As some ASCs weigh the promise of hospital joint ventures, leaders caution against misalignments in conversations with prospective hospital partnerships.
Here are three red flags to know:
1. Misaligned goals: A strong joint venture needs to be on the same page from the start, something Lacey Dyer, vice president of clinical operations for Surgical Investors and Advisors, has seen in her career.
“We see a lot of benefits on the joint ventures with hospitals,” she said during an Oct. 17 panel at Becker’s 31st Annual Meeting: The Business and Operations of ASCs in Chicago. “There’s certainly pieces that they bring to the table, but some of the red flags we’ve had are when they come to the table saying, we do ASCs, but it’s a wholly-owned hospital ASC with a completely different model. The great partner that we had was one that we’ve developed multiple centers with. They sat at the table and they said, ‘We know what we do well, and we are hiring you because you have proven what you do well and [we’re] letting everybody do what they do well.'”
2. Poor communication: A lack of transparency and “stalling tactics” have posed obstacles to some joint ventures, Asizza Dorsey, COO at Los Angeles-based Advanced Pain Medical Group, said.
“In my experience [a red flag is] lack of communication,” she said. “Sometimes there’s stalling tactics that will happen, and it becomes very frustrating to figure out how they want to move forward. It really depends on what your goal is. [None] of my five ASCs has anyone with 51% ownership that is not our owners … A conversation I had not long ago [was about] what you want to see happen [in retirement], and that might be something that would allow you to decide that you want to give up that 51% in that moment. Maybe that lack of communication isn’t as much of an issue. But in my experience, it has been very challenging to move needles with uncommunicative partners, or people who maybe are not honest or genuine about why they want to partner. They may have an ulterior motive, and you need to make sure you vet that and figure that out before you sign anything.”
3. A loss of autonomy: Jeffrey Flynn, administrator and COO at New York City-based Gramercy Surgery Center, echoed an emphasis on alignment and said ASCs should keep autonomy top of mind when assessing opportunities.
“The alignment is very important,” he said. “A lot of [hospital systems] will walk in saying they need to be the 51% owner, and if you were looking to lose autonomy, that’s exactly what’s going to happen even if they tell you you’re going to run it … But there are success stories with alignments. Specifically in the New York metro area we have very successful joint ventures. Each one of them has about 17 to 19 surgery centers, each where I think only one or two of [the health system] actually has a 51% ownership. The rest is anywhere from 10% to 20% ownership. But what they’re able to do is to align themselves and really help in certain ways to go forward.”
