Physicians and Hospitals need to possess a clear business purpose for entering into a formal JV relationship. To enter into a JV relationship for ill defined and/or shallow reasons will lead to a very frustrating and abbreviated relationship.

A JV usually involves the development of a fairly complex business; therefore time spent on the front end defining the scope of the project is invaluable. Failure to define scope could result in a facility that is too small before it even opens its doors, or a facility that is so overbuilt that it encumbers the project financially from the first day of operation.

A well thought out business plan will thoroughly address projected market dynamics, volume and reimbursement requirements, staffing needs, supply costs, building costs and related operating expenses, financing costs, start-up expenses, tax considerations, etc. The critical question to be asked, once the Purpose and Scope has been determined, is "Does this project have financial merit?".

JVs are the focus of much legal scrutiny and regulatory obstacles, and these issues must not be taken lightly. The JV partners must seek to understand these issues and establish legal parameters with the assistance of an attorney(s) dedicated to healthcare law.

While this may plaque any worthwhile endeavor, it is especially common in JVs because they do require more attention. The physicians and the hospital must keep one another informed of important developments, and there is a need for a regular communication forum.

One party may assume that the other party is responsible, or both parties may assume that they are each responsible. The lack of defining roles and responsibilities will lead to a lack of accountability, and the end result will be frustration and finger pointing between the parties.

A JV relationship can be initiated too quickly. Many JVs have been formed simply as a knee jerk reaction to market pressures and/or initiatives of a major competitor. No two parties should create a business relationship just because someone else has made a similar decision.

Fundamental issues of trust must be confronted between hospitals and physicians. Economics can not be the sole reason to form a JV. Often physicians and hospitals enter into a business relationship because they believe they have no other choice, and, without an adequate threshold of mutual trust, trouble will inevitably follow.

Many a business has been structured and developed with little or no input from the people who will actually be responsible for making it work on a day to day basis. It is especially important in the development of clinical services that the appropriate professionals are brought in during the planning process.

The saying, "All good things come to an end" may not be an absolute truth, but it is true enough! The JV partners must address methods for determining partner buyouts and partnership dissolution on the front end, or potentially deal with angry partners on the back end.