What is “strategic partnering” and how will it benefit you and your center?

Strategic Partnering is when you form a partnership with one or more entities that can help your center grow, become more profitable, and increase the value of the center and the distributions to the partners.

A strategic partner is a partner that brings more to the table than just money. While money is important, and we strive to obtain the highest possible values for our clients, in most cases money is not the sole goal. Since buyers almost always want the sellers to retain a significant (usually 49% or greater) interest in the ASC, it is in the seller’s best interest to partner with a company and/or hospital that will bring expertise that improves the business, as well as money.

From a strategic perspective the best buyers are the ASC management companies that have investment capital and that can bring expertise in recruiting, contracting, case costing analysis, billing and collection, A/P and A/R, and purchasing savings to the table. Each of these areas of expertise can help your center improve its business and generate more profits and distributions. In many cases, a hospital that is willing to provide access to its hospital contracts can be a strategic partner, but this is a relationship that must be carefully managed. This is why a 3-way deal between the ASC, an ASC management company and a local hospital can be a very practical and workable strategic alliance, especially if Accountable Care Organizations (ACOs) become dominant. We call it “the best of both worlds” alliance – ASC management expertise and access to better paying contracts, in an environment that values the ASC as the high quality, low cost provider.

Partnerships with private equity firms that are “rolling up” groups of ASCs are not “strategic”. Private equity roll-ups, or leveraged buy-outs, are engineered by investment firms to buy a group of ASCs and then sell them at a profit to a higher bidder. These are not strategic as the private equity buyers tend to know very little about the ASC business and can’t help your business grow. While the investment bankers make lots of money, your individual ASC business is not likely to be enhanced by the transaction. And at the end of the day you don’t know who your eventual owner or partner will be. We recommend partnering with an ASC management company and/or a hospital in a strategic partnership that results in tangible financial and operational benefits to the ASC sellers.

Based on the situation and goals of the sellers, ASCs Inc. helps its clients find the best strategic partner and the highest value for their centers, as we have for over 200 centers since 1984.

For more information go to: www.ascs-inc.com