February 8, 2023

Session: ASC joint ventures—Risk or reward?

By: Tarsilla Moura

Editor's Note

“Patients, physicians, and others basically label hospitals as the place you go when you’re sick,” Joan Dentler, MBA, Founder and President of Avanza Healthcare Strategies, said when opening the session, “ASC Joint Ventures—Risk or Reward?” On the flip side, she continued, “outpatient services is where you go when you’re healthy.” There is this divide between what hospitals and ambulatory surgery centers (ASCs) represent, and the divide is only getting bigger.

COVID-19 has reinforced this divided image, Dentler said. “The biggest trend we’ve seen since the pandemic is hospitals wanting to acquire physician groups.” Outpatient migration is continuing as more and more procedures get approved for ASCs, and “that’s a definite push for consumers, patients, and payers. The amount of both vendor services and IT products now available for the ASC space has grown tremendously,” she said.

What does that mean for ASC ownership? There are a few ASC ownership structures out there, including:

  • physician- or hospital-owned
  • management company
  • private equity
  • payer
  • joint venture

“Private equity is buying ASCs like crazy right now, as well as buying physician groups,” she said. But ASCA does a survey every year, she added, and according to that source, hospital-physician joint ventures look to be the fastest‐growing sector.

What are the motivations for partnering up to open an ASC? Top motivations include:

Hospitals Physicians
  • payer pressures
  • capital
  • consumer‐driven trends
  • payer relationship
  • physician alignment and recruitment
  • branding and reputation (practice growth)
  • prevent physicians from taking cases away
  • CON support
  • value‐based strategy support
  • better exit opportunity
  • reduce costs
  • development and operations

Dentler walked through a couple of real examples of how some of the most recent joint ventures came to be. Most often than not, a hospital will approach a physician group that has already started the steps to open an ASC. For successfully established physician-owned ASCs, she said, the physician owners “can take home a lot of money out of the ASC” if a hospital comes in and buys even a small percentage of it. “And they [the physicians] will continue to make money from the part that they still on,” she added. “It’s a pretty good deal financially for physicians.”

Interestingly, she points out, a physician group currently looking to out-right sell their ASC might have a hard time. “If the physician owners did not do a good job staggering the ages of the surgeons in the group, and they all want to sell because they all want to retire, for example, there’s usually no buyer for that,” she said.

This highly informative session prompted several questions from the audience as attendees sought to understand this growing trend. Dentler walked through what makes a successful ASC partnership, how to address some of the top issues that may arise, how to demystify misconceptions and misinformation, and key roles and responsibilities for each partner. “Remember, no JV [joint venture] is better than a bad JV,” she concluded.

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