Mergers and acquisitions, private equity and joint ventures have had a significant impact on the ASC space over the past few years, but the frequency of deals has recently decreased, according to this CEO.
Higher interest rates, paired with inflation and rising operational costs, have led to some groups taking a step back from the acquisition side of things.
Whitt Holder, CEO of Amarillo Urology Associates in Texas, recently connected with Becker’s to talk about how mergers and acquisitions, as well as joint ventures, have cooled throughout the ASC industry and what some of the causes of the slow down have been.
Note: Responses were lightly edited for clarity and length.
Question: When it comes to mergers and acquisitions and consolidation throughout the ASC and healthcare spaces what are you predicting?
Whitt Holder: It feels like some of the glory days of M&A have passed us a little bit. We lived through a lot of healthcare systems wanting to buy practices and do joint ventures, but that has slowed down a little bit. And then private equity hit hard around COVID, and there was a lot of PE activity, but I feel like the PE activity slowed down a little bit, too. I think it may be because that second bite hadn’t gone as fast as anyone wanted it to. I’m not an expert at it, but I kind of feel like it’s all gotten a little bit quiet on the western front when it comes to M&As and joint ventures. I do think there is still opportunity out there for big ASC groups, possibly to get in and continue to slowly start buying some more ASC strategically and geographically.
I don’t know where that would be or what that would look like, but I do think your USPIs and your bigger ASC groups are going to still continue to try and work on doing joint ventures with independent ASCs. I feel like, and maybe I’m just not in the right geography, but I feel like a lot of those phone calls, a lot of those emails, all those letters that used to come in quite often, have slowed down quite a bit. It could be because interest rates are higher now, that could have something to do with it as it is the cost to buy in is more than what it used to look like back when we had 3% interest rates. A few years ago, you could go get money cheap, buy and then make it work. That’s just kind of my gut feel on that.
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