The Path to ASC Joint Venture Readiness

Use these metrics to assess your own health system’s readiness for an ASC strategy. 

1. ASC-focused payer contracts. 

Health systems typically have much more to leverage, as well as value trade ability with commercial payers, so the health system partner in the ASC joint venture should take the lead on negotiating rates with payers. 

Pre-negotiated, outpatient ‘ready’ rates position the ASC platform for success, enabling steady growth throughout the market. Getting this structure into place is an evolution. It involves value-based conversations with key commercial payers regarding the overall benefit of developing such an ASC platform. 

With a committed strategy, this value becomes apparent as the health system commits to migrating key specialties into the more cost-effective ASC setting. Creating a platform of facilities with more efficiency, lower costs, lower capital spend, and (in most cases) more effective outcomes all result in greater patient satisfaction. 

2. Surgeon participation. 

As with all ASCs, surgeons should be permitted to own interest in the joint venture—even surgeons currently employed by the health system. This is the bedrock of a successful ASC strategy. 

Surgeon ownership requires the health system to assess current compensation alongside the ancillary revenue that comes from ASC ownership. This strategic planning is worthwhile. Physician ownership has proven itself time and again to be the best practice in this space. 

When physicians have ownership—as well as governance, leadership, and decision-making opportunities—the ASC joint venture, and the overall partnership, are stronger. 

3. Build momentum for your ASC joint venture. 

ASC partnerships are most successful when partners begin with an initial project and ramp up from that initial effort. While a partnership should begin with a broad joint venture strategy “end in mind,” it is imperative to start somewhere to get the ball rolling and create momentum.   

We find that an initial focus (a specific market or a specific ASC project, for example) provides momentum and offers insight into how the partners can work together to build on initial efforts and expand into a much broader relationship.

4. Market leader alignment.  

Many hospitals invest in ASCs because migrating simpler procedures to ASC settings creates capacity for the hospital to take on more complex cases  

Such case migration is good for the ASC joint venture and good for the health system’s overall market share and patient care strategy. For this reason, market leaders’ compensation plans should reward success throughout the market, not just within the existing hospital’s “four walls.”

If market leaders are penalized financially when cases migrate from the hospital to the ASC, they will inevitably create roadblocks that obstruct the joint venture’s success. This alignment with market leadership is imperative to the success of the overall strategy and speed to market.

5. Final decision clarity. 

No one person can accomplish a successful ASC joint venture. It takes a collective group of people all working in concert to make that happen. These people work in the health system, in physician partner medical offices, at ASC management companies, and at equity partners.  

But the joint venture should rely on one key health system leader for the final decision clarity that brings health system employees into alignment and eliminates conflicts by providing understood pathways to success. A health system COO might take on this role, for example.

6. Separate ASC infrastructure. 

 Health systems that attempt to run the ASC out of the hospital’s operational infrastructure are often doomed to fail. 

 A separate ASC infrastructure allows staff, technology, and systems to laser-focus on ASC operations and run as lean as possible, thus optimizing the odds of success. 

Where is your health system on the continuum of these 6 foundational elements? Contact us, and let's have a discussion to help you assess your ASC joint venture readiness.