26
JOINT
VENTURES
How Value-Based Care Breeds Joint Venture ASCs &
Key Characteristics Hospitals Look for in Partners
By Eric Oliver
A
s healthcare
moves towards
value-based
care, joint venture ASCs
are becoming more
commonplace, and tra-
ditional reimbursement
practices could become
history.
Joan Dentler, president and CEO of Avanza Healthcare Strategies, has
been helping develop hospital physician surgery center partnerships
since the late 1990s. In the '90s, many of the ASC joint ventures with
hospitals were reactionary; hospitals were looking to affiliate with
physicians who were threatening to leave. Now, Ms. Dentler feels that
hospital systems are coming to her proactively, making ASCs a part of
their strategic plan.
e reason for that is two-fold. Not only do joint ventures allow hos-
pital systems keep talented physicians, but as payers place increasing
pressure on providers to lower costs, ASCs become indispensable.
Ms. Dentler says joint venture ASCs can deliver a "win-win-win-win
combination" for providers, partners, payers and patients. Surgeons
have a more efficient and cost-effective arena to perform elective sur-
geries and hospitals have increased surgical capacity; payers can reim-
burse at lower rates for common surgeries and patients can be back
home quickly.
In the current and projected healthcare landscape, Ms. Dentler is cau-
tious with clients who prefer developing a physician-only owned ASC
because of the reimbursement uncertainty. Although not impossible,
she is advising physician owners always be on the lookout for a hos-
pital partner.
However, as Paul Eiseman, vice president of business development for
Regent Surgical Health, notes some physician-owned centers can still
be sustainable if they have the right mix of specialties.
"If you have orthopedic, spine and pain [together] sometimes the
[CMS and managed care rates] are high enough that you can get a
decent reimbursement without the hospital affiliation," he says. "at's
true for several markets."
Profitable surgery centers will remain valuable for hospitals in the val-
ue-based healthcare environment and surgeons could choose to sell in
the future and still reap the benefits.
"[e ASC owners] can sell off their 51 percent at some point and get
a nice multiple in return," he says. "at said, a JV that includes a hos-
pital partner is still the recommended approach, especially in a value-
based environment that is looking to hospitals for lower cost venues,
bundled payments, etc."
Hospitals look at several characteristics when deciding whether to
purchase ownership of an ASC; some of them include:
• Whether a physician or the physician group is notable
• Whether the ASC is an established brand
• Clinic location
• Whether it's in a market the hospital wants to target
• Extra capacity to accommodate new cases
"If the ASC has the capacity to add additional cases, that can be valu-
able to a hospital because they can migrate some of their lower acuity
cases to the ASC, freeing up ORs for higher acuity, higher reimbursing
cases," Ms. Dentler says.
ASCs that track performance metrics — e.g., clinical quality, patient satis-
faction, workflow and cost — are also attractive to hospitals. Quality and
performance metrics can be used by the ASC to "make the case to why
they would be a good acquisition partner," Ms. Dentler says.
e exact future of the field is a moving target, but Mr. Eiseman isn't
afraid to place his bet on joint ventures, particularly with hospital part-
ners.
"[e landscape] is always going to change," he says. "But I think the
general concept is lower cost, higher quality. e volume of value
based healthcare practices are advancing at different paces in different
places, but I think it's an ongoing thing. I don't see us going back to
traditional reimbursement. is is the future."
n
6 Hospitals, Health Systems
Opening or Planning ASCs
By Jessica Kim Cohen
H
ere are six hospitals and health systems that
have announced plans for ambulatory surgery
centers.
Aurora Health Care opened Germantown (Wis.) Health
Center, which features an ASC.
Farmington, Minn.-based Northfield Hospital & Clin-
ics is considering building its new ASC in Lakeville, Minn.
UC San Francisco Health and Walnut Creek, Calif.-
based John Muir Health are opening a new outpatient
center in Berkeley, Calif., in 2018.
Middletown, N.Y.-based Orange Regional Medical
Center is opening a new cancer center and outpatient
building, with an ASC, in Wallkill, N.Y.
Cincinnati-based TriHealth is building a new outpatient
surgery center in Anderson Township, Ohio.
Physicians Endoscopy partnered with Englewood
(N.J.) Hospital and Medical Center and the physicians
of Gastroenterology Group of Northern New Jersey
to open Northern New Jersey Center for Advanced
Endoscopy in Englewood Cliffs, N.J.
n
Joan Dentler
Paul Eiseman
