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3 Tips for Hospital Affiliations

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As hospitals try to streamline their services and cut waste, affiliating with other providers is becoming increasingly common to deliver care most efficiently and effectively and reap value-based rewards from payors.

Here are three trends in hospital affiliations from Alan Schabes, JD, a partner at Benesch Friedlander in Cleveland.

1. Focus on your strengths. With the fee-for-service reimbursement model fading, hospitals stand to gain more by playing to their strengths, rather than building or beefing up a wider array of services, Mr. Schabes says. Focus your resources on developing centers of excellence, and consider partnering with other providers to round out care offerings.

"Hospitals are looking for ways of sustaining all kinds of collaborative agreements with specialists," he says.

2. Maintain your independence.
Current market conditions in many areas make affiliations attractive options for many providers, but with healthcare policy fluctuating as intensely as it has for the past few years, Mr. Schabes cautions hospitals from agreeing to arrangements that would take away their independence whenever avoidable.

"You don't want to give up your options," he says. "Depending on the marketplace and negotiating positions, you don't want to give up your independence. You want to be able to reconstitute yourself."

He recommends that hospitals explore joint venture opportunities that will preserve their autonomy and ability to adapt to future changes in healthcare reimbursement, in ways that full hospital transactions such as mergers and acquisitions may not.

That makes great sense for the foreseeable three to five years from now, he says, but more than that is an eternity for Medicare and anything longer can be unpredictable.

3. Rural hospitals should expect to slim down and outsource. "The reality of it is rural hospitals and critical access hospitals are very hard-pressed to maintain a high quality and competent medical specialist staff," Mr. Schabes says. They struggle to recruit the limited pool of talented specialists, and have low patient volumes to support competitive compensation for them.

In many cases, he says, rural hospitals would be better off outsourcing specialty services by referring such patients to larger centers of excellence.

"In the overall scheme of things, do we want every community hospital to do every kind of specialty surgery? Or do we want to consolidate and set up centers of excellence, leaving rural hospitals to become glorified emergency rooms or ambulatory surgery centers?" he says.

More Articles on Hospital Affiliations:

Iowa Health System Adds Story County Medical Center Under Umbrella
Clifton-Fine Hospital in New York to Affiliate With Samaritan Medical Center
2 Major Brooklyn Hospitals Begin Exploratory Affiliation Talks

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