While healthcare organizations are facing unprecedented pressures, surrendering independence in exchange for resources deemed to be necessary for survival is not the only partnership option available to hospitals, according to a Community Hospital Corp. report.
In order to make the best of a potential partnership, CHC offers three tips.
1. Check hospital vitals. CHC recommends a hospital conduct a thorough examination of its cost structure and operations. "Hospitals need to take stock before seeking out partners to identify their own strengths and where resources and support may be needed," said Mike Williams, president and CEO of CHC.
2. Consider risk and benefits of multiple partnership options. According to CHC, even when a partnership is the ideal path to follow, there are different partnership options that can allow a hospital to keep its independence. For instance, an affiliation agreement transfers neither risk nor governance, but still offers benefits to the smaller hospital. A merger of equals combines assets and allows each partner to become stronger by coming together. Other times, finding a buyer is the only option. "Hospitals need to look at the reasons for their financial challenges and how things might look five years from now," said Mr. Williams.
3. Be realistic. While a hospital should look at what resources it may need from a partner for long-term success, it should also address what factors will attract or turn off prospective partners. CHC recommends this analysis before approaching prospects or releasing a request for proposal. According to the report, "a debt-saddled hospital might need a partner to take on its debt, for example, or an aging hospital may need guaranteed capital for facility upgrades. The goal is to bring about the proverbial win-win situation, or at the very least to make sure community-based hospitals stay in the game."
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In order to make the best of a potential partnership, CHC offers three tips.
1. Check hospital vitals. CHC recommends a hospital conduct a thorough examination of its cost structure and operations. "Hospitals need to take stock before seeking out partners to identify their own strengths and where resources and support may be needed," said Mike Williams, president and CEO of CHC.
2. Consider risk and benefits of multiple partnership options. According to CHC, even when a partnership is the ideal path to follow, there are different partnership options that can allow a hospital to keep its independence. For instance, an affiliation agreement transfers neither risk nor governance, but still offers benefits to the smaller hospital. A merger of equals combines assets and allows each partner to become stronger by coming together. Other times, finding a buyer is the only option. "Hospitals need to look at the reasons for their financial challenges and how things might look five years from now," said Mr. Williams.
3. Be realistic. While a hospital should look at what resources it may need from a partner for long-term success, it should also address what factors will attract or turn off prospective partners. CHC recommends this analysis before approaching prospects or releasing a request for proposal. According to the report, "a debt-saddled hospital might need a partner to take on its debt, for example, or an aging hospital may need guaranteed capital for facility upgrades. The goal is to bring about the proverbial win-win situation, or at the very least to make sure community-based hospitals stay in the game."
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