By Jeff Peo
So, you are thinking about taking on a corporate partner in your ASC. You are not alone. This trend has been growing rapidly for the last couple of years, as ASCs are faced with increased regulations, compliance issues and declining reimbursements. Add to those issues the foreshadowing of other unknowns in providing healthcare services in America in the coming years, and it is little wonder that people are looking for help.
The following tips and cautionary tales may help make the merger and acquisition journey a little bit smoother.
PREPARE
There is a lot of work that you need to do up front. This preparatory work will save you from overwhelming headaches and finding yourself whimpering in a dimly lit room laying in a fetal position.
Self-assessment. The ancient Greek aphorism “know thyself" should be the guiding truth for any ASC that is considering being acquired. The first thing that you must do is an honest self-assessment of the strengths and weaknesses of your ASC. This assessment will be a vital piece to help you choose the right partner for your center.
Realistic expectations. You must also be realistic in your expectations regarding the value of your center. I recently spoke with a group of surgeons that has a very successful ASC in northern New Jersey. They were looking for a corporate partner, and brought in several groups to interview. It became very clear that there was a huge gap between what the surgeons thought the value of the ASC should be, and what the potential partners thought it was. The revenues of the center were falling, and the profit that had been experienced in previous years was not sustainable for a multitude of reasons. The surgeons wanted the value to be based upon a successful track record. The reality is that the valuation is based on the sustainable financial expectations moving forward. Not being realistic in your expectations will be frustrating to everyone involved.
DECIDE ON A PARTNER
Ask great questions. When you interview the companies that you think are a good fit for your ASC, you must be prepared with great questions. Give the company a short period to wow you with their marketing materials, but then spend the rest of the time asking questions. You must ask great questions to determine if they really are a good fit for your situation. Share your weaknesses. Ask specific questions about how they will address those weaknesses. Ask for examples of how they have done it in the past. Ask them how they define failure. Ask them about their failures. Find out where else they have seen these issues. Ask them about the strength of their operations team. Take copious notes.
Follow up. Once you have completed the interviews, assign people to call and check references and also to cold-call existing centers that the potential partners shared as having similar issues to your own. Ask them probing questions about the group that you are considering. Remember that you are getting a partner that will be with you for a long time. You want to choose wisely!
