Business Advisor: 3 Rival Hospitals Own the Same Surgery Center

We're a couple months into our unlikely — and unprecedented — partnership in which 3 rival hospitals within a 50-mile radius own and use the same ambulatory surgery center. Yes, you heard right. Rather than each building its own ASC, 3 hospitals that used to compete for cases, contracts, surgeons and staff are now living under the same roof here at Skyline Surgery Center in Pocatello, Idaho. The collaborate-rather-than-compete idea is so crazy it just might work.

For our first 6 years, Skyline partnered with Bingham Memorial Hospital in a standard hospital-ASC joint venture. Only independent surgeons and Bingham-affiliated surgeons could use our facility. Meanwhile, Portneuf Medical Center and Mountain View Hospital each considered building their own ASCs to compete against us.

But after running the financials, the hospitals saw it made much more sense to partner with us. Thus was born the 3-hospital-physician joint venture. Each hospital has a 17% ownership interest totaling 51%, and a group of physicians owns 49%. (Before the merger, Skyline was 70% physician-owned while Bingham Hospital held 30%.)

In opening our doors to Portneuf and Mountain View, they, too, can enjoy the convenience and comfort of an ASC, as well as its bargaining power. Now that Portneuf has an ASC in its system, the 205-bed hospital can contract with insurers that want a low-cost alternative to hospitals for surgical care.

The joint venture will give everyone in our community within a 100-mile radius — from Jackson Hole, Wyo., to Twin Falls, Idaho, and down to the Utah border — access to cost-effective same-day surgery. We get calls every day about rising deductibles and co-pays. People are shopping for a less expensive alternative, and rightly so. We all know surgery at an ASC costs considerably less than at a hospital.

Our surgery center will benefit as well: more cases, more surgeons, more specialties.

• More cases. Our multi-specialty center has 3 ORs and 1 procedure room. In 2018, we performed 4,188 cases — 2,700 surgeries and 1,488 pain management procedures. We expect our new partnership will add 200-plus cases a month. Our facility has plenty of space to expand. We plan to add another OR and possibly an endoscopy suite.
• More surgeons. Just as we give surgeons access to our facility, the partnership will give our facility access to surgeons. Before the alliance, we couldn't offer endoscopies, upper GI and colonoscopies because we didn't have a gastroenterologist who was not affiliated with our competitors. Now that we do, we'll add a new line of gastroenterology services. The same goes for urology.
  For physicians, a shared site of care means efficiency. Doctors can do a lot more cases in an ASC than in a hospital.
• More specialties. We're most excited about expanding total joints. We have some very good joint replacement surgeons, but they were affiliated with competing hospitals. Now, they're onboard with total knees and total hips as a 23-hour stay. We need to renovate, and that may take up to a year before we can get going with total joints.