How to "Go Big or Go Home" with joint venture ASCs

Mike LipomiThere are benefits for ambulatory surgery center owners and operators to partnering with hospitals on joint venture centers. Healthcare is constantly changing, and alignment with a powerful hospital partner can breed success for the future.

"The physicians have to do inpatient as well as outpatient procedures, and bringing hospitals to the table to discuss governance and operational issues in a collaborative way will improve the patient and physician experience at the hospital," says Michael Lipomi, president and CEO of Surgical Management Professionals. "It also allows the surgery center financial benefits — whether it's purchasing or contracting — and since hospitals are employing primary care physicians they have a great deal of influence over their referral patterns. ASCs want them as partners."

The physicians' clinical expertise and the hospital's business and executive experience can help drive the ASC to profitability. But the relationship should be comfortable, and one side can't undermine the other. Now more than ever, hospitals understand traditionally inpatient services are moving to the outpatient setting, and ASCs have expertise with efficient, quality care.

On the flip side, ASC physician owners also see large collaborative organizations, such as accountable care organizations and risk-sharing initiatives, becoming a value-driver in healthcare and want to participate.

"When you have ACOs, and the majority of the ACOs are run under the auspices of the hospital, and the hospital has the PCPs in the ACO, there's a big opportunity to move patients into the outpatient setting," says Mr. Lipomi. "Otherwise healthy patients can have their procedures in ASCs and reduce the cost, potential for infections and complications."

Both sides must go "all-in" to make the joint venture arrangement work, and a strong management company partnership can strengthen those bonds. Especially in communities where the relationship between the ASC and hospital was traditionally adversarial, a management company can "smooth" over conflicts and make sure both sides benefit from an optimized joint venture center.

"There are always conflicts of interest when considering where patients should have surgery, so you need a strong, unbiased management committee or company to assist in the negotiations and ongoing operations," says Mr. Lipomi. "Discussing patient selection is a lengthy and highly negotiated, and very emotional — oftentimes very heated — discussion. People go into the discussion very passionate. It takes professionalism, expertise and time to work through everything."

One common conflict physicians run into with hospital leadership is bringing higher acuity cases into the surgery center. For example, physicians in an outpatient joint venture center focused on orthopedics may want to bring total joint replacements into the ASC. The total joints are higher-reimbursing procedures than minor orthopedic surgeries and are performed safely in centers across the country with proper patient selection.

However, from the hospital's point of view, the surgeons are taking a high-reimbursing procedure out of the inpatient department — which the hospital owns 100 percent — and into the ASC — where the hospital owns a smaller percentage and the reimbursement will be lower.

"We have to work this out so it's equitable for everyone," says Mr. Lipomi. "This is a highly disputed area and outside assistance can bring both sides to the table."

The best qualities for a hospital partner are:

1. Focus on providing quality care and lowering infection rates.

2. Interest in being transparent with clinical and financial data.

3. Desire to drive cases to the low-cost setting.

4. Physician-friendly facilities focused on efficiency.

5. A hospital that shares your culture.

But hospitals also have needs, such as call coverage and cost containment on the inpatient side. ASC physician owners and operators can strengthen their partnership — and trust with hospital executives — by taking on some of these extra responsibilities and valuing the hospital's success in addition to the ASC's success.

"The physicians can't be spiteful and expect hospitals to roll over for them," says Mr. Lipomi. "Just like you don't want to have an ASC that runs like a hospital, they aren't an organization that is run solely for the benefit of the surgeon. Work with them to establish a good business relationship."

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