At the 18th Annual Ambulatory Surgery Centers Conference in Chicago on Oct. 28, Jeff Simmons, chief development officer, and Bo Hjorth, vice president of business development at Regent Surgical Health, gave a presentation on different surgeon-hospital partnership models. Mr. Hjorth discussed the history of ASC development, which has peeked over the past few years and may decline over the next few years as the environment becomes more competitive.
“Today, 67 percent of hospital business is outpatient,” he said. “Reform favors strategic alliances between ASCs and hospitals. We are working in some markets today to help analyze the opportunities that are presented to them in the market. Hospitals realize they aren’t good in the ASC space and realize the benefit of partnering with physicians and management companies as a buffer of the services they provide.”
Mr. Simmons discussed several models for ownership partnerships between hospitals, physicians and management companies on ASCs:
· Hospitals own 51 percent; physicians own 39 percent; corporate partner owns 10 percent
· Physicians own 49 percent; hospitals own 41 percent; corporate partner own 10 percent
· Physicians own 70 percent; hospitals own 15 percent; corporate partner owns 15 percent
The presenters favored partnership models weighted toward physician-ownership because then physicians have more control over the governing body of the ASC. The board of directors for the ASC should have more physicians than hospital and corporate partner representatives, and the hospital representatives should be high ranking executives, such as the CEO and CFO.
“If you are stuck in an oversaturated market, being the first ASC to contract with the hospital is your best chance to significantly leverage your revenue stream,” said Mr. Simmons. “However, don’t make this the first joint venture the hospital has ever had.”
Mr. Hjorth and Mr. Simmons also discussed 100 percent ASC ownership in the HOPD model, which can take advantage of the hospital reimbursement rates for outpatient procedures. This can work well for small centers to maximize reimbursement, since hospitals receive a higher rate of reimbursement than ASCs, but it only works if the ASC is owned 100 percent by the hospital. In this model, hospitals have control over the budget, capital, debt, sale prices and insurance of shares. The physicians control clinical decisions, such as which physicians are in the partnership and anesthesia coverage.
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“Today, 67 percent of hospital business is outpatient,” he said. “Reform favors strategic alliances between ASCs and hospitals. We are working in some markets today to help analyze the opportunities that are presented to them in the market. Hospitals realize they aren’t good in the ASC space and realize the benefit of partnering with physicians and management companies as a buffer of the services they provide.”
Mr. Simmons discussed several models for ownership partnerships between hospitals, physicians and management companies on ASCs:
· Hospitals own 51 percent; physicians own 39 percent; corporate partner owns 10 percent
· Physicians own 49 percent; hospitals own 41 percent; corporate partner own 10 percent
· Physicians own 70 percent; hospitals own 15 percent; corporate partner owns 15 percent
The presenters favored partnership models weighted toward physician-ownership because then physicians have more control over the governing body of the ASC. The board of directors for the ASC should have more physicians than hospital and corporate partner representatives, and the hospital representatives should be high ranking executives, such as the CEO and CFO.
“If you are stuck in an oversaturated market, being the first ASC to contract with the hospital is your best chance to significantly leverage your revenue stream,” said Mr. Simmons. “However, don’t make this the first joint venture the hospital has ever had.”
Mr. Hjorth and Mr. Simmons also discussed 100 percent ASC ownership in the HOPD model, which can take advantage of the hospital reimbursement rates for outpatient procedures. This can work well for small centers to maximize reimbursement, since hospitals receive a higher rate of reimbursement than ASCs, but it only works if the ASC is owned 100 percent by the hospital. In this model, hospitals have control over the budget, capital, debt, sale prices and insurance of shares. The physicians control clinical decisions, such as which physicians are in the partnership and anesthesia coverage.
Related Articles on ASCs:
Central Piedmont Surgery Center to Open in North Carolina Next Week
7 Traits to Make Your Surgery Center More Attractive to Physicians
What are the Most Common Surgery Center Subspecialties?