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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. Aurora BayCare Medical Center (ABMC). ABMC is an acute care hospital that opened in 2001

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The BayCare Experience: Physician Joint Ventures

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  1. The BayCare Experience:Physician Joint Ventures Paul R. Summerside, MD Chief Medical Officer BayCare Clinic, LLP President, Board of Managers BayCare Aurora, LLC

  2. 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 - Women’s Health - Adult ICU/eICU - Obstetrics - Cardiovascular - Level III Neo-natal ICU - Neuroscience - Pediatric Inpatient - Orthopedic - Inpatient Rehabilitation - Emergency Services including a Level II Trauma Center - Oncology • Located in Green Bay, Wisconsin • 1,100 employees • Operates under the Planetree philosophy: patient centered care in a healing environment

  3. 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

  4. Joint Ventures….Why? • Am I in trouble? • Am I at risk? • Will I be at risk? Risk Avoidance = 10x Pleasure Pursuit

  5. Change

  6. Hospital System Anxieties • Fixed Costs • Physician Loyalty • Capital Needs • Regulatory Concerns • Safety/Quality • Payor Mix Risk

  7. Understanding Motivation Maslow’s Hierarchy of Needs

  8. Physician Fears/Needs • Loss of lifestyle • Loss of Control • Loss of Colleagues • Loss of Respect

  9. Hospital Finance PROFIT COST $ Millions LOSS REVENUE 0 Volume

  10. Physician Finance REVENUE $ Thousands PROFIT COST LOSS 0 Volume

  11. Physician I Move I Stay Risk Corridor $ Thousands REVENUE PROFIT COST LOSS 0 Volume

  12. Hospital Finance Fears Ortho Sad Ortho Happy PROFIT RiskCorridor COST $ Millions LOSS REVENUE 0 Volume

  13. Clash of Cultural Values Institutional: Greatest Good for the Greatest Number (Missions) Physician: My Income, My Overhead, My Time, My Patients (Goals)

  14. Physician Fears… Reliance on benevolent dictatorships w/ a “Mission” Psst… remember RESPECT and Control!

  15. The Renter vs. Owner

  16. Neurological Spine Costs Among Six Centers

  17. 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!)

  18. If you want to be a lion tamer…. you better at least like the animals.

  19. 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

  20. 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

  21. BayCare Aurora Experiment • Results: • BayCare Clinic • 1999 – 53 specialists • $44 million net collections • 2007 – 100 specialists • 40 physician extenders • $105 million net collections

  22. 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

  23. IP and OP Discharges Since 2002

  24. Patient Satisfaction – Inpatient Services * Source: Aurora Loyalty Index Data Through Q2 2007

  25. Patient Satisfaction – Outpatient Ambulatory * Source: Aurora Loyalty Index Data Through Q2 2007

  26. “In the Absence of a Great Dream… Pettiness Prevails.” --Peter Senge

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