How physicians and hospitals can benefit from joint ventures

In today's healthcare environment, physicians and hospitals can both benefit from embarking on a joint venture. But a joint venture can also be a headache for both parties involved. During a session at the Becker's ASC 23rd Annual Meeting in Chicago, three panelists discussed the reasons behind creating a joint venture, as well as negotiating points and governance issues involved in the process.

Why do physician groups want to partner with hospitals? "Bonding to do something together is important," said Robert Zasa, managing partner at ASD Management, a management firm for ASCs. Mr. Zasa added that the decision to launch a joint venture is wise from a financial perspective.

Harel Deutsch, MD, co-director of the Rush Spine Center at Chicago-based Rush University Medical Center, agreed. "Capital can be important for physicians," he said. In addition, Dr. Deutsch said physicians likely want to be associated with a hospital that has a solid brand and good name within the community.

While navigating the joint venture process, Tracy Hoeft-Hoffman, administrator of Fremont (Neb.) Health Surgery Center noted that using a management company can make the transition process smoother. Her center didn't utilize a management company when it launched a joint venture with a hospital, but she "think[s] it could have helped. It does give you some leverage ... the expertise that a management company brings in adds to it."

Negotiating the terms of the joint venture can also be a challenge, as physicians often have different goals from the hospital. Ms. Hoeft-Hoffman said the physicians at Fremont Health Surgery Center wanted two things: a guarantee that all staff members would retain their positions and an assurance that they would not have to take call at the hospital. Ensuring they wouldn't have to take call "took a little more negotiating because the hospital was seeing it as a whole new set of people to take call," Ms. Hoeft-Hoffman noted. In the end, the physicians at Fremont ultimately got what they wanted — with a twist. They can take call, but the hospital has to give them six months notice.

Other negotiating points may be cause for more tension between the parties. Dr. Deutsch mentioned contracting with insurance companies as a big reason for dissension. "Sometimes the hospital will have good contracts, but payments for physicians may not be that great," said Dr. Deutsch. He also added that "when physicians are employed by a hospital, there's often a non-compete."

Ms. Hoeft-Hoffman agreed that non-compete clauses can be problematic while negotiating a joint venture. Mr. Zasa noted that accounting may also constitute a difficult negotiating point. "[The physicians and hospital wonder], 'How are we going to do the accounting?' and 'Who's going to do the accounting?'" he said. "[ASD Management] typically negotiate[s] an accounting review in the process."

Joint ventures between physician groups and hospitals are far from easy territory to navigate. But when both groups work out their differences and settle the most crucial terms, a joint venture can prove beneficial in a variety of ways.

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