A new market for physician practice acquisition has developed. ASC (Ambulatory Surgical Centers) owned Anesthesia practices and GI Anesthesia groups, which hold long-term contracts with Gastroenterology ASC’s, are now in demand. Larger companies are snapping them up at good prices. It is definitely a seller’s market — for now. You should take advantage of this situation.
Your Contracted Rates are Probably too low
Current reimbursement contracts from insurance companies for patients treated at GI Anesthesia practices tend to be 25-30% less than what larger, dedicated Anesthesia groups can negotiate. This means your practice is at a disadvantage financially. You’re just not close. Large anesthesia groups can make more money than you can from your smaller practice, and they are willing to pay you accordingly.
Financial Pressures Are Increasing
Reimbursement for GI Anesthesia services is going to decrease. For example, Alabama Blue Cross/Blue Shield is considering a reimbursement of only 25% for the use of Propofol.
Compliance in order to receive reasonable reimbursement is also becoming more difficult. The challenges of implementing ICD-10 and demonstrating Meaningful Use are just two examples.
Managing the staffing and benefits for Anesthesia providers can be painful as well. As practicing Gastroenterology becomes more complicated and more costly, many Gastroenterologists find it is tough to properly manage the challenges of their Anesthesia business endeavors.
Why Do Larger Companies Do Better?
Balancing reimbursement and compliance risk/burden is their expertise. More important, they can leverage the earnings (EBITDA) of acquired practices with Wall Street and/or private equity money to finance the acquisition of more groups. Size creates efficiency, savings and benefits for investors. This creates opportunity for GI groups beyond sales to hospitals or other physicians.
In one example, a company purchased a large GI group in Georgia. They followed this purchase with two smaller ones in March 2015. They believe they have the potential to not only grow revenues via future accretive acquisitions but also through organic growth of the acquired business.
In a more recent transaction (AnesthesiaStat was the consultant), the seller was able to achieve a market-leading multiple after careful consideration and skilled negotiation. Medical, business and legal questions added complexity and required care, but AnesthesiaStat managed these issues adeptly.
Make the Deal Yours
AnesthesiaStat can also help you consider other options. For example, a partial sale can help maintain some cash flow and allow you to benefit from better management and “income repair”. Individuals worried about out-of-network charges and balance billing can address these concerns during the negotiation. Anesthesia staff is typically maintained, but new staff can be hired if desired.
Selling a GI Anesthesia practice allows you to cash out now, when the market is favorable, avoiding future risks. The buyer can use its superior management skills to get better reimbursement and reduce anesthesia billing, compliance and collections costs. The key for you is to make sure you receive a price commiserate with your practice’s earning potential. The advice and support of AnesthesiaStat will help you achieve this. More information is available at anesthesiastat.com.