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.

Ambulatory surgery centers (ASCs) play an important role in providing surgical and diagnostic services in an outpatient setting. They can be owned by physicians who staff them. Previous studies focused on patient “cherry picking” and over-utilization of services due to physician ownership. Few studies examined the relationship between physician ownership and quality of care. Using a retrospective cohort of patients who underwent colonoscopy, this study examined the effect of physician ownership of ASCs on the occurrence of adverse events after outpatient colonoscopy. Agency theory is used to as a conceptual framework. Depending on the extent to which consumers are able to assess quality of care differences across health care settings, physician ownership can function as a mechanism to improve quality or as a deterrent to quality. Four adverse event measures are used in this study: same day ED visit or hospitalization, 30-day serious gastrointestinal events resulting in ED visit or hospitalization, 30-day other gastrointestinal events resulting in ED visit or hospitalization, and 30-day non-gastrointestinal events resulting in ED visit or hospitalization. Physician ownership status is determined based on a court decision in California in 2007. Data sources include the State Ambulatory Surgery Databases (SASD), State Inpatient Databases (SID), Emergency Department Databases (SEDD), State Utilization Data Files, the Area Resource File (ARF), and HMO/PPO data from Health Leaders. After controlling for confounding factors, the study found that colonoscopy patients treated at a physician-owned ASC had similar odds of experiencing same day ED visit or hospitalization and 30-day non-gastrointestinal events resulting in ED visit or hospitalization as those treated in a hospital-based outpatient facility. But the former had significantly higher odds of experiencing 30-day serious gastrointestinal events and 30-day other gastrointestinal events resulting in ED visit or hospitalization. The results are robust to changes in propensity score adjustment approach and to the inclusion of a lagged quality indicator. They suggest that physician ownership of ASCs was not associated with better quality of care for colonoscopy patients. As more complex procedures are shifted from hospital-based outpatient facilities to ASCs, expanded efforts to monitor and report quality of care will be worthwhile.