We note how health systems will likely “pay” for their newfound acquisition appetite, and review techniques that are being utilized. The potential for an increased pace of change is focusing greater attention on the terms, conditions, and value exchanged (financial and otherwise) in business combinations.…
Hospitals and health systems face an array of compounding pressures. Chief among these is a shift to population health and value-based care models that require health systems to not only continue to make investments in information technology, administration and care, but also take on additional financial risk.…
As 2017 comes to an end, we thought it would be helpful to The Governance Institute membership to provide some observations regarding the state of health system merger and acquisition (M&A) activity, and specifically its impact on independent non-profit hospitals.
First, the industry remains among the most fragmented in the U.S.
In its 2010 Governance Institute white paper, Juniper Advisory described the ownership structure of the hospital industry in anticipation of the impact of healthcare reform and the Affordable Care Act (ACA) on hospital consolidation.¹ Leading up to enactment of the ACA, health policy experts had concluded that the U.S.…
The European Union is an affiliation. Unlike a federal government, the United States for example, where members combine into a single sovereign nation, each member state of the EU remains independent. The EU member countries gain a measure of collective strength and influence by ceding control over certain decisions, regulations and institutions to a central authority, but they remain sovereign and free to exit.…
As the delivery of health care continues to evolve and hospitals bear additional pressures to adapt to new payment models, more nonprofit hospitals are partnering with for-profit providers, through a sale, joint venture, or other arrangements.
Partnerships between independent nonprofit hospitals and larger health care systems (nonprofit and for-profit) have been growing over the past two decades.…
In its final season, “Downton Abbey” captured audiences by exploring a healthcare phenomenon set in rural England 100 years ago — and one still playing out across America today.
The phenomenon is hospital consolidation, and historical period drama “Downton Abbey” tackled it with the same gusto with which it took on the deterioration of class hierarchies, the emergence of the women’s liberation movement and many other social issues over six critically acclaimed TV seasons.…
Independent hospitals and small health systems face a daunting challenge in developing their healthcare IT capabilities to meet the requirements of value-based care. But they must carefully weigh their options and proceed cautiously in meeting that challenge.
Health systems that lack the financial wherewithal to develop an electronic health record system on their own, and that are seeking an alternative strategy, should keep in mind five lessons learned by organizations that have faced a similar challenge:
> Review the full range of options.…
Affiliations are contractual arrangements between two or more hospital partners in which they agree to work together on projects. No ownership or control is exchanged in affiliations; however, the term is sometimes used euphemistically, or incorrectly, to describe business combinations. These sorts of agreements have existed for many decades as non-profit hospitals have pursued contractual approaches to improve qualitative, operational, or financial performance.…
Eighty-seven percent of hospitals are considering alignment with another hospital or system as a part of their overall strategic planning, according to Dixon Hughes Goodman. This interest is primarily attributed to structural factors in the industry, including the shifting reimbursement environment and issues related to new healthcare regulations that place independent hospitals at a competitive disadvantage.…
The County of Santa Clara (Calif.) assumed responsibility for the operation of O’Connor Hospital in San José, St. Louise Regional Hospital in Gilroy, and [...]
Healthcare executives expect their businesses to exceed 2018’s benchmarks and will largely use mergers and acquisitions to reach those expectations, according to a new [...]
Investment income resulting from a strong stock market has propped up many standalone hospitals’ balance sheets over the past two years, according to a [...]