5 Things to Know About Successful Spine Surgery Center Joint Ventures

Jeff Leland, CEO of Blue Chip Surgical Center Partners, has been involved in the management and development of several spine-focused ambulatory surgery centers, including joint ventures between hospitals and physician groups. He discusses five core concepts for achieving and maintaining success with joint venture spine ASCs.
1. Joint venture spine surgery centers can be beneficial for hospitals and physicians. Physicians are often eager to hold ownership in joint venture surgery centers because they are able to reap obvious benefits of faster turnaround times, lower infection rates and additional ancillary income. Hospital and health system executives are often more cautious about committing to the project because they fear an ASC will mean a lower case volume of spine procedures in the hospital. However, in his experience, Mr. Leland has found the opposite is true.

"Hospital and health system executives have some trepidation about doing these projects because they are fearful of giving up cases that would be done in the hospital," he says. "We created a spine surgery center with a hospital and the hospital tracked its inpatient spine work for two years before the project and three years afterward. The hospital found its inpatient spine case volume actually went up because surgeons were more productive in the ASC, which allowed them to take on more inpatient cases."

In this particular example, the hospital was in a community where there weren't enough surgeons to meet patient demand. However, the efficiency of the surgery center — where there was only 10 to 11 minutes between cases — they were able to close the coverage gap and increase market share.

2. The project builds stronger relationships between physicians and hospitals.
In many communities, physicians and hospital executives have an adversarial relationship from decades of battling over business and clinical issues. However, success in today's healthcare market is dictated by the ability of different providers to work in tandem. Launching a joint venture spine surgery center can help bridge the gap between providers so both groups are working toward the same goals and both have skin in the game.

"Hospital executives and orthopedic spine surgeons and neurosurgeons come to know each other better when they are working on a joint venture ASC together," says Mr. Leland. "As a result of the relationship around the surgery center, they build more loyalty to one another and the surgeons who are “splitters” often, in time, begin bringing more inpatient cases to the partner hospital."

It's also easier for hospital executives to obtain physician support for cost-cutting and business measures if the physicians have financial investment in the project. Hospital's aligned surgeons often are difficult to motivate or recruit to work on the hospital's business opportunities like a Spine Center of Excellence program because the surgeons aren't appropriately incentivized or effectively motivated to participate in the program.

"When doctors have a key interest in the surgery center, they have an interest in standardizing implants and instrumentation, which translates to the hospital," says Mr. Leland. "Our hospital partners have experienced the benefit of surgeons changing preference cards once they understand the cost of instruments and supplies."

3. Initiate conversations about starting a joint venture intelligently.
Whether the hospital executives or physician group initiate the conversation, a great deal of preparation should go into joint venture plans before even mentioning the partnership to the other side.

"If the project is initiated by surgeons, the best way to proceed is to agree on all of the key points among the partners and create legal documents before the project is introduced to the hospital," says Mr. Leland. "Tell hospital executives the train is pulling out of the station — the surgeons are creating this ASC — and there is a seat on the rain for the hospital, and it will depart soon." Physician groups should be prepared to give hospital executives 30 to 60 days to make a decision about the project. Unfortunately, with out a deadline, some hospital executives will move in hourglass time when the surgeons expect to move in nano-second time.

"On the other side of the coin, when the hospital initiates the idea of the project, we will often negotiate and agree upon key terms with the hospital well in advance of presenting the idea to the physicians, and things can move more quickly from there," says Mr. Leland.

4. Physician control of the surgery center is important.
Mr. Leland feels it's important for physicians to hold majority ownership in the surgery center while hospitals and management companies hold minority shares. Generally speaking, in the joint ventures Blue Chip invests in, physicians hold 51 percent equity while hospitals and management companies each hold 24.5 percent equity. Generally, each physician involved holds an equal amount of the equity owned by the physician group.

"Typically, I believe the best surgery centers are the ones where physicians have control," says Mr. Leland. With majority ownership, the physicians can make decisions about care delivery processes and protocols, while still benefiting from hospital contracting power and the community reputation and status of the hospital.

5. Physician work on spine centers of excellence is more feasible.
Creating a "Spine Center of Excellence" is difficult and often requires physicians to spend extra time with administrative duties, agreeing protocols, designing clinical pathways and clinical coordination. Physicians are often busy with their clinic and in the OR, leaving little time for meetings where they aren't directly compensated. However, if physicians are able to accrue additional income from the joint venture surgery center, they will often make time to focus on helping create a meaningful program..

"Spine centers of excellence are entities created by the hospital to help facilitate the ease with which patients can access the system," says Mr. Leland. "Surgeons have to be involved to standardize protocols and processes. It's expensive for surgeons to spend three hours in a meeting to sort that out, but when they are taking in $15,000 to $20,000 more per month with ownership in the ASC, they are more relaxed about becoming involved." Once a spine surgeon helps create and expand a "Spine Center of Excellence," the surgeons are often pleased with increased volume of patients and the ease with which the patients transition through the delivery system — the ancillary income from the ASC makes it much easier for the surgeons to "be fully committed" to the project.

More Articles on Spine Surgery:

5 Spine Surgeons on Responding to Coverage Denials

15 Spine Surgeons Discuss Patient Satisfaction

One Spine Surgeon's Journey to Profitability: 5 Points on Dr. Anthony Yeung's Unique Practice & Procedure

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