In today’s state of the industry, new ventures into joint projects are commonplace. How to go about these projects in a ground-breaking way is key in keeping physicians in practice with a speed-to-market approach. Now more than ever, management companies, physicians and hospitals are joining forces to create the unique environment of an ASC, bringing revenue, dedicated teams and service lines. While joint ventures are at an all time high now, Alegent Health and Health Inventures banded together in 2005 to pave the way for today’s developmental approach.
“I think it was a competitive thing," says Scott Butterfield, administrator for Lakeside Surgery Center is Omaha, Neb. “At that time, there was an increased demand for physicians to open their own surgery centers. They realized they could make a lot more money doing it on their own and having more control over things then having a system do it."
In 2005, the industry was beginning to see more joint ventures — and the Nebraska medical community had two joint ventures emerging, which welcomed with a tepid interest from Alegent members. Once these projects were completed and started gaining recognition, Alegent looked at the competitive landscape and realized that doctors would soon start forming their own partnerships — Alegent and would help open surgery centers, rather than see the physicians form them independently. “By doing that, we don’t lose all the business, on .49 cents of every dollar. It was the opportunity cost they were considering. By that factor, it became the impetus to create said surgery centers," concedes Butterfield.
Once Alegent engaged Health Inventures, there was a comprehensive ASC feasibility assessment which addressed challenges up-front in a business plan before work began on the actual facility. Every aspect of the development project was analyzed and both parties were able to produce a business plan for the successful launch of the surgery center.
This feasibility phase is essential to avoiding the pitfalls of overbuilding or moving forward without adequate physician commitment, which can have significant long-term consequences, but Alegent found no lack of interest from physicians. Health Inventures conducted extensive physician interviews to educate physicians about the joint venture process and gauge interest. Based on positive feedback from the interviews and Health Inventures’ financial forecasts, a joint venture was deemed feasible. The degree of physician interest reflected enough case volume to occupy two new facilities. Butterfield adds that a third-party management company was a main reason interest levels were high. “I believe they joined because Alegent wasn’t going to be managing. If they were, they may have lost control. The third party management company was a non-biased entity that ran the center with the best interest of the center and the patients it served." With the ability to control their schedules and enjoy faster turnover times, physicians were allowed for more cases in a shorter amount of time, which was seen as a huge benefit. “The smart thing that Alegent did was not rely on one service line — they diversified themselves. It allowed the opportunity to bring in new service lines and shelter itself from the peaks and valleys of volumes," says Butterfield.
