Can a New Physician Buy an Ambulatory Surgery Center?
A new physician may be able to purchase an ambulatory surgery center, depending on the physician’s qualifications, financial position, experience, the ASC being acquired, and the requirements of the financing program.
For physicians considering ambulatory surgery center financing, understanding what lenders may evaluate can help when planning an acquisition.
1. Medical Experience Can Matter
A physician’s professional background may be an important consideration when evaluating an ASC acquisition.
Relevant clinical experience, leadership experience, and previous healthcare management experience may help demonstrate the ability to operate or oversee the business.
The specific requirements will vary by lender and transaction.
2. Business Experience May Also Be Considered
Owning and operating an ASC involves more than providing medical services.
Physicians may also need to manage:
- Employees
- Operating expenses
- Equipment
- Scheduling
- Billing
- Vendor relationships
- Financial performance
Previous business or management experience can be relevant when evaluating the overall acquisition.
3. Financial Strength Is Important
A new physician should be prepared to provide information about their personal financial position.
Lenders may review factors such as:
- Credit history
- Personal income
- Existing debt
- Assets
- Liquidity
- Other financial obligations
A strong financial profile can help support the financing application.
4. Student Loan Debt Does Not Automatically Prevent an Acquisition
Many physicians begin their careers with significant student loan obligations.
Student debt may be considered as part of the overall financial analysis, but it does not necessarily mean a physician cannot purchase an ASC.
Lenders may evaluate the physician’s complete financial position along with the expected cash flow of the ASC.
5. The ASC’s Financial Performance Matters
When purchasing an existing ASC, lenders may evaluate the center’s historical financial performance.
Revenue, profitability, procedure volume, operating expenses, and cash flow can all provide insight into the business.
A financially strong ASC may provide a different financing profile than a center with declining revenue or inconsistent cash flow.
6. The Purchase Price Should Be Reasonable
The purchase price is another important consideration.
Physicians should understand how the asking price relates to the ASC’s financial performance, assets, equipment, real estate, and future prospects.
A thorough evaluation can help determine whether the proposed acquisition makes financial sense.
7. Financing May Be Available Through Different Programs
Depending on the transaction and borrower qualifications, a physician may consider SBA financing or conventional financing.
SBA financing is subject to applicable SBA requirements and lender underwriting.
Conventional financing does not include an SBA guaranty and may have different lender requirements.
8. A New Physician Should Prepare Early
Physicians considering an ASC acquisition should begin preparing their financial information before searching for financing.
Potential documentation may include:
- Personal tax returns
- Personal financial statements
- Bank statements
- Professional history
- Information about existing debt
- ASC financial statements
- Purchase agreement or letter of intent
Preparing these documents early can make the financing process more organized.
9. Consider the Total Capital Needed
A physician should look beyond the purchase price when determining how much capital will be required.
Additional costs may include:
- Working capital
- Equipment
- Facility improvements
- Real estate
- Professional expenses
- Other operating costs
Planning for the entire project can help prevent an acquisition from being undercapitalized.
10. Build a Strong Acquisition Plan
A well-prepared acquisition plan should explain how the physician intends to operate the ASC and maintain or grow its financial performance.
The plan may address staffing, procedure volume, expenses, equipment, physician participation, and expected cash flow.
A clear plan can help demonstrate that the physician has carefully evaluated the acquisition.
Final Thought
A new physician may be able to purchase an ambulatory surgery center, but approval will depend on the specific borrower, ASC, financing program, and transaction.
Professional experience, financial strength, credit history, existing debt, ASC cash flow, purchase price, and the overall acquisition plan may all be considered.
Physicians should evaluate the business carefully and begin preparing their financial information early when considering an ASC acquisition.
