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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

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
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


Baycare history
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
Joint Ventures….Why?

  • Am I in trouble?

  • Am I at risk?

  • Will I be at risk?

    Risk Avoidance = 10x Pleasure Pursuit



Hospital system anxieties
Hospital System Anxieties

  • Fixed Costs

  • Physician Loyalty

  • Capital Needs

  • Regulatory Concerns

  • Safety/Quality

  • Payor Mix Risk


Understanding motivation
Understanding Motivation

Maslow’s Hierarchy of Needs


Physician fears needs
Physician Fears/Needs

  • Loss of lifestyle

  • Loss of Control

  • Loss of Colleagues

  • Loss of Respect


Hospital finance
Hospital Finance

PROFIT

COST

$ Millions

LOSS

REVENUE

0 Volume


Physician finance
Physician Finance

REVENUE

$ Thousands

PROFIT

COST

LOSS

0 Volume


Physician
Physician

I Move

I Stay

Risk Corridor

$ Thousands

REVENUE

PROFIT

COST

LOSS

0 Volume


Hospital finance fears
Hospital Finance Fears

Ortho Sad

Ortho Happy

PROFIT

RiskCorridor

COST

$ Millions

LOSS

REVENUE

0 Volume


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!




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



    Patient Satisfaction – Inpatient Services

    * Source: Aurora Loyalty Index Data Through Q2 2007


    Patient Satisfaction – Outpatient Ambulatory

    * Source: Aurora Loyalty Index Data Through Q2 2007


    “In the Absence of a Great Dream…

    Pettiness Prevails.”

    --Peter Senge


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