The questions most frequently encountered at Healthcare Venture Professionals.
Frequently Asked Questions
Why should the hospital give up a significant part of the outpatient surgery revenue it already has?
HVP has seen numerous situations where hospitals have adopted this position, only to later “wake up” and find that some of its key doctors have decided to develop (either on their own or with the assistance of an outside entity) an ASC or some other traditionally hospital-owned service. The hospital ends up with the classic “100% of nothing” and a missed opportunity to develop closer (and more beneficial) relationships with some of its key physicians.
What makes a JV ASC successful?
Is it difficult to develop an ASC?
This depends on the legal/regulatory climate (e.g. is a Certificate of Need (CON) required?), financial feasibility, competitor assessment, history of relationships between contemplated owners/partners, and many other complicated factors. Experienced, objective external consultative support and guidance can be crucial. As surgery center specialists, HVP has the expertise and track record to help address such concerns from either a physician or hospital perspective.
How can HVP help us with our ASC?
HVP serves as a “one-stop shopping” point for ASC development and management. We are a single source of accountability and resources for all aspects of ASC operations. It’s HVP’s full-time job to make the ASC successful. ASC owners can have the peace of mind in knowing that their investment is in capable, professional hands.
Why do we need outside help (such as HVP) to create an ASC?
The proposed ASC is typically neither the hospital’s nor physician’s “core business.” ASC owners usually don’t have the time, resources, expertise, or experience necessary to structure, develop, or operate the ASC in a way that maximizes benefits to the patients served and to all owners. Individual owners may resent perceived control of the ASC development process by other owners. HVP involvement allows all prospective owners to concentrate on their traditional “core businesses” while the ASC is professionally developed and managed by an objective, external third party accountable to all ASC owners.
Are there other reasons why the hospital should consider an ASC JV with physicians?
A well-structured, formal collaboration with physicians allows the hospital to benefit from a larger market share, improved margins, better patient and physician satisfaction, and enhanced hospital-doctor relationships. Since most ventures such as ASCs are developed on a separate site or “freestanding” basis, it can also free up existing hospital space for other revenue-producing uses.
Are there other reasons why a physician should consider an ASC joint venture (JV) with the hospital?
In many situations, a JV with the hospital provides physicians with more direct control and formal involvement in a new, innovative patient service, more access to capital (“deep pockets”), sharing of ownership risk, access to better-paying insurance contracts, enhanced market share, and increased income potential. The JV also becomes a platform to develop other new collaborative relationships with the hospital and to strengthen traditional relationships.
Can’t a group of physicians or a hospital develop an ASC without considering a formal partnership with the other?
They can (or perhaps should), but in many markets, this approach results in increased competition and resentment. Physicians have a growing number of opportunities to “do it themselves;” hospitals have almost always had such opportunities. The consequences of a unilateral approach usually include the disruption of other important and necessary aspects of the traditional doctor-hospital relationship and a situation where one party is perceived to (or actually does) benefit at the expense of the other. Both parties may also miss a tremendous opportunity to jointly provide a service to the community in a more innovative, convenient, efficient, and cost-effective fashion. There are a number of states where specific regulatory factors either encourage a physician-hospital collaborative approach or (to the contrary) make it easier for physicians or hospitals to develop an ASC on their own.
What about the hospital building a new, physically separate ASC and operating it as a hospital outpatient department (HOPD)?
For a variety of reasons, HVP is seeing a growing trend toward the HOPD ASC approach. Contact us to find out why!
Will HVP work with a group of physicians or a hospital to develop an ASC without involving the other party?
HVP believes that a physician-hospital collaborative approach is a preferred model for ASC development. HVP will, however, work with physicians or hospitals to create an ASC in situations where a collaborative approach has been ruled out for either political, practical, regulatory, or other overriding reasons.
Will HVP invest in the ASC?
For many positive reasons, HVP would prefer to have a minority ownership position in the ASC. This is only in situations where the hospital or physician owners would like HVP to do so. This approach differentiates HVP from many other companies that insist on significant ownership and control of any ASC that they help to develop and operate.