ASC share

[caligas]

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Have opportunity to buy a share of an ASC my group covers.

Anyone willing to share; what are the key questions and what due diligence would I need to do?

 

[ChiDO]

Find out how the valuation is calculated and when is it updated? (we take an average over 5 years)
Debt on the books?
How to buyouts and buyins work?
P&L statements?

 

[ZzzPlz]

Dilutable or non-dilutable shares? Share cost vs average distributions? Quarterly distributions? Agree to take a look at share price and history of share price and ask to see as much of the ASC financials as they’re willing to give you I.e. outstanding debt and EBITDA

 

[UscGhost]

Be very cautious. I have known a lot of surgeons who have never made a dime off distributions, and many who've lost their shirts.

It's a risky business, as your profits depend on other surgeons who could leave or change practices.

Also need to compare risk/return versus other investments (real estate, stocks, etc)

 

[Howard888]

While common in the past It’s extremely unusual for any ASC to offer anesthesia ownership anymore as anesthesia does not bring cases or generate revenue (although one can argue that there is a huge difference in what type patients or cases anesthesia groups are comfortable doing at an ASC and so a more flexible group brings more cases).

The good ASCs or I should say profitable ASCs recognize this and would never offer an anesthesia share versus new surgeons.

As some alluded too, many non profitable ASCs that yield little return and many have shut down as well.

Look at the numbers but have to ask yourself why they are offering you a share when you don’t generate revenue for the facility

 

[AKMD_1984]

It’s a scam

 

[nimbus]

While common in the past It’s extremely unusual for any ASC to offer anesthesia ownership anymore as anesthesia does not bring cases or generate revenue (although one can argue that there is a huge difference in what type patients or cases anesthesia groups are comfortable doing at an ASC and so a more flexible group brings more cases).

The good ASCs or I should say profitable ASCs recognize this and would never offer an anesthesia share versus new surgeons.

As some alluded too, many non profitable ASCs that yield little return and many have shut down as well.

Look at the numbers but have to ask yourself why they are offering you a share when you don’t generate revenue for the facility

Since many ASCs now have problems getting anesthesia coverage, offering ownership may be an inducement to prioritize coverage for the ASC by the owner/anesthesiologists.

 

[Simba1711]

I have a surgical share. It was a brand new facility and with Covid they finally started generating profit year 3. In hindsight I would have just put money in total stock market etf. It’s liquid and much safer investment. Also, the profit margins seems to be much tighter for ASCs nowadays compared to in the past.

 

[kidthor]

Have opportunity to buy a share of an ASC my group covers.

Anyone willing to share; what are the key questions and what due diligence would I need to do?

Do they own the land? Do they have a lease on the land and for how long and on what terms? Are you a general partner or a limited partner - and are some partners more "equal" than others? Do you vote on the business dealings via the share? Are you exposed to a potential capital call? Under what terms can you sell your share? What kind of insurance do they have and what could you be personally liable for (e.g. if a high liability event occurs are you then on the hook for part of a $20 million judgment?).

Personally I would engage a medical business attorney to assist with due diligence because these days I think it's a potentially high liability investment.

 

[arsene19]

Have a clear exit strategy.

Otherwise you're marrying that ASC and are their b**ch in perpetuity for 0530 starts before their 0700 clinic, if they want to bang out some cases on a Sat after a vacation, etc etc.