Transcript The BayCare Experience: Physician Joint Ventures

The BayCare Experience:
Physician Joint Ventures
Paul R. Summerside, MD
Chief Medical Officer
BayCare Clinic, LLP
President, Board of Managers
BayCare Aurora, LLC
1
Aurora BayCare Medical
Center (ABMC)
• ABMC is an acute care hospital that opened in 2001
• Joint Venture of BayCare Clinic (a physician partnership) and
Aurora Health Care (a not-for-profit organization)
• 40% Physician ownership
• 167 Beds including the following services:
-
General Medical and Surgical
Adult ICU/eICU
- Obstetrics
Cardiovascular
Neuroscience
Orthopedic
Emergency Services including a Level II Trauma Center
-
Women’s Health
Level III Neo-natal ICU
Pediatric Inpatient
Inpatient Rehabilitation
Oncology
• Located in Green Bay, Wisconsin
• 1,100 employees
• Operates under the Planetree philosophy: patient centered care
in a healing environment
BayCare History
•
•
•
•
•
•
•
•
1996 - Independent Specialty Practices Form MSO
1998 - Letter of Intent w/ AHC
1999 - Integration of MSO to BayCare Clinic
1999 - Finalize JV Operating Agreement
2000 - Break Ground on ABMC Hospital
9/01 - Opening ABMC Tertiary Hospital
2003 - ABMC Reaches Calendar Year Profitability
2004 - ABMC Pays off Operating Line and
Accumulates Cash Reserve
• 2007 - ABMC 5th Consecutive year w/ > 12% margin
and begins seventh expansion
Joint Ventures….Why?
– Am I in trouble?
– Am I at risk?
– Will I be at risk?
Risk Avoidance = 10x Pleasure Pursuit
Change
Hospital System Anxieties
1. Fixed Costs
2. Physician Loyalty
3. Capital Needs
4. Regulatory Concerns
5. Safety/Quality
6. Payor Mix Risk
Understanding Motivation
Maslow’s Hierarchy of Needs
Physician Fears/Needs
1. Loss of lifestyle
2. Loss of Control
3. Loss of Colleagues
4. Loss of Respect
Hospital Finance
$ Millions
COST
LOSS
0
Volume
$ Thousands
Physician Finance
PROFIT
COST
LOSS
0
Volume
Physician
I Stay
$ Thousands
Risk Corridor
I Move
PROFIT
COST
LOSS
0
Volume
Ortho Sad
$ Millions
COST
LOSS
0
Volume
Risk Corridor
Hospital Finance Fears
Ortho Happy
Clash of Cultural Values
Institutional: Greatest Good for the
Greatest Number (Missions)
Physician: My Income, My Overhead,
My Time, My Patients (Goals)
Physician Fears…
Reliance on benevolent dictatorships
w/ a “Mission”
Psst… remember RESPECT and Control!
The Renter vs. Owner
Neurological Spine Costs
Among Six Centers
No Complications
240,000
220,000
200,000
180,000
160,000
140,000
120,000
100,000
80,000
60,000
40,000
20,000
0
0
1
2
3
4
5
6
7
Keys to Successful Join Ventures
•
•
•
•
Key personnel like each other;
Understanding partner’s cultural values;
Respect of partner’s value;
Willingness to relinquish control.
(If you love them, set them free!)
If you want to be a lion tamer….
you better at least like the animals.
Aligning Incentives (Fears!)
Hospital System
Anxieties
•
•
•
•
•
•
•
Fixed Costs
Physician Loyalty
Capital
Regulatory
Safety/Quality
Payor Mix Risk
Loss of Profitability and
Mission
Physician Anxieties
•
•
•
•
Loss Lifestyle
Loss of Control/Quality
Loss of Colleagues
Loss of Respect
BayCare Aurora Experiment
• Ownership
• 40% BayCare Physicians
• 60% Aurora
• All Stark Controlled Revenues in the JV
• Governance (MAD) Board
•
•
•
•
Five Aurora and Five BayCare
70% Super Majority Rule
Partner Veto all Self-Dealing
Non-competition
BayCare Aurora Experiment
• Results:
– BayCare Clinic
• 1999 – 53 specialists
» $44 million net collections
• 2007 – 100 specialists
» 40 physician extenders
» $105 million net collections
BayCare Aurora Experiment
• BayCare Aurora LLC
• 1999 – Two Surgery Centers
» $8 million gross revenues
• 2007 – Tertiary Hospital System
» $200 million gross revenues
» Largest Taxpayer in County
IP and OP Discharges Since 2002
8,000
7,000
6,000
5,000
4,000
3,000
2,000
Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4
2002 2002 2002 2002 2003 2003 2003 2003 2004 2004 2004 2004 2005 2005 2005 2005 2006 2006 2006 2006
Patient Satisfaction –
Inpatient Services
65%
60%
55%
50%
45%
40%
2001
2002
2003
2004
2005
2006
Q1
2007
Q2
2007
* Source: Aurora Loyalty Index Data Through Q2 2007
Patient Satisfaction –
Outpatient Ambulatory
75%
70%
65%
60%
55%
50%
45%
40%
2001
2002
2003
2004
2005
2006
Q1
2007
Q2
2007
* Source: Aurora Loyalty Index Data Through Q2 2007
“In the Absence of a Great Dream…
Pettiness Prevails.”
--Peter Senge