Joan Rivers case points up inherent risks of ASCs

BVWireIssue #144-3
September 24, 2014

The market for ambulatory surgical centers (ASCs) is strong. When valuing an ASC, experts need to be aware of potential serious risks these entities face, especially with older patients, who represent a major segment of ASC customers. The recent high-profile case of Joan Rivers illustrates this, as a visit to an endoscopy clinic for a routine procedure ended in her death. In addition to treatment-related risks, there are other risks that valuation experts need to examine.

Risk assessment tool: In a recent BVR webinar, Todd Sorensen and Kevin McDonough (both with VMG Health) discussed the valuation of ASCs and presented a tool for assessing the risks inherent in ASCs. The ASC Risk-Assessment Matrix measures risk along a number of lines, including service-area growth, competition, location, physician ownership, and more.

The tool produces a single score but gives different weights to different categories and subcategories based on their relative importance to measuring risk. The weighting may be adjusted based on specific facts and circumstances, but, typically, the highest weights are assigned to categories that directly affect volume and reimbursement expectations (e.g., the physician utilization profile, market reimbursement risk analysis, and market competition).

Free download: The ASC Risk-Assessment Matrix is included in a chapter on valuing ASCs written by Sorenson in the BVR/AHLA Guide to Healthcare Valuation, Third Edition. BVR offers this chapter in its Free Resources section. To download it, click here (free registration required).

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