3 steps nonprofit health systems should take before merging

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The healthcare industry continues to consolidate, and nonprofit systems looking to partner, affiliate or merge with another organization need to engage their governing boards throughout the process, according to a National Law Review report.

When considering a transaction, the first three steps a nonprofit system should take with its board are as follows:

1. Educate the board of directors about the process. A number of steps must be taken in any transaction, and it is vital members of a nonprofit system's board of directors understand the role they are going to play throughout the process. The board of directors of a nonprofit system is oftentimes made up of uncompensated community members, and they need to be educated on aspects of the deal, including key governmental approvals, costs and effect on employees. It is also important the members of the board of directors understand the transaction is a confidential matter.

2. Form a committee workgroup. Nonprofit systems considering merging with another organization should form a committee of directors to serve as the designated party to receive reports from executives and provide input and guidance to system executives and advisors throughout the transaction, according to the report. "The smaller committee provides for a more candid discussion and for more meaningful feedback to the team than would occur if the entire board sat as a committee-of-the-whole," according to the report.

3. Revisit and update conflict of interest questionnaires.  Although physicians, employed executives and vendors may serve as directors of a nonprofit system, it is important the system's governing board understands when a conflict exists "and just as importantly, when a conflict does not exist," according to the report. 

More articles on healthcare industry transactions:

2014: The year of 95 hospital transactions — and more innovative ones at that
10 recent hospital transactions and partnerships
2015 could be a busy year for hospital deals

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