Anyone know any info about the acquisition of Southeastern Anesthesia Consultants by American Anesthesiology/Mednax? What's the word on the street?
Mednax SAC
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Don't have any word on the street, but they have been gobbling up practices in the southeast like crazy the last few years. This is the 3rd large practice in the state of North Carolina they have acquired in approximately the last 2 years.
They appear to be setting up a near monopoly on large practices from Atlanta up to DC. Considering the uncertain future of reimbursements, I find it a little strange that they are so willing to lay out large sums of cash to acquire practices that might not be as valuable in the future. But they must know something.
They appear to be setting up a near monopoly on large practices from Atlanta up to DC. Considering the uncertain future of reimbursements, I find it a little strange that they are so willing to lay out large sums of cash to acquire practices that might not be as valuable in the future. But they must know something.
I totally agree with you Mman...And SAC is a really big group...must have been expensive...
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MEDNAX, Inc. subsidiary American Anesthesiology has acquired Southeast Anesthesiology Consultants, PA, a 90-physician group practice that provides anesthesia and pain management services at nine hospitals, 12 ambulatory surgery centers, and 10 pain management centers in the Charlotte, NC, area.
Financial terms were not disclosed, but Deutsche Bank Equity Research North America estimated that American Anesthesiology paid between $150 million and $200 million in the cash deal.
Deutsche Bank research shows Southeast Anesthesiology Consultants generates about $100 million in annual revenues and between $25 million and $30 million in trailing EBITDA. SAC, which does anesthesia volume of about 111,000 cases annually, is the fifth and largest group practice acquisition for MEDNAX, in terms of volume and facilities served.
SAC services eight of the 32 hospitals within Carolinas HealthCare System, the nation's second-largest not-for-profit healthcare system, including the system's largest hospital, the 874-bed Carolinas Medical Center.
SAC also provides anesthesia services at 11 ambulatory surgery centers in the Charlotte area, which includes part of South Carolina, and one facility in Virginia Beach, VA. The group also provides services at 10 pain management centers in Charlotte with annual volume of approximately 50,000 patient visits.
The group employs eight physician assistants and six certified registered nurse anesthetists. The physicians practice under an anesthesia care team model that includeshospital-employed CRNAs. SAC also has 45 clinical and administrative employees.
American Anesthesiology includes more than 620 anesthesia providers, including more than 275 physicians and 345 CRNAs and anesthesia assistants practicing in the Carolinas, Virginia, and Georgia, with administrative offices in Raleigh, NC, and Sunrise, FL.
Money talks...
Financial terms were not disclosed, but Deutsche Bank Equity Research North America estimated that American Anesthesiology paid between $150 million and $200 million in the cash deal.
Deutsche Bank research shows Southeast Anesthesiology Consultants generates about $100 million in annual revenues and between $25 million and $30 million in trailing EBITDA. SAC, which does anesthesia volume of about 111,000 cases annually, is the fifth and largest group practice acquisition for MEDNAX, in terms of volume and facilities served.
SAC services eight of the 32 hospitals within Carolinas HealthCare System, the nation's second-largest not-for-profit healthcare system, including the system's largest hospital, the 874-bed Carolinas Medical Center.
SAC also provides anesthesia services at 11 ambulatory surgery centers in the Charlotte area, which includes part of South Carolina, and one facility in Virginia Beach, VA. The group also provides services at 10 pain management centers in Charlotte with annual volume of approximately 50,000 patient visits.
The group employs eight physician assistants and six certified registered nurse anesthetists. The physicians practice under an anesthesia care team model that includeshospital-employed CRNAs. SAC also has 45 clinical and administrative employees.
American Anesthesiology includes more than 620 anesthesia providers, including more than 275 physicians and 345 CRNAs and anesthesia assistants practicing in the Carolinas, Virginia, and Georgia, with administrative offices in Raleigh, NC, and Sunrise, FL.
Money talks...
Not that simple. I know some people in practices that were bought out by them. I'll make up an example practice to illustrate their buyout package.
10 partners each making $600,000 per year.
The group and Mednax (or whatever you want to call them) go over the books and see past case volumes and payor mixes and project future earnings of the group. Assume everything relatively constant.
Mednax projects each partner to earn 4.2 million over the next 7 years. They pay a one time bonus of 2.4 million to each partner and guarantee a salary of roughly $260K per year for 7 years. If they leave early, they have to pay back a portion of the initial payment.
Basically gives the partners identical income to what they would get over the next 7 years with upfront lump sum and then smaller salaries afterwards. Beyond the 7 years, they are in the same boat as anybody else and can be hired/fired as needed by Mednax.
They don't buy out "decision makers". They offer to continue your current income for a set period of time in exchange for the longterm rights to the practice. The older the group is, the easier the decision to "sell out".
But to me it is still risky to the company. It's probably a safe assumption that our salaries are going down to some extent in the near future. They are gambling that the long term outlook (10+ years) is still rosy enough to outweight the short term hit they might take financially on the transaction.
Part of the reason for their gamble is that they probably believe that with more and more groups under their control that they can negotiate much better rates with commercial insurers. Considering the current political climate, I'm not sure commercial insurance will be the same 5-10 years from now as it is currently.
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Hmmmm, they've only bought 3 or 4 practices including this one in the last three years, so I don't know if "gobbling up practices...like crazy" is quite accurate.
Sounds like they have a good hold in NC, but that's the only place they do. There are lots of practices (actually most of them) from Atlanta to DC that are not affiliated with American Anesthesiology. But hey, at least my Mednax stock has more than doubled in the year and a half that I've owned it. 🙂
I guess I overstated it a bit. But they have purchased unquestionably the majority of the largest and most profitable practices. Piedmont, Fairfax, Raleigh/Critical Health, and now Southeastern. I mean the smaller groups and less profitable ones haven't been bought up (yet), but they are certainly making a push.
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I bet the partners made out like bandits. Most of their group is made up of non-partners. I used to know the exact number but not anymore. I did interview with them last year and was offered a position after my 2nd interview. I am extremely glad I did not take it.
