At the 19th Annual Ambulatory Surgery Centers Conference in Chicago on October 27, Bo Hjorth, vice president of business development, and Michael McKevitt, senior vice president of business development, Regent Surgical Health, discussed key considerations for academic medical center and ambulatory surgery center joint ventures.
Mr. McKevitt began by discussing some of the reasons AMCs are electing to pursue ASC partnerships. One key reason is healthcare reform — which incentivizes systems to provide care at the lowest-cost location — coupled with the research and educational missions of AMCs, which make it difficult for them to compete on cost of care.
"For the first time ever, what we're seeing are academic medical centers beginning to think outside the box," he said.
Mr. Hjorth then discussed the general ownership and governance model that Regent recommends for AMC-ASC joint ventures. Under the firm's most common model, the physicians do not have a majority ownership stake, but they do have a majority of board seats.
The ASC's board typically consists of two hospital members, four physician members and one member from Regent. "What we grant them is operational and clinical control of the center," he said, adding that providing the physicians with that control is often one of the first hurdles of working with an AMC.
Mr. Hjorth also shared some of the challenges of working with AMCs. Some of the more common include a slower decision-making process, a faculty and educational mission that sometimes conflicts with the need for efficiency within the ASC and faculty physicians’ desire for the latest (and costly) technologies. These challenges can be managed, though, by explaining the financial implications of inefficiency or costly new technologies, he said.
Mr. Hjorth closed the presentation by sharing some key considerations for a successful joint venture surgery center with an AMC. Key questions to ask include:
Mr. McKevitt began by discussing some of the reasons AMCs are electing to pursue ASC partnerships. One key reason is healthcare reform — which incentivizes systems to provide care at the lowest-cost location — coupled with the research and educational missions of AMCs, which make it difficult for them to compete on cost of care.
"For the first time ever, what we're seeing are academic medical centers beginning to think outside the box," he said.
Mr. Hjorth then discussed the general ownership and governance model that Regent recommends for AMC-ASC joint ventures. Under the firm's most common model, the physicians do not have a majority ownership stake, but they do have a majority of board seats.
The ASC's board typically consists of two hospital members, four physician members and one member from Regent. "What we grant them is operational and clinical control of the center," he said, adding that providing the physicians with that control is often one of the first hurdles of working with an AMC.
Mr. Hjorth also shared some of the challenges of working with AMCs. Some of the more common include a slower decision-making process, a faculty and educational mission that sometimes conflicts with the need for efficiency within the ASC and faculty physicians’ desire for the latest (and costly) technologies. These challenges can be managed, though, by explaining the financial implications of inefficiency or costly new technologies, he said.
Mr. Hjorth closed the presentation by sharing some key considerations for a successful joint venture surgery center with an AMC. Key questions to ask include:
- Does the AMC have a defined ASC strategy?
- Will the C-suite leadership be involved in the ASC?
- Do physicians have control of the clinical and operation decisions at the board level?
- Does the AMC have the contracting power to improve ASC rates?
- Is there a reasonable specialty mix to develop business and surgeons to participate?
- Will the AMC shift lower acuity cases to the ASC?
- Will the AMC provide open communication with the AMC?