6 key thoughts on ASC joint venture governing board structure

Laura Dyrda - Print  |

Many hospital C-suiters are now eager to partner with ASCs as part of their outpatient strategies to capture the surgeons' operational expertise and keep at least some outpatient revenue at the hospital.

Negotiating ASC joint ventures is a long process, and one of the biggest points of contention is the ASC's management board and structure. The most successful boards are structured to keep all partners committed to the ASC's success.

"The structure of ASC management and governance can take many forms, so the structure agreed upon should be spelled out clearly in the operating and partnership documents," says Joan Dentler, president and CEO of Avanza Healthcare Strategies.

Here are a few thoughts for structuring the board:

1. Engage experienced legal counsel to advise on the ASC's governance requirements, and make sure all parties approve of the legal counsel and have confidence in the advice they receive. Physicians shouldn't feel the hospital is hiding behind IRS regulations to gain control of operations.

2. The board composition will have additional regulations if the hospital is a not-for-profit entity. The way decisions are made could be impacted by the hospital's status. Keep this in mind when entering into joint ventures.

3. Hospital in-house counsel shouldn't serve as the attorney to the ASC, advises Ms. Dentler, but instead remain a legal advisor to the hospital. She also recommends the surgeons have their own legal representative and the ASC engage a neutral, but experienced, attorney for the partnership as a whole.

4. Third-party ASC consultants can be valuable to the negotiation and management process. "We tell our clients our only commitment is to the health and sustainability of the ASC," says Ms. Dentler. "We do not have a commitment to the hospital or the physicians — our advice will always center on what we feel is in the best interest of the ASC entity, and therefore both partners."

5. Be prepared to give, and receive, candid and sometimes unpopular input. This requires thick skin. "Both the hospital and physicians can jeopardize the ASC partnership by being too focused on their own needs and not that of the partnership," says Ms. Dentler. "Such an approach is vital to ensuring the success of the ASC partnership."

6. Understand the commitment it takes to serve on the ASC's board. "ASC board members are often overseeing multi-million dollar companies, so their role as a fiduciary, not merely an advisor, is extremely important and should be taken seriously," says Ms. Dentler.

Physicians, hospitals and payers can all benefit from a joint venture surgery center as larger cases migrate from the hospital to the ASC. Sending low acuity — and often lower reimbursing — cases to the ASC leaves hospital operating rooms open for more higher-reimbursing cases and the most appropriate cases for the inpatient setting. This arrangement also grows the ASC's bottom line.

"With patients becoming more aware of the costs associated with their care and payers are always keenly aware of their costs related to healthcare services, ASCs are in a great position," says Ms. Dentler. "We are seeing forward-thinking hospital leaders proactively identifying low-acuity, low-reimbursing cases taking up valuable space in the high-cost operating rooms and finding ways to encourage them to be performed in their partner ASCs."

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