Health systems and ASC operators struck some of the largest deals in the industry’s history over the past year, but not every hospital-ASC pairing works out, and Marie Edler, chief growth officer of SCA Health, has a specific way of spotting the ones that won’t.
“If hospitals are struggling to make the financial leap from owning 100% of the care to aligning in a joint venture model, and they can’t tie that into their strategic priorities and their direction for specialist geographic expansion, that’s a red flag,” Ms. Edler told Becker’s. “If those things don’t line up, and they’re really just anchored on the migration out of their own ORs, that’s a red flag from a mentality perspective. They’re not there yet, and it’s going to be dissatisfying to them.”
It’s a different framing than the operational red flags independent ASC leaders describe, but it points at the same underlying failure of a partner who wants the outcome without the structural change.
Lacey Dyer, vice president of clinical operations at Surgical Investors and Advisors, has warned against hospital partners who claim ASC expertise while actually running a “wholly-owned hospital ASC with a completely different model.” Jeffrey Flynn, administrator and COO of Gramercy Surgery Center in New York, has cautioned that a hospital demanding 51% ownership will cost a partner its autonomy “even if they tell you you’re going to run it,” noting that successful arrangements in his market typically cap health system ownership at 10% to 20%.
Ms. Edler’s version of that same warning is about strategy rather than ownership percentage, but the test is similar: is the health system actually restructuring how it thinks about outpatient care, or does it just want the ASC’s economics without giving up control?
She sees the JV model itself as the fix, not just a workaround.
“We have case studies that demonstrate the value that creating an ambulatory network around a health system can bring,” Ms. Edler said. “It’s a way for health systems to demonstrate to the broader specialist community that they want to be part of advancing that care, and it comes back to physician satisfaction and patient experience and outcomes. Systems want to do that, and they know they’re not going to be able to do it inside their HOPDs, so they’re looking for a partner who can bridge their growth objectives into a joint venture partnership that feels strategically aligned, financially relevant, and expands their goals overall.”
That pitch has gotten easier to make than it used to be, according to Ms. Edler, simply because fewer health systems are still resisting it.
“We just don’t get it as often as we did 10 years ago, because more often than not, everyone is already doing this,” she said. “It’s more, ‘How can you help me accelerate my advancement of an ASC strategy?'”
The shift in leverage shows up in how the partnerships are structured now, too. Five or 10 years ago, Ms. Edler said, partnerships were “centered on the facility and the operations in and of itself.”
Today, she said, the strongest partnerships answer a bigger question: “How can we as SCA Health sit at that intersection of what specialists in a market need and what a health system needs to build for their outpatient capabilities, their outpatient footprint, their outpatient strategy in a given market? That means understanding more than just what cases can migrate, but where cases should migrate.”
At the Becker’s 32nd Annual Meeting: The Business and Operations of ASCs, taking place October 29-31 in Chicago, ASC leaders, surgeons and healthcare executives will explore strategies to drive growth, enhance operational performance, navigate reimbursement challenges and prepare for the future of ambulatory surgery. Apply for complimentary registration now.
