Jon Vick is president of ASCs Inc., which advises surgery center owners on strategic partnering and joint ventures.
Q: When is the best time for an ASC to bring in a hospital partner?
Jon Vick: The best time to bring in a hospital partner is when the ASC is operating at a highly profitable level and the hospital is willing to do the following:
A. Pay a fair market value based on the high multiples that ASC management companies are willing to pay.
B. Leave control of certain ASC functions in the hands of the physicians, via a super-majority vote.
C. Give the ASC access to the hospital contracts when they are better than the ASC contracts.
D. Agree to allow the ASC to continue operating in such a way that the ASC retains its efficiencies and economics.
E. Prepare a 3-5 year forecast that shows how the hospital participation will enhance distributions to the partners.
In our experience, the best way to accomplish the above is to first affiliate with an ASC corporate partner then let the corporate partner negotiate a three-way deal with the hospital. This will establish a high fair market value initially and allow the corporate partner to negotiate the deal with the hospital, thus helping the physicians avoid confrontational issues with the hospital.
Learn more about ASCs Inc.