As the net growth of ASCs has stalled, partnerships between hospitals, physicians and ASCs are becoming an increasingly popular option for all parties involved, according to Paul Eiseman, vice president of business development with Regent Surgical Health.
Mr. Eiseman and Jeffrey Simmons, Regent's chief development officer, discussed three-way joint ventures and more at the 14th Annual Spine, Orthopedic and Pain Management-Driven ASC Conference + The Future of Spine in Chicago June 10.
In fact, Mr. Eiseman and Mr. Simmons presented data showing the percentage of independent ASCs has dropped from 78 percent in 2000 to roughly 60 percent today.
According to Mr. Simmons, ASCs should consider bringing in a hospital and a management company for one or two reasons: increasing the reimbursement rates of a surgery center by being a partner, and delivering a book of business. "If they do both, it's a bonanza," he said. "You should never bring on a hospital partner for financing or credibility."
Hospitals are also much more willing to go for a joint venture ASC project than they had been in the past, they said. This is due to several factors, including the rise of accountable care organizations — hospitals are looking for lower cost settings, like ASCs, to send lower-acuity surgeries, according to Mr. Simmons.
A joint venture with a hospital can also increase reimbursement rates dramatically for ASCs, while still providing a lower cost location for surgeries than an HOPD.
ASCs that are looking for a hospital joint venture should seek a setup that allows physicians to have operational control. Regent prefers a model in which Regent and a hospital form a holding company, of which the hospital usually owns about 70 percent and Regent owns the remaining 30 percent. Then, this holding company partners with the physician owners for the joint venture, allowing the physician company to own 40 percent and the hospital-Regent holding company to own 51 percent.
Using this ownership model allows physicians to retain control of the ASC operationally, but also leads to "hybrid" payer contracted rates, which fall below HOPD rates but far above those of an independent ASC.
The model tends to work best in the following scenarios, according to Regent:
- When physicians trust the local hospital and hospitals are interested in partnering with physicians
- When payers have squeezed independent ASC on reimbursement and the ASC is looking to change to a contracted model
- When an ASC has matured or doesn't see a profit increase coming in the future
- When the hospital has negotiating power and has a track record of negotiation favorable rates