A large, not-for-profit regional health system was looking to expand high-quality and convenient outpatient care options to patients through an urgent care strategy.
Situation
Urgent care centers are a convenient access point into the health system. Demand for urgent care services has increased significantly over the past several years as patients demand accessible, convenient health services at a lower cost of care compared to emergency rooms. However, many markets are saturated with urgent care centers, and the ability to develop a successful urgent care platform takes time, capital, and a focused management team.
Solution
The health system had conversations with multiple potential partners for urgent care services. VMG Health assisted in the initial evaluation of potential partners, including a review of post-transaction, contractual terms; potential purchase price; and geography. The health system selected a strategic partner that had an established platform of existing locations in a region where the health system also has a reputable presence within the market. The two entities jointly retained VMG Health to perform a fair market value analysis of the strategic partner’s existing urgent care platform to support the health system’s investment.
Additionally, VMG Health assisted with the valuation of several post-transaction, contractual arrangements, including a management services agreement where the strategic partner will continue to manage the locations and a royalty agreement related to the post-transaction branding of the locations.
Success
The parties signed a definitive agreement in which the health system invested in the existing urgent care platform to establish a new joint venture for urgent care services. In addition to the purchase agreement, the parties signed a royalty rate agreement and a management services agreement. The strategic partner benefits from the brand and scale of the health system. The health system has achieved additional, convenient access points of care through a large platform of established urgent care locations within their market.
