HealthSouth's financial meltdown has exposed one of the dangers of partnering with a national healthcare management company: commingling, which is when the corporate partner mixes cash from individual surgery centers in national accounts that may be subject to the claims of the partner's creditors. Just as joint ventures can provide you with experienced management and access to purchasing contracts and capital, they can also spell trouble. Here are six steps you can to take to steer clear of the risks.

Avoid commingling
When negotiating with a joint venture partner, write the agreement so that your surgery center's cash is not "commingled" with the national accounts. Many venture documents let the national company invest an individual center's money with national money in the company's cash-management program. Problems can arise if the partner doesn't segregate those funds in another account in the name of the surgery center. For example, if the partner claims bankruptcy, creditors could claim the local center's money along with the national company's money. It appears that Health South has started to take steps in many of its centers to reduce the amount of commingling of cash between the surgery centers and HealthSouth. But those funds may be tied up for a long time in bankruptcy or other proceedings.

Police check-writing
Physician investors should negotiate a policy that dictates that any checks larger than a certain dollar amount - such as $5,000 - also require the signature of a physician representative. Such a dual-signature requirement creates a system of checks and balances that can help assure that money is not being mishandled or stolen. In addition, insist that any checks made payable to the national company or another affiliate require the signature of a physician representative.

Audit annually
The independent surgery center should insist on a yearly audit of the center's finances by an independent financial accounting firm - preferably an auditor that does not have financial ties to the national company. An audit of a surgery center's financial statements usually costs about $20,000. But another interesting lesson physician-investors can learn from the HealthSouth debacle is that an audit could save you far more in the long run.

Protect your assets
Some companies that acquire ASCs ask to use the local center's assets as collateral for the company's financing. This is a big no-no. Let's say your corporate partner buys 60 percent of your center for $10 million. The partner borrows that $10 million and puts up your center's assets as collateral for the loan. If your partner goes bankrupt or has a financing problem, your assets would be subject to the liens and claims the banker has against the national company.

Know your position
A company that is paying several million dollars to buy into a local center is likely to be more aggressive and have better leverage in negotiating points that are not as favorable to the local center. The millions of dollars you'll receive from a deal are very tempting, lessening the desire to fight hard for after-the-deal issues. But be ready to walk away from the deal if need be.

Choose your partner carefully
The difference between good and bad companies that provide management services to surgery centers (see "Top 16 Corporate Partners") is substantial. Many management companies have little experience, and the experience they do have is not often good. The best protection in any transaction is to be in business with good people with high integrity. In short, if you're stuck looking to your operating agreement for help, you most likely have already found yourself in an extremely costly exercise.