At the Becker's Hospital Review Annual Meeting in Chicago on May 17, Scott Becker, JD, CPA, partner with McGuireWoods in Chicago, discussed 12 signs of success when it comes to structuring a hospital-physician joint venture.
1. Have serious knowledge in the deal process. Leaders should have knowledge about how much time it takes to finalize these types of deals and a deep understanding of the due processes involved. This is not an endeavor hospital nor physician leaders want to underestimate.
2. Significant experience in deals is helpful. People should quickly be able to get a sense if a deal is likely to work or not. This sixth sense can help parties avoid a deal that is doomed from the start.
3. When making a deal, work with someone who has authority. "The more authority somebody has, the more likely they are to know where things will land," said Mr. Becker. Engage with the highest level of leadership possible. The best transaction Mr. Becker most recently saw was one in which the COO and CEO were intimately involved in every part of the deal. Their involvement set the tone that this was a high priority.
4. Know due processes and clarify them for others. Some physician practices may hold inaccurate expectations about the amount of time it takes to structure a joint venture. Physicians may believe it can be done in 30 days, whereas health systems know it will take 90 days. "It's knowing the process, from Point A to Point B, that is really critical," said Mr. Becker.
5. Have confidence in hospital operations. There is nothing worse than an organization's marketing efforts outrunning its development, and the same goes for joint venture arrangements. Sophisticated coordination between hospital development and operations can ensure the hospital implements the deal as well as sold it on the front-end.
6. The more consistent the communication, the better. A message doesn't have to be perfect to be communicated, particularly in an instance as delicate as a transaction. "Regular communication is best. Even if it's saying, 'Hey we don't know about this legal issue, but we'll get back to you next week,'" said Mr. Becker. Transparency is also essential. "The more transparent the communication, the less matters will be spun for political purposes," he said.
7. Prepare for joint ventures early. Know the big issues and potential setbacks early and address them early in the game.
8. A consistent renaming of the price can stall negotiations and hurt morale. Deals near closing but constantly readjusted with lower bids and requests for revaluation can make for "horrendous" deals, according to Mr. Becker. A direct leader, even if he/she may not be kind and bubbly to work with, can make deals much more organized.
9. High integration with legal and regulatory teams early to avoid problems later. There is nothing that drives physicians crazier than deals being unwound because legal and regulatory issues present problems.
10. Get in as deep of an agreement with partners as possible before you get it to the lawyers, yet at the same time get it to lawyers early. This is a touchy game of too early, too late. "Many lawyers think their job is, once you have a deal done, to renegotiate the deal," says Mr. Becker. Find the right time to engage legal counsel so their involvement doesn't present problems to the deal's deadline.
11. Keep a constant focus on the endpoint. Set check points and deadlines. Have a date in mind by which you need to close the deal.
12. Maintain regularly scheduled meetings to force weekly meetings and hold people accountable. These meetings will force people to think about the deal regularly.
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1. Have serious knowledge in the deal process. Leaders should have knowledge about how much time it takes to finalize these types of deals and a deep understanding of the due processes involved. This is not an endeavor hospital nor physician leaders want to underestimate.
2. Significant experience in deals is helpful. People should quickly be able to get a sense if a deal is likely to work or not. This sixth sense can help parties avoid a deal that is doomed from the start.
3. When making a deal, work with someone who has authority. "The more authority somebody has, the more likely they are to know where things will land," said Mr. Becker. Engage with the highest level of leadership possible. The best transaction Mr. Becker most recently saw was one in which the COO and CEO were intimately involved in every part of the deal. Their involvement set the tone that this was a high priority.
4. Know due processes and clarify them for others. Some physician practices may hold inaccurate expectations about the amount of time it takes to structure a joint venture. Physicians may believe it can be done in 30 days, whereas health systems know it will take 90 days. "It's knowing the process, from Point A to Point B, that is really critical," said Mr. Becker.
5. Have confidence in hospital operations. There is nothing worse than an organization's marketing efforts outrunning its development, and the same goes for joint venture arrangements. Sophisticated coordination between hospital development and operations can ensure the hospital implements the deal as well as sold it on the front-end.
6. The more consistent the communication, the better. A message doesn't have to be perfect to be communicated, particularly in an instance as delicate as a transaction. "Regular communication is best. Even if it's saying, 'Hey we don't know about this legal issue, but we'll get back to you next week,'" said Mr. Becker. Transparency is also essential. "The more transparent the communication, the less matters will be spun for political purposes," he said.
7. Prepare for joint ventures early. Know the big issues and potential setbacks early and address them early in the game.
8. A consistent renaming of the price can stall negotiations and hurt morale. Deals near closing but constantly readjusted with lower bids and requests for revaluation can make for "horrendous" deals, according to Mr. Becker. A direct leader, even if he/she may not be kind and bubbly to work with, can make deals much more organized.
9. High integration with legal and regulatory teams early to avoid problems later. There is nothing that drives physicians crazier than deals being unwound because legal and regulatory issues present problems.
10. Get in as deep of an agreement with partners as possible before you get it to the lawyers, yet at the same time get it to lawyers early. This is a touchy game of too early, too late. "Many lawyers think their job is, once you have a deal done, to renegotiate the deal," says Mr. Becker. Find the right time to engage legal counsel so their involvement doesn't present problems to the deal's deadline.
11. Keep a constant focus on the endpoint. Set check points and deadlines. Have a date in mind by which you need to close the deal.
12. Maintain regularly scheduled meetings to force weekly meetings and hold people accountable. These meetings will force people to think about the deal regularly.
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