According to Don Phalen, Vice President of Development at Regent Surgical Health, technical advances in anesthesia, orthopedic devices, and surgical procedures, coupled with shifting payer models, are changing the game and creating opportunity for hospital-surgeon ASC joint ventures focused on spine and orthopedics.
In the first installment in a two-part series, Phalen summarized how procedures and payer models are playing a role, and in part two, Phalen discusses strategies to overcome joint ventures hurdles.
Getting to Yes: Joint Venture Hurdles
Even as hospital and surgeons embrace the idea of joint venture ASC partnership, there are issues to be overcome in the development of such relationships. Based on Regent’s extensive experience managing these issues, Phalen suggests some essentials for getting to a win-win.
“Some points to consider include the need for both the physicians group and the hospital to be in alignment on the long-term goals of the center — things like growth, equity splits, and governance,” he says. “But in addition, physicians are very concerned with having decision rights over how center is managed and governed. At Regent, we create a board structure that gives the doctors a majority vote so they have the final say on clinical decisions, and that’s important to them. While some financial decisions require super majority approval, the physicians know they’re in control when it comes to key clinical and operational questions.”
Satisfied on the clinical/operations front, physicians often find that a hospital joint venture can benefit them in several more ways. According to Phalen, even when spine and orthopedic centers are profitable they aren’t always efficient. A hospital partner may bring strengths to increase profitability, improving the day-to-day financial picture over and above the capital event of their contribution to ownership in the center. And, as ASCs grapple with payers’ tightening reimbursement approaches, physicians benefit not only from a hospital partners’ negotiating clout and familiarity with managed care contracts, but from their expanded network for referrals to drive patient volume as well.
Finally, Phalen urges potential joint venture partners on either side not to underestimate the importance of embracing a common culture. “It all comes back to making sure you’re in alignment on goals,” he concludes.
For more information on Regent Surgical Health’s management of hospital-surgeon joint ventures, click here.