Factors associated with hospital entry into joint venture arrangements with Ambulatory Surgery Centers

Abstract

Factors associated with hospital entry into joint venture arrangements with Ambulatory Surgery Centers by Reethi Narasimhan Iyengar, Ph.D. A dissertation submitted in partial fulfillment of the requirements for the degree of Doctoral of Philosophy at Virginia Commonwealth University. Virginia Commonwealth University, Richmond Virginia, May 2011 Director: Michael J. McCue, D.B.A. Professor, Department of Health Administration This study presented an empirical analysis of the key market, regulatory, organizational, operational and financial factors associated with hospital entry into joint venture (JV) arrangements with Ambulatory Surgery Centers (ASCs) as examined through the framework of resource dependency theory complimented with neo-institutional theory. This study used a cross sectional design to examine hospitals that entered into a joint venture arrangement with ASCs in 2006 and 2007. The data for this study were drawn from five main sources: the American Hospital Association Annual Survey (AHA), the Area Resource File (ARF), the CMS (Center for Medicare and Medicaid Services) minimum dataset, the National Legislative Assembly Website and the CM case-mix files. Descriptive analysis and multivariate logistic regression were performed to examine the association of various factors in this study. The study found that market factors such as unemployment rate and percentage of elderly were strongly associated with the hospitals decision to joint venture with ASCs. Also organizational size (measured by bed size) was a significant factor in these decisions. Other factors which showed a marginal significance were Herfindahl-Hirschman Index, number of ASCs, certificate of need laws, ownership status, and operating expense per adjusted discharge of the hospital. This research project sheds light on joint venture arrangements between hospitals and ASCs at a very opportune time. In light of the new Health Reform Legislation, studying hospital-ASC joint ventures is very important. For hospitals and ASCs, and their collaborative interests such as joint ventures, Accountable Care Organizations (ACO‟s) could either provide incentives to help improve quality of care to patients or stint on needed care by making them focus narrowly on higher margin services (Fisher and Shortell 2010; Shortell and Casalino 2010). Since policy measures should encourage the first and not the second outcome, it is important to have a transparent performance measurement system that can win the confidence of the provider organizations such as hospitals and ASCs. Lacking which, it may discourage joint venture arrangements between hospitals and ASCs in future.