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Lori Gardner, Senior Director
Communications & Marketing
301.984.9496 ext. 226
For Immediate Release: March 6, 2005
Oncology Physician Practices Look for Innovative Ways to Meet the Needs of Their Patients—and Stay in Business
ROCKVILLE, Md.—Oncologists in private practice are learning troubling news: The new payment methodology from the Centers for Medicare and Medicaid services could translate into sizeable reductions in payment rates for the majority of oncology drugs administered in a physician’s office. Some oncology practices are already struggling to keep their doors open; many are looking for innovative solutions.
One option is a joint venture with a hospital-based cancer program.
"Joint ventures between hospital-based cancer programs and private oncology practices have become increasingly common in recent years," said Kevin M. Kennedy, MBA. "A joint venture with a hospital-based cancer program can help support physician incomes and moderate the impact of adverse reimbursement changes."
Kevin M. Kennedy, MBA, will be presenting at the Association of Community Cancer Centers’ 31st Annual National Meeting. He is a principal with ECG Management Consultants, Inc., in Seattle, Wash.
Joint ventures are typically characterized by 1) joint funding of resources by the investors, 2) relationships defined and governed by an agreement, and 3) shared participation in the management and governance of the venture. Developing a joint venture is a time-consuming, complex process for both parties—the hospital-based cancer program and the physician practice.
Hospital/physician relationships are perhaps the most heavily regulated aspect of the healthcare industry. In fact, numerous barriers—for both hospitals and physicians—make joint ventures difficult to develop, even under the best of circumstances.
"Joint ventures involve significant financial stakes and thoughtful, thorough strategic planning. A successful joint venture can strengthen the bond between a hospital and the physicians in its community. An unsuccessful joint venture can damage—sometimes irreparably—this important relationship," said Kennedy.
In today’s challenging healthcare environment, joint ventures are an increasingly popular method for hospitals and physicians to work together to provide quality cancer care to the patients in their community.
"A joint venture creates ownership and a sense of investment and commitment between the hospital-based cancer program and the physician practice,” said Todd Greenwalt, JD, a partner with the law firm of Vinson & Elkins, Houston, Tex., who will also be presenting at the meeting.
"A joint venture also allows the hospital and practice to leverage the unique expertise each brings to the table."
For physician practices, a joint venture with a hospital-based cancer program may be attractive for several reasons, including access to capital, the hospital’s reputation within the community, and the hospital’s legal and contracting expertise. Kennedy and Greenwalt will discuss the various kinds of joint ventures, the legal limitations, and how the current economic client is driving the trend of hospital-based cancer program/ physician practices joint ventures.