Hospitals and health systems face familiar and emerging pressures as they seek to expand service lines, develop revenue streams and explore new methods of care delivery. Service line partnerships can provide innovative solutions to these common issues by bringing together parties with physical assets, key licenses, management experience, access to capital and other resources necessary to develop a successful service line.

During this webinar as part of our Growth From Within series, McDermott Partners Brad Dennis, Travis Jackson and Amanda Jester discussed service line strategies and considerations for establishing inpatient rehabilitation units, behavioral health services and ambulatory surgery centers (ASCs).

Top takeaways included:

1. Service line expansions can reduce pressures on other departments. For example, expanding behavioral health care services – and reaching patients before their needs become emergent – can improve patient outcomes. It can also help meet important community needs, reduce unnecessary hospitalizations and match patients with appropriate care settings. Similarly, inpatient rehabilitation units provide more specialized care and reduce patient readmissions while freeing up other hospital beds. Hospitals that are concerned about losing physicians to physician practice management companies or about more complex procedures migrating to ASCs can consider partnering in the operation of ASCs to recapture value, expand their regional reach and maintain strong physician networks.
2. Regulatory considerations will shape service line structures. New service lines can operate as standalone facilities or outpatient clinics, or potentially through other formats such as a hospital-within-a-hospital. When designing service line arrangements, service line partners should carefully consider state licensing requirements, reimbursement opportunities, tax implications, antitrust issues, and fraud and abuse risks.
3. Addressing key negotiation points at the outset is key. Service line partners frequently find natural alignment on asset contributions and day-to-day management of the service line. However, partners should have strong mechanisms in place to address dispute resolution, termination procedures, changes in ownership and other important issues that can arise over the course of a partnership. Charity care requirements, compliance with religious directives, noncompetition terms and data ownership are also frequent topics of negotiation.

Explore more webinars in the Growth From Within: Hospitals and Health Systems Service Line Expansion series here.