One frequently cited solution for two underperforming ASCs serving the same patient population is to close one of them and combine operations at the other, but this isn't as easy as it would appear, says Bill Heath, chief development officer at Practice Partners in Healthcare. Mr. Heath says he has avoided this approach and points to one such deal in Florida that caused a lot of problems. Here he shares some of the top challenges.
1. Which ASC has to close? This is a very contentious issue because the physician-owners who agree to close have to be willing to give up a conveniently located center and maybe drive across town to the other center. In most cases, however, it is obvious which center should close. One center is usually doing more poorly than the other. Both sides have to agree up front to go with the data and close the lower-performing center. "It’s a question of whose baby is uglier," Mr. Heath says.
2. How do you determine ownership? When two centers merge, determining the exact percentage of ownership by each party is not easy. It can involve a complicated formula, based on a number of concerns. For example, should owners of the surviving ASC get a higher percentage?
3. Will the two really be a good fit? "It's rare that you find two centers that fit well," Mr. Heath says. Melding differing cultures is not easy to do. A surgeon's favorite nurse may have to be let go, for example. Also, the mix of specialties may be incompatible. These are all issues that must be addressed before a worthwhile combination of facilities can occur.
Learn more about Practice Partners in Healthcare.