Presenters were Elliott Jeter, Health, CFA, CPA, ABV, MBA, partner with VMG Health and Stephan Peron, partner, AVA, also a partner with VMG Health.
Mr. Jeter began by discussing market trends regarding physician-owned businesses (POBs), including surgery centers and other ancillary businesses. These trends include a poor economy and tight capital market, declining reimbursement and uncertainty regarding healthcare reform.
He discussed the exponential growth of POBs over past 10 years, which led to many profitable service lines leaving the hospital setting. Physicians were drawn to owning their own ancillary business because of poor relationships with hospitals and the opportunity for additional income.
However, Mr. Jeter explained that many POBs have reached a point of maturation that makes growth and increased profitability difficult. This maturation, in addition to market trends of uncertain reimbursements and healthcare reform, has created a “perfect storm” for market consolidation, including an increase in hospital/POB joint ventures.
According to Mr. Peron, reimbursement uncertainty is one of the top drivers of physician relationships with hospitals. In the next several years, some POBs, including imaging and cancer centers, face Medicare reimbursement cuts, as do many medical specialties, which could impact profitability.
In response, many physicians are looking to sell ancillary businesses and practices, enter into joint-venture relationships with hospitals and seek hospital employment, according to Mr. Jeter.
Hospitals are generally interested in acquiring POBs and seek out businesses that have high-earning potential, cohesive physicians and low risk.
Several benefits of hospital joint ventures include:
• Greater ability to adhere to quality reporting requirement
• Greater ability to implement IT indicatives
• Shielding POBs from isolated regulation changes
The speakers ended the Webinar by explaining how both the minority and majority interest in these physician/hospital joint ventures are valued and how fair market value for such arrangements is determined.
Learn more about VMG Health.
At the Becker’s 32nd Annual Meeting: The Business and Operations of ASCs, taking place October 29-31 in Chicago, ASC leaders, surgeons and healthcare executives will explore strategies to drive growth, enhance operational performance, navigate reimbursement challenges and prepare for the future of ambulatory surgery. Apply for complimentary registration now.