Urology: What Do Acquirers Consider?

Vertical: Urology
Author: JC Lupis
Date: August 2019

How Solid Is Your Practice’s Foundation?

Urology groups looking to expand – as well as their PE sponsors – pay much attention to the state of a practice beyond its financial standing. Such factors include the management of the practice, its physicians’ desire to grow, its local market and regional presence, and its infrastructure (including equipment and electronic health record system). With compliance burdens and regulatory scrutiny increasing, acquirers are also closely examining urologists’ referrals to and/or ownership of ambulatory surgery centers (ASCs) and intensity-modulated radiation therapy (IMRT) providers to ensure that federal Stark Law and state self-referral laws are not being violated.

Does Your Practice Own A Surgery Center?

ASCs are viewed as important revenue drivers and platforms for rapid growth. Urology’s ASC component positions the sector in a better light than some other specialties, including dermatology. While there are relatively few single-specialty urology ASCs in the US6, the regulatory-backed migration of surgical procedures from inpatient to outpatient settings indicates that more urological procedures will be performed in ASCs in the future.

What Role Do Elective Procedures Play in Your Practice?

As urologists know, reimbursement is a difficult topic and one that is the subject of frequent tension. As a practice, urology is heavily dependent on insurer reimbursements. Strategic acquirers and PE groups are also attuned to the challenge of securing adequate reimbursement for services, and therefore also look at a practice’s portfolio of cash pay opportunities. Meanwhile, for a practice’s non-elective portfolio, acquirers are interested in how well providers are offering convenient, value-based comprehensive care, and the extent to which ancillary services are present (and compliant).

Urology Market: Key Data Point

The 5 largest urology groups encompass less than 3% of the total urology workforce.

Source: LUGPA 2018 Conference, Private Equity Consolidation in Urology: What Urologists Should Know

Urology Market: Key Chart

Percentage of Private Practice Urologists in Large (10+ Provider) Groups

GHA-Large-Urology-Practices

GHA’s Urology Market Brief includes the following sections:

  • Urology Market-At-A-Glance
  • Urology Market Developments
  • Key Urology Market Data
  • What Do Acquirers Consider?
  • The Mergers & Acquisitions Landscape

To inquire about a copy, please contact research@ghadvisors.net.