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Key Issues in Physician-Hospital Joint Ventures

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At the 19th Annual Ambulatory Surgery Centers Conference in Chicago Oct. 26, Jon O'Sullivan, principal of HealthEconomix, and Michael Stroup, vice president of business development of United Surgical Partners International, discussed key issues in physician-hospital joint ventures.

Understanding one's own and the other party's expectations is one of the key issues Mr. O'Sullivan and Mr. Stroup discussed. "Identifying objectives is the first step in any joint venture relationship," Mr. O'Sullivan said. Physicians and hospitals need to determine why they want to be in a joint venture and what they expect from the other party. In addition, physicians and hospitals need to assess whether the other party can provide the benefits they expect. A joint venture cannot be successful if one of the partners does not provide value. "Sometimes the idea is great, but you need a partner who can do something for you," Mr. Stroup said.

A common pitfall in joint ventures is when the organizations don't have a written agreement delineating expectations upfront, according to Mr. Stroup. For example, if the physicians expect the hospital to perform certain administrative functions, they need to develop an agreement on those services in writing.

Other issues Mr. O'Sullivan and Mr. Stroup discussed include valuation, joint venture governance and physician employment.

More Articles on Joint Ventures:

Considering an Academic Medical Center-ASC Joint Venture? 7 Key Questions to Ask
Ambulatory Surgery Center Partnerships With Hospitals: Possibilities & Opportunities

How to Structure a Great Joint Venture

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