Jim Stilley, CEO of Northwest Michigan Surgery Center in Traverse City, Mich., has operated a joint-venture ambulatory surgery center for six years. The 35 physician-investors at NMSC have a 51 percent stake in the center, and Munson Medical Center, a large local hospital, has a 49 percent stake. In a time when many ASCs are hesitant about pursuing a joint venture, Mr. Stilley discusses six positive aspects of his center's relationship with the local hospital.
Pros for the ASC:
1. Shared resources. Mr. Stilley says his surgery center has benefitted from the extensive resources provided by its hospital partner. Hospitals tend to have larger planning, communications and marketing departments, and a partner with these resources has a lot to offer an administratively lean ASC. When NMSC needs consultants in radiology, pharmacy, biomedical engineering or facilities management, Mr. Stilley pays for a hospital consultant to come to the ASC. Without the hospital partner, the center would have to look to the community for a consultant, a process that can be time-consuming and could cost significantly more money.
2. Use of a GPO and equipment sharing. The relationship between Munson Medical Center and NMSC means that Mr. Stilley's center has the use of a group purchasing organization, which decreases supply costs considerably. The ASC can also share hospital equipment that it would otherwise have to purchase. "We don't have that huge capital outlay for infrequently occurring procedures," he says. "We may not need [some instruments] as often as the hospital needs them." His ASC has also decided to purchase incremental services, such as linens, from the hospital as long as the facility provides an equal or better service than other companies.
3. Collaboration, not competition. "I have seen firsthand how a successful partnership can work to benefit both the hospital and the surgeons," Mr. Stilley says. Nobody wins in a small community when the surgeons and the hospital are not partners. Mr. Stilley says the partnership between Munson Medical Center and his own facility means that the two parties are collaborators, not competitors. "If you're in a community that has a strong hospital in it, you want to partner with them," he says. "I wouldn't want to be a stand-alone [facility] unless you have to be. There is too much to be gained by working together."
Pros for the hospital:
4. Stronger surgeon/hospital relationship. Mr. Stilley says most hospitals recognize that a hospital/ASC joint venture can bring positive change to its relationships with physicians. "It can strengthen these relationships by fostering a culture that places the surgeon at the center of the surgical care model," he says. The surgeon and the hospital are mutually incentivized to work within a structure that focuses on high-quality, low-cost care while reducing administrative burden to minimal levels. The joint venture can give surgeons increased visibility to the hospital as they contribute to strategic decisions and help plan for the future.
5. Unburdened OR schedules. When a hospital partners with an ASC, it gains the freedom to move cases without an overnight stay requirement to a more appropriate, outpatient-specific facility. While ASCs should not expect a hospital partner to send every case over immediately, the transfer of appropriate cases can unburden hospital OR schedules and increase staff satisfaction.
6. Referral base for X-rays, labs and pathology. In Mr. Stilley's opinion, the biggest benefit of a joint venture for the hospital is the expanded (or maintained) referral base for X-rays, labs and pathology. "That's huge, because if that goes away from the hospital the community may not benefit," he says. When the ASC sends patients to the hospital for X-rays, labs and pathology services, the hospital benefits from increased business, and the community benefits from a centralized location of capable technicians and providers.
Read more on hospital/ASC joint ventures:
-5 Steps Surgery Centers Should Take Before Selling to a Hospital
-8 Observations About Hospital-Physician Joint Venture Surgery Centers
Pros for the ASC:
1. Shared resources. Mr. Stilley says his surgery center has benefitted from the extensive resources provided by its hospital partner. Hospitals tend to have larger planning, communications and marketing departments, and a partner with these resources has a lot to offer an administratively lean ASC. When NMSC needs consultants in radiology, pharmacy, biomedical engineering or facilities management, Mr. Stilley pays for a hospital consultant to come to the ASC. Without the hospital partner, the center would have to look to the community for a consultant, a process that can be time-consuming and could cost significantly more money.
2. Use of a GPO and equipment sharing. The relationship between Munson Medical Center and NMSC means that Mr. Stilley's center has the use of a group purchasing organization, which decreases supply costs considerably. The ASC can also share hospital equipment that it would otherwise have to purchase. "We don't have that huge capital outlay for infrequently occurring procedures," he says. "We may not need [some instruments] as often as the hospital needs them." His ASC has also decided to purchase incremental services, such as linens, from the hospital as long as the facility provides an equal or better service than other companies.
3. Collaboration, not competition. "I have seen firsthand how a successful partnership can work to benefit both the hospital and the surgeons," Mr. Stilley says. Nobody wins in a small community when the surgeons and the hospital are not partners. Mr. Stilley says the partnership between Munson Medical Center and his own facility means that the two parties are collaborators, not competitors. "If you're in a community that has a strong hospital in it, you want to partner with them," he says. "I wouldn't want to be a stand-alone [facility] unless you have to be. There is too much to be gained by working together."
Pros for the hospital:
4. Stronger surgeon/hospital relationship. Mr. Stilley says most hospitals recognize that a hospital/ASC joint venture can bring positive change to its relationships with physicians. "It can strengthen these relationships by fostering a culture that places the surgeon at the center of the surgical care model," he says. The surgeon and the hospital are mutually incentivized to work within a structure that focuses on high-quality, low-cost care while reducing administrative burden to minimal levels. The joint venture can give surgeons increased visibility to the hospital as they contribute to strategic decisions and help plan for the future.
5. Unburdened OR schedules. When a hospital partners with an ASC, it gains the freedom to move cases without an overnight stay requirement to a more appropriate, outpatient-specific facility. While ASCs should not expect a hospital partner to send every case over immediately, the transfer of appropriate cases can unburden hospital OR schedules and increase staff satisfaction.
6. Referral base for X-rays, labs and pathology. In Mr. Stilley's opinion, the biggest benefit of a joint venture for the hospital is the expanded (or maintained) referral base for X-rays, labs and pathology. "That's huge, because if that goes away from the hospital the community may not benefit," he says. When the ASC sends patients to the hospital for X-rays, labs and pathology services, the hospital benefits from increased business, and the community benefits from a centralized location of capable technicians and providers.
Read more on hospital/ASC joint ventures:
-5 Steps Surgery Centers Should Take Before Selling to a Hospital
-8 Observations About Hospital-Physician Joint Venture Surgery Centers