2013 brought growth to the M&A aspect of urgent care centers. However, with new government regulations and provider shotages, what will 2014 bring to the industry
Dallas, TX, March 04, 2014 – 2013 brought growth to the M&A aspect of urgent care centers. However, with new government regulations and provider shotages, what will 2014 bring to the industry
Owners of such centers shouldn’t suffer from a shortage of potential buyers, but preparation for sale will be the key to success.
“We have seen urgent care garner more and more attention from the health systems and that will also grow in 2014,” said Blayne Rush, president of Ambulatory Alliances, a healthcare investment banking and urgent care center broker firm. “Health systems see that urgent care is an entry point for the patients. I have seen where urgent care refer a great deal of patients to primary care and the systems are fighting over that influence.”
The pattern that some experts expect to see in the coming year is that of smaller deals, as oppossed to those involving urgent care companies with more than three locations.
“From a financial buyer perspective, the challenge is a shortage of platforms of sufficient scale,” said attorney Geoffrey Cockrell, co-chair of the private equity group at law firm McGuireWoods. “…It may require piecing together a couple [platforms] to have sufficient scale to absorb the overhead that a financial sponsor will want to overlay.”
The main threats anticipated involve state-level government regulation and national healthcare provider shortages.
“The regulatory market may put pressure on fragmentation as well,” said Cockrell. “You’re seeing it in New York, you’re seeing it in other states as regulators try to wrestle with this evolving industry. …This will make it more challenging for the smaller urgent care companies.”
Considering all factors, however, 2014 looks to be the year that those looking to do so should sell. Success in this regard will be heavily dependent on the preparations taken by physician owners prior to selling.
“An astute buyer will not buy compliance risk,” said attorney Jon Henderson, Corporate and Transactional Practice chair at law firm Polsinelli PC. “The stakes are too high from a reputation standpoint. An astute seller will engage in an appropriate level of self-diligence to understand his compliance profile.”
The growth and expansion of the urgent care market is thriving as a result of more factors than just the M&A aspect. Furthermore, while 2014 looks promising for investors and owners, experts would warn against letting this prosperous time pass by.
“Anything can be overbuilt, but there’s still a sense that there’s still green space available for building those businesses,” McGuireWoods’ Cockrell said. “If not, we’ll start to see more consolidation and that may be an alternative as well.”
Blayne Rush, MHP, MBA
The Ambulatory M&A Advisor
18181 Midway Rd. Ste 200
Dallas, TX 75287