Independent hospitals across the country are increasingly considering whether or sale or merger may be in their future. While some independent hospitals will continue to thrive, many more are likely to join larger systems in order to benefit from economies of scale.
As hospitals weight the pros and cons of forgoing their interdependence, Jeffrey Gruen, MD, director of healthcare services at PRTM, a global management consulting firm, provides three considerations for hospital boards.
1. Let the mission to guide the decision. "The hospital board should take very seriously its actual mission," says Dr. Gruen. For example, if the mission of the hospital or hospital district emphasizes improving the health of the community, the organization should examine if a merger or sale might fulfill that mission and do so more efficiently, thereby ensuring healthcare access for the area.
2. Look realistically 2-3 years ahead. Hospitals that have been able to stay afloat might not be viable several years down the road if they continue to operate in the same ways. "Really look 2-3 years ahead with a kind of insistence or unvarnished view about the future," says Dr. Gruen. "Believing the future is going to be quite similar to the past may not be true in many markets. First, really make sure [you have] realistic projections on scenarios that could occur."
3. Don't give up on independence. Dr. Gruen says independent hospital can stay independent if they face downside scenarios head-on and act quickly enough. "Do the things investor-owned hospitals would do. Really look at how you can could change the business model to succeed in the new world — a worth with much more transparency and much more payment for value.
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As hospitals weight the pros and cons of forgoing their interdependence, Jeffrey Gruen, MD, director of healthcare services at PRTM, a global management consulting firm, provides three considerations for hospital boards.
1. Let the mission to guide the decision. "The hospital board should take very seriously its actual mission," says Dr. Gruen. For example, if the mission of the hospital or hospital district emphasizes improving the health of the community, the organization should examine if a merger or sale might fulfill that mission and do so more efficiently, thereby ensuring healthcare access for the area.
2. Look realistically 2-3 years ahead. Hospitals that have been able to stay afloat might not be viable several years down the road if they continue to operate in the same ways. "Really look 2-3 years ahead with a kind of insistence or unvarnished view about the future," says Dr. Gruen. "Believing the future is going to be quite similar to the past may not be true in many markets. First, really make sure [you have] realistic projections on scenarios that could occur."
3. Don't give up on independence. Dr. Gruen says independent hospital can stay independent if they face downside scenarios head-on and act quickly enough. "Do the things investor-owned hospitals would do. Really look at how you can could change the business model to succeed in the new world — a worth with much more transparency and much more payment for value.