Selling Gastroenterology and Endoscopy Practices

Over the past 10 to 15 years, private equity (“PE”) firms have displayed an increasing interest in the healthcare provider industry. Recently, PE firms have set their focus on certain specialty physician practices with the intent to consolidate and grow practices in traditionally fragmented markets. Over the past 10 years, the demand for Gastroenterology and Endoscopy practices, starting in 2016 with the formation of Gastro Health by Audax, since then we have seen increased investments in this market sector by not only PE backed platform but institutional and consolidating investors in this highly sought after space.

The combination of strong revenue, high reimbursement rates, and integrated ancillary services make Gastroenterology groups an attractive target for investment. In the US, an aging population has led to powerful demand for Gastroenterology services and procedures like colonoscopies and endoscopies. These surgeries used to only take place in a hospital setting, but thanks to technological advancements in surgical techniques and instrumentation, most Gastroenterology procedures can be safely performed in a much more affordable outpatient setting which further improves profitability of the Gastroenterology business.

Physicians, executives, nursing staff, and support teams all play pivotal roles in the success of these organizations, and understanding how these elements contribute to overall value is essential for any physician-owner who is considering a sale of their Gastroenterology practice.

The Market for Gastroenterology Practice Acquisitions

Investment, consolidations, and buyouts are reshaping every sector of healthcare, and Gastroenterology is a growing part of this trend. Large regional and national platforms are emerging, and while investment in Gastroenterology groups is not new, private equity’s interest in this specialty area continues to gain traction. Private equity buyers are looking for specialty practices like Gastroenterology because of their steady cash flow and strong growth potential. We expect this interest to continue. There are now at least 10 private-equity and institutionally backed platforms actively pursuing Gastroenterology group deals.

Benefits of Selling a Gastroenterology Practice

Physician owners of Gastroenterology practices can realize many benefits from a sale to private equity or a partnership with a large MSO, consolidator, or hospital system. Naturally physicians focus on the immediate financial benefit that comes from the liquidity event at closing, but the operational advantages of consolidation are equally important to understand and consider.

Independent Gastroenterology practices today face substantial challenges that can strain resources and limit growth. Finding the right partner and negotiating the best terms can provide solutions to many of these challenges. Through joining a larger platform, practices gain access to scale, capital, and specialized expertise that would be difficult or impossible to develop independently. Specifically, large private equity backed organizations or MSOs are better positioned to manage:

• Governance and Compliance
• Physician and Staff Recruitment
• Capital for Growth
• Revenue Cycle Management
• Payer Contracting
• Infrastructure and Support Services

For physicians, retaining clinical autonomy while offloading much of the work associated with running and growing a practice can be an appealing option.

How to Sell a Gastroenterology Practice: The PTA Process

Selling a Gastroenterology practice represents one of the most significant financial and professional decisions a physician will make in their career. For most physicians this is a once-in-a-lifetime event. However, the buyers and private equity firms across the negotiating table complete multiple transactions each year and are supported by teams of investment bankers, attorneys, and analysts whose primary goal is to structure deals in their favor. Without an experienced advisor, physicians are at a serious disadvantage when it comes to negotiating the best valuation and deal structure for their Gastroenterology practice.

The industry leading team has guided more physician owners through partnership evaluation process than any other firm, having successfully completed more than 300 transactions across multiple specialties, with deep expertise in Gastroenterology specifically. We serve as trusted partners to navigate complex transitions and maximize value during organizational change. Whether you’re exploring your options, in active discussions with buyers, or ready to move forward with a transaction, we provide the guidance necessary to successfully navigate every phase of the transaction. Our process, which is risk-and-cost free until closing, aligning our success with yours includes:

Our Recent Gastroenterology and Endoscopy Practice Transactions

With over 300 transactions closed, Physician Transaction Advisors has the expertise to achieve the best outcome. Below are some recent GI and Endoscopy client transactions:

• Digestive Disease Physicians
• Gastroenterology Associates, LLC.
• Digestive Disease and Endoscopy Center
• Southwest Endoscopy