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.
Sound familiar? This is the same type of arrangement as hospital affiliations.
Over the last several years, hospitals have rapidly formed collaborative regional partnerships. These relationships are designed to address challenges that small systems and independent hospitals are ill-equipped to efficiently navigate on their own. Hospital affiliations include accountable care, population health, purchasing, information technology, academic, management and many other agreements. In consulting presentations and at conferences, community hospitals are encouraged to pursue affiliations rather than fully combine to realize the benefits of scale without ceding ownership or control. As Britain’s vote to leave the EU, or Brexit, showed us last week, this argument is a dangerous fallacy. By definition, affiliations require participants to cede control, either to the collective (accountable care agreements) or to another party (IT and management agreements).
The problem with affiliations is that their greatest selling point — sovereignty — is also their greatest weakness. Affiliations do exactly what they are set up to do, they work until they don’t. The often overlooked truth is that when they come to an end, organizations and countries typically find themselves worse off than before they entered the partnership.
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