At the 20th Annual Ambulatory Surgery Centers Conference in Chicago on Oct. 25, Tom Mallon, CEO of Regent Surgical Health, and Jeffrey Simmons, chief development officer of Regent Surgical Health, shared best practices for joint venture partnerships with hospitals. Mr. Simmons began by presenting some key benefits of a hospital-partnered ASC:
- Significantly higher payments per case, often because of the hospital’s negotiating clout
- Alignment with integration aims of healthcare reform
- Hospitals are currently acquiring physicians and ancillary services, so the demand is present
“The more the hospital owns, the more they can leverage on their contracts,” Mr. Simons said, adding that the average reimbursement for independent ASCs is between $1,200-$1,700 per case, if the ASC is fully contracted, while the average reimbursement for hospital-affiliated ASCs range from $2,200-$3,000 per case (assuming the hospital owns less than 100 percent of the center). “Give the hospital [greater] ownership if they can leverage their contracts, but retain physician clinical control,” he recommended. However, just because there can be a reimbursement upside, not all hospitals make good JV partners. When is a hospital a good partner? According to Mr. Simmons:
- The physicians trust the local hospital.
- The hospital has past experience in other joint ventures, though the JV doesn’t have to be a surgery center. Legal costs drop considerably when the deal isn’t the first joint venture.
- The hospital has a strong track record of negotiating managed care contracts.
Once a partnership moves forward, the key to success with any hospital-ASC joint venture to ensure the governance and ownership structure helps both the physicians and hospital “get what they need out of these partnerships,” said Mr. Mallon.