Executive Summary
Health system executives are grappling with numerous challenges in a difficult operating environment. Hospital leaders routinely tell us that five initiatives, in particular, are high priorities for their organizations: ambulatory expansion, OR capacity optimization, surgical case migration to the right site of service, physician retention and recruitment, and partnerships (i.e., M&A). One common denominator impacting each of these five initiatives is the ambulatory surgery center (ASC)—a lower-cost site of service for patients and payers and a joint venture (JV) alignment mechanism for physicians and health systems.
Partnerships between health systems and ASCs are growing, but they often face operational and structural challenges that need to be mitigated early in the transaction process. The definitive agreement documents—the purchase agreement, operating agreement, and management agreement—represent the foundation of success for an ASC JV. Health system leaders must approach this portion of the planning process with exceptional care. Failure to do so can impact the success of the partnership—and future partnerships—for years to come.
This whitepaper explores challenges and solutions that health system leaders should consider before finalizing a transaction, including:
- Managed care implications related to health system equity position.
- Financial impact of surgical case migration.
- Governance and ASC board composition.
- Noncompete provisions.
- Key management responsibilities for health systems or third-party managers.
As health systems and physicians continue to search for win-win alignment solutions, ASC transactions and partnerships will continue to grow. Understanding and incorporating the key elements outlined in this paper will enable successful, enduring partnerships between key provider networks.
Waiting to develop an ASC strategy is not an option for health systems that want to maintain both a competitive position in the current environment and alignment with key physicians who are being redirected to ASCs by payers.
Edited by: Matt Maslin and Mary Anne Akhouzine
