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3 reasons hospitals are avoiding mergers and choosing to affiliate instead

Although there is rapid consolidation occurring in the healthcare industry, some hospitals are choosing to steer clear of a merger and reap the benefits of an affiliation instead.

 

Affiliation is becoming an increasingly popular option for hospitals that wish to join forces with another organization but remain independent. Through affiliation, hospitals can tap the financial and clinical leverage that comes from linking to another organization while maintaining their own identity.

 

Englewood (N.J.) Hospital and Medical Center was one of those facilities interested in joining forces with a bigger partner and keeping its independence. The hospital recently entered into a clinical and academic affiliation with Hackensack (N.J.) University Health Network. The affiliation allows Englewood to maintain its own identity while collaborating with Hackensack on a number of projects, including the creation of a regional cardiac surgery program.

 

Some hospitals are choosing to affiliate rather than merge with another system to avoid Federal Trade Commission scrutiny. Hospital mergers have the potential to cause price increases and lower the incentive for hospitals to improve quality of care. By affiliating with another organization, hospitals avoid the close watch the FTC has on hospital mergers. In addition, affiliating hospitals typically do not catch the attention of antitrust watchdogs that "still cast a suspicious eye at too much regional consolidation and the health systems' underlying motives," Linda Schwimmer, vice president of the New Jersey Health Care Quality Institute, recently told NJBIZ.

 

An affiliation is also a good option for hospitals interested in improving the quality and delivery of care in their regions without giving up control of their organization. For instance, in August 2014, Coeur d'Alene, Idaho-based Kootenai Health joined the Mayo Clinic Care Network, established by Rochester, Minn.-based Mayo Clinic. The affiliation allowed Kootenai to gain the expertise of a prominent health system without relinquishing control to another system. Kootenai was able to improve the quality of care it provided to its community by gaining access to various Mayo Clinic resources such as the AskMayoExpert database and electronic consulting that connects physicians with Mayo Clinic experts to answer questions about diagnosis, care management or therapy.

 

More articles on healthcare industry transactions:

 

HCA deal for Louisiana hospital blocked by Tulane contract

4 recent hospital transactions and partnerships

Slidell Memorial Hospital, Ochsner Health System to form partnership

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