An hfm Web Extra

Following are important questions to consider in selecting a corporate partner:

• Track record. How many facilities has the company developed? How many have failed to make a profit? Has the company ever been sued by its hospital or physician partners?
• Profit. What is the average profit margin of the company's ASCs?
• Risk. Would the corporate partner be on the hook for its pro rata share of the facility's debt? Would it contribute cash up front along with the other partners?
• Reward. Would the corporate partner have an incentive to improve the ASC's bottom-line profits, or would it only be paid a management fee based on top-line collections?
• Business model. Are the company's and hospital's business models philosophically compatible?
• Operational support. Who would oversee the facility? How often would they be on site? What additional support would the company provide on an ongoing basis? Would these employees be charged back to the ASC or paid by the corporate partner?
• Development fee. Would the company charge a fee for the development of the center?
• Equipment planning. Would this function be contracted out? If so, would the fees be shared by all partners or would the corporate partner bear the cost?
• Benchmarks. Does the company have benchmarks that are applicable from other centers it has managed? How does it use those benchmarks?

For more information,see Allan Fine and Brandon Frazier's "Can a Hospital Benefit From Partnering with Physicians?," hfm, May 2011 

Publication Date: Monday, May 02, 2011