On May 3, 2010, a panel of speakers shared their thoughts on strategic planning for hospitals and ASCs in a free webinar hosted by ASC Communications and moderated by Scott Becker, JD, partner at McGuireWoods and publisher of Becker's Hospital Review and Becker's ASC Review.
Hospital strategic planning
David Fleisch, partner at Bain & Company, discussed key considerations for hospitals in their strategic planning efforts. Accountable care organizations and movement toward capitated payments will greatly change how hospital profits are made, he said. Currently profitable service lines, such as open heart and inpatient services, will become high-cost lines under future payment structures. Hospitals must keep this in mind when creating strategic plans.
Changes in reimbursement will push toward an integrated continuum of care, and Mr. Fleisch predicts hospitals will look to acquire practices and other healthcare facilities to bring more services under one umbrella. As hospitals look to acquire, he recommended they invest in their core service lines before expanding to new services. Hospitals that expand new services without ensuring their core services are strong face challenges in long-term success, said Mr. Fleisch.
One ancillary service many hospitals have already begun to acquire is ASCs. Andrew Hayek, president and CEO of Surgical Care Affiliates, shared key thoughts for hospitals that wish to build a leading network of ASC joint ventures as part of their strategic plans. Mr. Hayek said investing in ASC partnerships has four key benefits for hospitals:
• Recapture and grow ambulatory surgery volume
• Free up hospital-based OR capacity;
• Align with high-quality physicians; and
• Prepare for accountable care organization structure.
Mr. Hayek recommends hospitals seeking to invest in ASCs be flexible in the structure of their relationships with physicians by considering both minority and majority partnerships and negotiate non-compete and buy-back provisions.
ASC strategic planning
Brent Lambert, MD, president and owner of Ambulatory Surgical Centers of America, provided an overview of some of the forces currently impacting the ASC industry that ASC leaders need to consider when planning for the future of their centers. These forces include:
• Stalled growth in the industry (as new ASCs open, just as many are closing);
• Decreased number of unaffiliated surgeons;
• Consolidation of payors;
• Decline of out-of-network strategy;
• Maturation of many ASCs without evergreen provisions; and
• Declining interest by private equity firms.
Luke Lambert, CEO of ASCOA, then shared his thoughts on how ASCs can best address these market factors. Mr. Lambert advised against a "capital-driven growth strategy," warning that many centers are not as profitable as they once were. Instead, he recommended acquirers base decisions on how centers are managed. "Capital is relatively more abundant than good management," he said.
Mr. Lambert also recommended that hospitals or other ASCs looking to acquire a center do so with a minority interest structure. Giving physicians a greater financial stake improves their commitment to the financial success of the center. The level of physician participation impacts the schedule, supply costs, recruitment and overall profitability, he said.
Download the Webinar presentation here (pdf). You will find a "Certificate of Participation" at the end.
View the Webinar here (wmv). We suggest you download the video to your computer before viewing to ensure better quality. If you have problems viewing the video, which is in Windows Media Video format, you can use a program like VLC media player, free for download here.
Hospital strategic planning
David Fleisch, partner at Bain & Company, discussed key considerations for hospitals in their strategic planning efforts. Accountable care organizations and movement toward capitated payments will greatly change how hospital profits are made, he said. Currently profitable service lines, such as open heart and inpatient services, will become high-cost lines under future payment structures. Hospitals must keep this in mind when creating strategic plans.
Changes in reimbursement will push toward an integrated continuum of care, and Mr. Fleisch predicts hospitals will look to acquire practices and other healthcare facilities to bring more services under one umbrella. As hospitals look to acquire, he recommended they invest in their core service lines before expanding to new services. Hospitals that expand new services without ensuring their core services are strong face challenges in long-term success, said Mr. Fleisch.
One ancillary service many hospitals have already begun to acquire is ASCs. Andrew Hayek, president and CEO of Surgical Care Affiliates, shared key thoughts for hospitals that wish to build a leading network of ASC joint ventures as part of their strategic plans. Mr. Hayek said investing in ASC partnerships has four key benefits for hospitals:
• Recapture and grow ambulatory surgery volume
• Free up hospital-based OR capacity;
• Align with high-quality physicians; and
• Prepare for accountable care organization structure.
Mr. Hayek recommends hospitals seeking to invest in ASCs be flexible in the structure of their relationships with physicians by considering both minority and majority partnerships and negotiate non-compete and buy-back provisions.
ASC strategic planning
Brent Lambert, MD, president and owner of Ambulatory Surgical Centers of America, provided an overview of some of the forces currently impacting the ASC industry that ASC leaders need to consider when planning for the future of their centers. These forces include:
• Stalled growth in the industry (as new ASCs open, just as many are closing);
• Decreased number of unaffiliated surgeons;
• Consolidation of payors;
• Decline of out-of-network strategy;
• Maturation of many ASCs without evergreen provisions; and
• Declining interest by private equity firms.
Luke Lambert, CEO of ASCOA, then shared his thoughts on how ASCs can best address these market factors. Mr. Lambert advised against a "capital-driven growth strategy," warning that many centers are not as profitable as they once were. Instead, he recommended acquirers base decisions on how centers are managed. "Capital is relatively more abundant than good management," he said.
Mr. Lambert also recommended that hospitals or other ASCs looking to acquire a center do so with a minority interest structure. Giving physicians a greater financial stake improves their commitment to the financial success of the center. The level of physician participation impacts the schedule, supply costs, recruitment and overall profitability, he said.
Download the Webinar presentation here (pdf). You will find a "Certificate of Participation" at the end.
View the Webinar here (wmv). We suggest you download the video to your computer before viewing to ensure better quality. If you have problems viewing the video, which is in Windows Media Video format, you can use a program like VLC media player, free for download here.