The emergence of ASCs and outpatient facilities has some in the industry questioning if joint ventures with hospitals are totally necessary.
With the battle over the legality of CON laws ongoing in North Carolina, the idea of ASCs and independent groups being forced into joint venture partnerships with hospitals could be brought under the microscope.
If hospitals aren’t needed to provide the operating room space to independent groups, they may not need to partner at all.
Leo Spector, MD, CEO of Charlotte, N.C.-based OrthoCarolina, recently connected with Becker’s to talk about joint venture partnerships with hospitals and what makes a good one.
The organization currently has two orthopedic-focused ASCs in the state.
Note: Responses were lightly edited for clarity and length.
Question: How could the removal of CON laws change joint venture partnerships?
Dr. Leo Spector: As we move forward, it doesn’t necessarily mean that we want to own all of our centers 100% without the hospitals. There might be some good reasons for us to continue to joint venture with them. If we do, it’s now a different relationship, it’s a different proposition. We’re choosing a joint venture with them because we want their partnership. They’re choosing a partner with us because they want that partnership. Now, we’re deciding that it’s in our best interest, it’s in the patient’s best interest, in the community’s best interest for us to do this together, as opposed to being forced to do this. Things work much better when people mutually agree, because it’s in their both interest in the interest of patients to do it together. I think resetting the relationship to one that is really aligned for what our patients need is going to make a big difference.
Q: What would be an example of a joint venture that you would go into that would make sense? What are the things that go into those partnerships with a hospital?
LS: When you do a joint venture, both parties need to bring something of value to make it work. It’s got to be a true partnership and there has to be a degree of mutual respect and trust. In the past, those relationships were typically based on the hospital bringing the OR asset. With that aspect of things gone, it really puts the onus on the hospital to bring something else to the table. Can you help us with the management of the facility? Are there ways that we can work together to lower the total cost of care for the payers? It changes the nature of that conversation about what value you are bringing.
It’s the same thing with ASC management companies. Currently, we own and manage our own two facilities. And so it changes the conversation with the ASC management companies to say, do we joint venture with them? Is it an equity position or not? And if so, again, what’s the value that they’re bringing to it? Competition is good and it brings out the best in everybody. I think this creates a little more of a level playing field, which forces those entities to compete more for that to be a part of that joint venture, which is only going to make them better partners in the end.
