Avoid these pitfalls when collaborating
Avoid these pitfalls when collaborating
(Editor’s note: In last month’s issue of Same-Day Surgery, we explored four tips for protecting your job in the event that your facility affiliates with another organization. In this month’s issue, we warn your about four areas of potential pitfalls that could siderail your collaborative effort before it begins.)
In these days of managed care pressures, collaborations are becoming as common in the same-day surgery field as cataract procedures. Before rushing into an affiliation, however, do your homework, or your program could be doomed to failure before it starts, affiliation experts warn.
Tribrook/AM&G Management Consultants, a Westmont, IL-based firm that consults with hospitals and surgery centers on ownership and operations issues, surveyed 224 hospitals that said their most popular reasons for terminating or rejecting an affiliation were:
• loss of autonomy/control;
• lack of shared commitment/vision;
• insufficient benefits;
• lack of flexibility;
• lack of trust/confidence.
"If there is a distrust of one management team among prospective partners, that can really throw a monkey wrench into the process," says Douglas Rich, president of Tribrook/AM&G.
For example, one partner may be unwilling to share information about market share. In such a case, you may want to reassess the collaboration, Rich suggests. "If there isn’t trust, then the potential for failure is very high," he says.
Consider these four potential pitfalls when forming an affiliation between your same-day surgery program and another organization:
• Don’t pick partners without looking at the big picture.
It’s difficult to bring together two organizations whose views of their respective roles in the community are extremely different, Rich says. For example, a corporate model that is highly motivated by profitability and operating conditions is going to have difficulty collaborating with a nonprofit program that is more concerned about provision of care, he says.
Keep in mind that collaborations that work in one part of the country may not work in another, says Pamela J. Wayne, RN, MPH, regional vice president of the surgery center division for Southern California and Arizona for HEALTHSOUTH Corp. in Birmingham.
"You may be looking at a hospital partner in San Diego, for example, where you may be looking at physician group partners in another part of the country," she says. "The manager in each particular SDS center has to be aware of what’s going on in their market. Nothing is absolute across the board."
Pick partners whose managed care contracts complement your own or who have a high degree of overlap, Rich suggests. "If you both contract with Blue Cross, you’ll have much higher negotiating power by doubling your size when you negotiate in the future," he says.
• Don’t wait to meet with payers.
Physicians frequently say they’re not going to talk to payers until after they put a network together, says Scott Becker, JD, CPA, partner with Ross and Hardies in Chicago.
"They put together 30 services, and the payer only wants three," Becker says. "They’ve spent countless days and costs putting together something that nobody wants."
What do payers want?
First, approach the payer to see what the payer is looking for, Becker suggests.
"Otherwise you can spend $100,000 in start-up costs, and at the end of the day, you have a product that no one wants to buy."
• Don’t try to affiliate with close-by competitors but stay on good terms with hospitals.
It’s often difficult for surgery centers to set up affiliations with each other if they are in the same geographical area, Becker says. A surgery center also may have a difficult time getting a national company or another partner interested if it is located within a couple of blocks of a hospital but has no hospital investment, he says. That center is seen as an enemy by the hospital and "is hated 10 times more than if it were two miles away," Becker says.
National companies that own surgery centers want to stay on good terms with hospitals, he emphasizes.
"Everyone recognizes that hospitals have lost some of their power and glimmer in the last few years, but they’re still a central spot for health care in most communities," Becker says. "If you’re another health care provider, you’d better swim with and be friendly with hospitals rather than risk animosity."
Avoid setting up joint ventures to offer the "bigger ticket" type of hospital procedures such as orthopedics and high-cost endoscopy and laparoscopy procedures, Becker warns. Instead, offer services such as urology, ophthalmology, and pain management that the hospital isn’t as dependent on, he suggests.
"Then it’s not viewed as a direct poke in the eye of the hospital," Becker says.
• Avoid loose affiliations.
Loose affiliations are basically handshake agreements in which two same-day surgery programs agree to offer referrals and do some joint purchasing. This arrangement gives both groups the opportunity to back out.
"Unfortunately, the looser the affiliation, the higher the probability that it won’t work out," Rich warns.
With looser affiliations, "it’s denying the fact that there’s a need for them to think as one," he says. "If they continue to think as independent entities, it’s unavoidable almost that at some point, a decision will be made that may be in the best interest of the group, but not one or the other." At that point, affiliations tend to deteriorate quickly, he says.
"This type of arrangement requires a lot of trust, and the field isn’t full of trust yet," Rich says.
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