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Growing Market Share Through ASC Joint Ventures

Allan Fine and Brandon Frazier for HealthLeaders Media, June 3, 2011

With hospitals and physicians struggling with declining reimbursements, both entities need to consider the value of establishing joint venture ASCs. The likelihood is that both physicians and hospitals can also benefit from having as a joint venture partner a professional ASC development and management company that has an established track record and infrastructure. Although hospitals and ASCs have historically competed for facility fees, as reimbursement continues to decline, there will be incentive for these parties to integrate.  
    
Benefits to physicians and hospitals
Why would physicians be attracted to an ASC? Clearly, there are financial benefits that can be attributed to ownership. In addition, the lack of emergency cases performed in this setting improves the surgeons’ quality of life by enabling them to perform their work in a timely manner, thereby opening up time to address other clinical or personal needs. Further, an efficient ASC environment provides a fast turnaround time between cases that is difficult to match in a hospital setting. Convenience increases for both physicians and patients in an ASC.  Patients also tend to appreciate the non-institutional ambience of an ASC.  

Conversely, hospitals increasingly will become attracted to ASCs particularly when they find that their operating rooms are at, or near capacity. Adding capacity through taking an ownership position in an ASC is generally a more expedient, economical, and pragmatic approach than simply trying to expand the current capacity in the hospital setting. Such a strategy may also augment the institution’s ACO plan if it is contemplating proactive measures.

The ASC will offer a viable profit center and a cost effective venue for ambulatory cases. In addition, progressive hospitals will seize the opportunity to attract new surgeons and retain high-value physicians who may be inclined to leave due to multiple factors, e.g., lack of equity opportunity, inability to procure adequate block time or simply available time on the OR schedule, inefficiencies ranging from scheduling to turnaround time and concerns over available and experienced nursing, anesthesia, and ancillary personnel. The hospital can also use the ASC as a strategy to increase market share and expand its service area. Those hospitals that may own an ASC, even if it is one that is faltering, will often find that changing the structure and bringing in other partners, both physicians and a competent ASC development and management company, will not only serve to achieve a successful turnaround, but will validate the strategy. 

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