Executing a Carve Out Professional Services Agreement (PSA)
Physician alignment and affiliation strategies include many options, but selecting and executing the right one can be challenging.
A prominent urologic private practice and one of its hospital partners wanted to expand and develop a clinic location in a new outreach area. The practice did not want to assume risk, financial or otherwise, but was still interested in a partnership. In this case, the hospital partner accepted that all start-up costs were its responsibility. Therefore, the practice would not lose money through the deal but would not realize significant profits either.
We worked with the practice to identify structural options and suggested a carve-out professional services agreement (PSA). We completed supporting analyses, developed documentation to support the affiliation, and negotiated agreements terms.
Together, we established the compensation and other key terms, which led to the submission of a letter of intent (LOI) to the hospital. Both parties agreed the carve-out PSA would achieve their objectives, and they achieved a successful partnership while the urology practice remained independent.
Approach
- Step 1Situational Review
- Step 2Financial Analysis
- Step 3LOI & Terms Development
- Step 4Negotiations
- Step 5Ongoing Assistance in PSA Start-Up
We enhanced the value of the transaction for both parties, proven by the sustainable structure and results in the short- and long-term. We helped both parties be innovative while following compliance guidelines and protocols.