Hospitals and ambulatory surgery centers possess the opportunity to benefit heavily from joint ventures. The strategic development of the joint venture proves just as important as running the center.
"They have to be set up right and carefully planned," says Joe Zasa, managing and founding partner of ASD Management in Dallas. "You can't make it a one-sided venture."
A joint venture fosters cohesion in the community between physicians and the hospital, and ASCs may receive enhanced contract rates. It is important to ensure the hospital's legal protection, but in the most beneficial joint venture ASCs, physicians take the reigns to run the center and decide the important aspects of management.
To avoid unmet expectations, clear roles and goals must be stated. Joint ventures easily fail when a hospital focuses on its bottom line instead of maintaining a healthy partnership with the ASC. "The most successful centers have third party management or experienced advisers," says Mr. Zasa. "You have to have somebody stand in to balance the needs."
A good management company or adviser will sort through the timeline of center development and licensure, as an ASC may not be operational until six months after it receives a certificate of occupancy. Further, expected roles and responsibilities of each party should be clearly outlined.
Laying out the economics of the joint venture will be vital to understanding financial components like budget and debt, as the center may take up to six months to become cash-flow positive.
Mr. Zasa suggests ASC administrators speak with hospital administrators about management policies that work well within ASCs, including:
- staffing strategies
- payer contracting
- business office operations
The two parties also need to clearly define ownership and control disparities. That is, the ASC operating agreement should spell out shareholder rights, ownership eligibility and partner buy-out and buy-in stipulations.
Ultimately, a good joint venture balances on trust.
"These things are like any kind of relationship," says Mr. Zasa. "People have to buy-in to the program and look out for each other and work together."
Both sides of the joint venture can craft this trust early in the process, planning the center with a concerted understanding of each other's intentions. Substantiating the legal aspect of the partnership is a crucial first step to a trust-centric center.
"When trust goes away, the venture starts to crumble," says Mr. Zasa. "If you build the thing on a solid foundation, it has a lot better chance to survive than on a rocky foundation."