Excerpt From 10 Challenges Surgery Centers Can No Longer Ignore as seen in Becker’s ASC Review 4. Collaborating with hospitals. In today’s market, physician-owned surgery centers can no longer ignore the importance of continually exploring new and different ways to reposition their ASC for sustained growth and viability, says Michael McKevitt, senior vice president, business development, for Regent Surgical Health. Hospitals, he says, face the same, if not greater, challenges in trying to provide the highest standard of care at the lowest cost. Historically “tenuous” relationships between ASCs and local hospitals are changing, and forward-thinking operators of both ASCs and hospitals are finding ways to collaborate on a common vision, he says.   Collaboration can take many different forms, but the most common and emerging model Mr. McKevitt is seeing is hospital/physician ASC joint ventures, in which a local hospital acquires an existing ASC with the intent of gaining market share while concurrently establishing synergy with the larger medical community.   There are myriad reasons as to why an existing center needs to be repositioned in the market. “We pride ourselves on our collective ability to find solutions using the right tools to improve profitability for our facilities,” he says. “In the past couple years, the right tool, more often than not, has been to include the local hospital in the ownership of an ASC that previously was exclusively held by physicians. In fact, all of Regent’s six acquisitions in 2011 include local hospitals in the ownership structure. Why? ASCs are [struggling] and will continue to struggle with decreasing payments and increasing operating costs — to the point that many of the higher acuity cases can’t cover operating costs even though they represent significant surgical volume. As the ASC market matures, there are also a dwindling number of new projects and a dwindling number of new (non-aligned) partners available to replace retiring partners and bring in new patients.”   Mr. McKevitt says facilitating successful physician/hospital joint ventures is predicated on finding a common ground and balancing the need of the hospital for governance and control coupled with the physicians’ desire for efficiency and clinical autonomy. For this model to work long-term for both the physicians/ASC and the hospital, there must be give and take, according to Mr. McKevitt.   “When you are able to meet the needs of both the hospital and physicians in dealing with the uncertainty of the future healthcare economy, you have an efficient, yet profitable, business model,” he says. “In exchange for long-term gain, and in some cases survival, physicians are willing to bring in a strategic partner with the caveat that the physicians will retain control of daily operations. In turn, the hospital accesses a patient base that historically was not referred, which translates to greater market share. Give and take. The end result is a more profitable center that is positioned for long-term success.”