Independent vs. hospital-associated ASCs: Mutually assured destruction or an uneasy truce?

ASCs that are jointly owned by independent physician groups and hospitals or health systems may spur contention and discord among the clinicians and hospital administrators. However, under positive terms, such ventures can yield both parties increased efficiency, profits and satisfaction for patients and providers.

The trend of ASC joint ventures with hospitals is projected to continue, especially as hospitals seek to save money as they take on more risk under value-based care delivery models. ASCs that are in joint ventures with hospitals are positioned to benefit from more favorable payer contracts, while hospitals can gain more leverage with payers as they look for ways to reduce medical expenses. Additionally, ASCs that are associated with hospitals can benefit from a steadier stream of referrals and a constant stream of cases. And from the patient perspective, ASCs offer a safer surgical environment, quicker recovery to the home and lower costs.

During Becker's ASC Review's 23rd Annual Meeting in Chicago, a panel of physicians, ASC administrators and hospital executives convened to discuss the challenges associated with running hospital-associated ASCs, as well as strategies to maximize their benefits.

Here are four key thoughts from the panel.

1. Build the business relationship on a foundation of mutual respect. When coming to the table, physicians from independent medical groups and hospital administrators must be prepared to sort out the business terms of the relationship, such as ownership and management structure, legal agreements and licensure. However, it is equally important to prepare for a collaborative, constructive working relationship that is rooted in mutual respect, according to Joseph Zasa, JD, managing partner and founding partner of ASD Management. "Physicians need to understand the perspective of the hospital and health system, and visa versa," he said during the panel discussion.

Mr. Zasa suggested taking an approach that emphasizes establishing strong connections with individuals. "In board meetings, you're often dealing with tough issues," he said. "But if you can glean a little more depth from the situation and really hear one another out, you can work through those things." Approaching conflicts in an equitable manner is the basis for success, and while there is no clear path for avoiding conflict, individuals' communication styles and ability to work together can make or break success. "It's OK to disagree, but it's not OK to be disagreeable," Mr. Zasa added.

2. Take the patient perspective into account. Many hospitals have been resistant to the idea of partnering with ASCs. However, ASCs often offer new avenues of efficiency — both for hospitals, which can increase surgery volumes through ASC joint ventures, and for patients, who can have better care experiences and quicker discharges.

"The respect piece also applies to patients," said Thomas K. Miller, MD, vice chairman of orthopedic surgery and chief of the section of sports medicine at Roanoke, Va.-based Carilion Clinic. "If hospitals see that patients want to go to ASCs for procedures X, Y and Z, they are better off supporting it than stomping on something patients actually prefer."

3. Embrace a hybrid EMR/paper records system. Many ASCs continue to use paper records instead of EMRs. However, if a hospital refers a patient to an ASC and it operates as part of a joint venture, it makes sense for the ASC to use the EMR. At the same time, hospitals are often wary of extending access to the EMR in this capacity. According to Stephanie Martin, RN, senior director of operations for Regent Surgical Health, a hybrid solution works effectively. One solution is having the hospital continue to maintain the EMR system while patient records from the ASC are scanned and uploaded into the EMR offsite. This satisfies the hospitals as well as the ASC physicians, who don't wish to deal with entering data into the online systems. 

4. Patient preferences are driving joint replacement procedures to the ASC arena. As patients become increasingly involved in their healthcare decisions, more are expressing a preference for total joint replacement surgeries in the ASC setting. While not all patients are proper candidates for outpatient joint surgery, those who are a good fit and who are looking for ways to lower their out-of-pocket costs will persistently seek an ASC to perform elective joint replacements. "The market trend is going toward outpatient," said Michael Patterson, president and CEO of Mississippi Valley Health in Davenport, Iowa. "Hospitals can either keep half of the money [for joint replacements] and partner with an ASC, or they can lose the business completely to other ASCs."

More articles on ASC transactions and valuation issues:
McKay-Dee Hospital opens orthopedic surgery center: 3 takeaways
Surgical Care Affiliates' Q3 revenue jumps to $322.8M; Total joint replacement business doubles — 14 things to know
Resurgens Orthopaedics opens 7th ASC: 5 things to know

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