Four healthcare leaders joined Becker’s to discuss the most important things to consider when developing joint ventures between ASCs and hospitals or health systems.
Editor’s note: Responses have been lightly edited for clarity and length.
Michael Boblitz. CEO of Athens (Ga.) Orthopedic Clinic: Partnering with leading health systems in local markets is always a worthwhile goal to evaluate. Regional health systems can offer a very complementary footprint to private orthopedic practices with several locations for access to local hospital care. In addition, leading regional health systems operate broad ambulatory networks with primary care and other specialties that require local access to leading orthopedic practices.
The devil is always in the details, as many hospital and health systems make the mistake to view partnerships as more one-sided where they attempt to have some level of control — via professional services agreements or employment agreements — in exchange for some higher compensation arrangement that is often short lived and reduced at the time to review the next term —or not.
A true partnership offers a win-win, where models such as co-management or service line agreements are deployed that align the private orthopedic practice with the health system around common growth and quality goals. With such win-win arrangements a parallel joint venture ambulatory surgery center partnership next makes sense to unify financial interests — and distributions.
Cathy Jones. CEO of Apex Spine and Neurosurgery (Suwanee, Ga.): The most important aspect for a potential ASC partnership or joint venture with a hospital or health system is strategic alignment. Both entities need to share common goals, share patient care values and outcomes, and share long-term objectives. Strategic alignment includes everything from seamless operational integration, compliance and legal considerations, data sharing, decision-making and quality of services.
Eric Chappell. Administrator for Orthopedic & Spine at Inverness (Colorado): As for health system partnership, a lot of that depends on where geographically you are, and which hospital system makes the most sense from a full partnership perspective, not only the ASC.
Also, something to strongly consider is not only how the ASC is set up from a legal and operational standpoint, but also what the exit strategy looks like if the group or a large number of providers leave the ASC or the group. That applies not only to a partnership with a health system but also for any ASC development company like SCA or USPI.
Our group is now affiliated with a hospital system here in Denver. We did talk with all the health systems and determined which one made the most sense for the entire group. Reasons: health system, medical group and hospital leadership, geography, strategic plans for the service line, growth, economics of both the ASC and other partnerships, including the group.
Mitch Spolan. CEO of Payorology (Atlanta): We can comment on our role in these partnerships, which focuses on financial analysis. We compare reimbursement rates — by payor — for each billed CPT code against other ASCs in the same market performing the same procedures. Based on this analysis, we have observed significant reimbursement rate growth when a health system or hospital acquires a majority stake in an ASC.
When a hospital or health system takes a majority stake, they integrate the ASC’s billing under their higher-rate contracts. The ASC owner benefits from the sale of the majority stake and continues to share in reimbursements as a minority owner. Hospital and health system negotiated rates are often significantly higher than those an independent ASC can secure. As a result, even a 49% minority share of the hospital/health system rate could yield a 30% to 100% increase in reimbursements compared to the ASC’s previous independent contracts.
