As the ASC industry continues to grow and inflationary pressures persist, private equity strategy will likely begin to shift, according to a recent VMG Health report.
Inflationary pressure, along with rising interest rates and labor costs, has turned private equity investors towards other deal strategies, according to the report. Investors are looking for smaller deals, where financing might be easier, or eyeing add-ons small enough to purchase without debt.
Private equity has already been eyeing ASCs for the cost savings they can offer without sacrificing quality. Private equity firms have ownership stake in two of the largest chains by market share, AmSurg and Surgery Partners. Additionally, private equity has been increasingly investing in cardiology and orthopedics, two fast-growing ASC specialties, Becker’s reports.
Private equity strategy shifts could drive transactions among independently owned ASCs, which make up 70% of the market, according to the report. VMG Health also expects private equity to eye “smaller add-on deals aimed at consolidating several ASCs in an area.” Read more.
