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N O V E M B E R 2 0 1 5 | O U T P A T I E N TS U R G E R Y. N E T
and improve care quality.
In recent years we've seen the creation of 8 separate interventional
pain management platforms intended to combine individual pain man-
agement practices and spin off de novo offices. For facility owners
and operators, a focus on the following areas can drive investor and
acquirer valuations.
• Strong physician relationships. Generally speaking, a pain management
group seeing 100 total patients from 10 referral sources will receive a
higher valuation than one getting 50 patients each from 2 sources. The
reason being, if 1 of those 2 referring physicians retires, moves or sim-
ply becomes dissatisfied with his patients' care, the group's business
could be irreparably damaged. Investors want diverse patient streams,
and view a diversity of referral sources as a proxy for the market per-
ception of the group, the strength of its marketing efforts and a testa-
ment to its reputation.
• Procedure mix. Investors seek pain management groups that treat
the whole patient, and are able to craft the treatment solution to
the specific patient. Groups that deliver a healthy mix of proce-
dures, both routine (injections) and complex (nerve stimulation),
and such ancillary services as physical rehab and prescriptions, are
seen as more competitive in the market. However, a conservative
use of narcotics as well as exceptional clinical protocols and com-
pliance procedures are must-haves for any investor.
• Investment in the business. A track record of investments in systems
— both human and IT — show a group's commitment to efficiently
deliver high-quality care. The fact that they've been willing to take a
short-term cash flow hit in order to invest in compliance systems and
employees, clinical and practice management software, and financial
reporting packages, demonstrates a long-term vision that excites