Recruit new physicians and syndicate. Buyers understand that physicians and referrals are central to the success of any surgery center. ASCs that attract additional physician-investors will capture the revenue from other centers. ASCs that have the right mix of physicians could lead to a boost in earnings, which will in turn increase your valuation, thus achieving a significantly greater acquisition price. Look to existing specialties and the partners of existing physician-investors; they should already be familiar with your facility and board members, and might be more open to joining you in short order. After that move to competitors of existing partners, this might be controversial to some but the competitors are valuable targets.
  • Is there a local competitor that you could merge with? If you have two centers that treat patients in the same market, think about merging the ASCs with the combined revenue and significantly reduced overhead.

With the right staff or consultants you should be able to carry out some, if not all of these things. Doing these will help you better convey your unique story. Additionally this will help you make your argument through the Discount Cash Flow Model, a Gordon Growth Model or some hybrid thereof. This is a picture of the present value of future revenues or future revenues in its present value.

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Category: Selling My Ambulatory Surgical Center
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