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I was wondering if anyone had good resources or advice on buying into a surgery center. I have been offered a small percentage and wanted to do some research, as it is not an investment I am familiar with. Thanks for any help.
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I would start with a number like 4-6x EBIDTA as a starting point for valuation. You should also make sure you can look at the books, have your own representatives (accountant and lawyer) evaluate the business, and talk to other MDs that are currently investors, especially those who have recently joined.
I have not docs who have done very nicely with these types of investments (including myself, in imaging centers) and those that have lost hundreds of thousands of dollars. Be careful, and if you are not in a position to evaluate the business (or have your own people evaluate the business), you should probably pass. -
I have invested in several ambulatory surgery centers. So far they have been profitable. The local politics and the volume of procedures are key. If it is aligned with a powerful integrated delivery system (e.g. hospital network or large practice surgical group) and if there are many types of surgical specialists operating there or who will bring their business it can be lucrative with minimal risk. There are a lot of factors to consider though... e.g. who does the appraisals of value? How often? How does one buy out? What happens to low volume or retiring surgeons? Will there be treasury shares to bring in new partners? How often will you be allowed to buy more shares? How equitable is the buy in? When are dividends paid? Is it managed by an outside company and if so how much are they paid? What are the payer trends in your area, etc.Comment
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Thanks for the advice, I have research to do.Comment
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Check out this annual ASC survey...
http://www.healthcareappraisers.com/ASC_Survey.htmlComment
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That link seems to be broken, here is the updated link to HealthCare Appraisers ASC Valuation Surveys for 2017.
https://www.healthcareappraisers.com/insights/valuation-surveysComment
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Be careful. Seek the advice of a healthcare attorney regarding the one-third tests. - Ann Bittinger, The Bittinger Law Firm.Comment
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