A recent article in Accounting Today highlighted the magnitude of balance sheet impact that the lease accounting changes are having on companies' balance sheets. Chief among the myriad of changes is the capitalization of operating leases longer than one year on the balance sheet as lease liabilities. In the healthcare industry, the average lease liability increased 1,817% as a result of the change.
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January 2020 M&A Spotlight: Summit Medical Group Arizona Acquired
Written by: Eric Murphy, Managing Director, Global Healthcare Services
VillageMD acquired Summit Medical Group Arizona, a subsidiary of Summit Health Management. The group provides specialized surgical solutions including breast surgery, neurology, internal medicine and related general surgery options.
A recent survey shows a growing trend of concern among healthcare CFOs related to the cost of care vs. the tightening revenue model for reimbursement of treatment. Organizations are being forced to recreate themselves and look for more progressive models to implement digital and ambulatory care, while at the same time decreasing their cost of delivery models. To fuel this investment, providers are turning more to specialty financing and having greater scrutiny on their fixed asset costs, especially real estate.
Fifty-one medical office building transactions closed in January, totaling over $371 million and 1.64 million square feet. Texas had the most medical office building transactions with 8 (15.7% of total), followed by California with 7 sales (13.7% of total). The average deal size was $9.5 million at $321 per square foot.