Lanson J. Hyde, chief operating officer of Surgical Development Partners in Franklin, Tenn., cites five reasons why physicians should partner with hospitals on ambulatory surgery centers.
1. Some hospitals are waking up. Some hospitals are shedding the traditional view that ASCs are a threat and are getting interested in partnering with physicians on centers. "Non-profit hospitals in particular are waking up to the potential of partnering with physicians on new centers," Mr. Hyde says. These hospitals are building centers on their main campus or, in the case of large urban hospitals, as part of new satellites out in the suburbs. While hospitals still push for HOPDs, where they retain full control, in many cases they are partnering with physicians on ASCs. Hospital executives are beginning to realize that making physicians partners enhances the viability of the center.
2. Higher net revenue. When a hospital is a partner, surgery centers typically enjoy higher net revenue per case than in standalone facilities. Mr. Hyde estimates the facility fee can be $200 more per case on average. "This revenue increase falls straight to the bottom line and is usually material," he says. The increased revenue is a function of the hospital's market clout with managed care payors. Even if ASCs have to negotiate contracts separately, "there's still a positive halo effect from the affiliation with the hospital," he says.
3. More case volume. It is easier for an ASC to find additional cases when partnered with a hospital. Physicians who wouldn't use an independent ASC because they are loyal to the hospital are suddenly available when the hospital becomes a partner. "These physicians are not going to come use a facility that competes with the hospital," Mr. Hyde says. "But it's not a problem any more when the facility is affiliated with the hospital."
4. Better access to funding. Lenders generally see hospital-partnered ASCs as safer and more stable than stand-alone facilities. "There is probably some truth to this viewpoint," Mr. Hyde says. "If you have a hospital partner, lenders look at you more favorably. They see you as secure and more stable." Having worked with numerous lending institutions in the past few years, Mr. Hyde says some won't deal with an ASC that has just physician-investors and no hospital partner.
5. More peace of mind. "Surgeons are willing to compete with a hospital if they have to, but they would rather not," Mr. Hyde says. Of course, surgeons' key concerns, such as retaining some control over the center, have to be met first. "There is a certain peace of mind that comes when you partner with the 800-pound gorilla instead of having to look over your shoulder all the time," he says.
Learn more about Surgical Development Partners.
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