At the Becker's Hospital Review 5th Annual Meeting in Chicago on May 16th , panelists discussed key issues in hospital and health system consolidation and affiliation.
Moderated by Barton Walker, JD, partner at McGuireWoods, the panelists discussed current trends in transactions and noted a decline in ownership.
Joseph Lupica, JD, chairman of Newpoint Healthcare Advisors, introduced the idea of "systemness" in organizations.
"Systemness is a centralized firm as a system. The rules of the network will determine your behavior more than any governance rules from the system," he said. "We follow the rules to get the excellence as required. Ownership becomes less important. It's a new approach, and it's not M&A. It's affiliation of some kind."
Gregory Scrine, principal at GE Healthcare Partners, commented on Mr. Lupica's comment on the downward trend of ownership and ownership's decreasing relevance to governance.
"Buying it and integrating it are two different things. You have about 12 to 18 months most to do the core integration," Mr. Scrine said. "The integration of practices, policies, how well you work as a business gets to these cultural aspects. That is fundamentally the much harder thing to do."
Carsten Beith, group head of acute care and physician services at Cain Brothers & Co., and Geoffrey Cockrell, JD, partner at McGuireWoods, agreed that one problem in ownership is figuring out who controls the risk in the network.
"Right now, there's a battle to create the network between payers, hospitals and physicians. If you distill it down, all these dimensions are cost centers of a mechanism that's ultimately designed to reduce the healthcare cost. Reducing cost of healthcare really means reducing utilization," Mr. Beith said.
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