Becker's Hospital Review

of a Healthy Community Executive Briefing: Community Hospital Affiliation 33 e and Independence Day parade, a hospital is a vital part of the community. hometown pride in addition to healthcare services. That's why CHC specializes patients would have access to Sanford's cancer care, which offers more 2. Understanding from the board. When a hospital decides to eservingexpanded chemotherapy treatments. community-based hospitals. We offer support and solutions new partnership, it must keep the board of directors in the create a including know at all times through a transparent, public process. Decisions of tional improvement, strategic vision, and help with regulatory compliance. Mr. Williams says these types of relationships will give local hospitals some ause your success matters to your community. but they are not as this magnitude cannot be unilateral, and a well-informed board will lead name and brand recognition with a larger organization, to a better transition. heavily pursued today. Joint venture. Joint ventures have picked up more steam in the past few years. These deals allow a hospital to maintain as much independence as possible, but the other organization will be put at some risk for the hospital's performance. For example, in February, Akron, Ohio-based Summa Health System and Cincinnati-based Catholic Health Partners created a "strategic partnership." Summa Health still retained majority ownership and local control, but CHP became a minority owner. Creating a new entity. Some non-profit community hospitals could go a step further, Mr. Williams says, and create a new 501(c)(3) organization. For example, several county-owned hospitals could band together and build a new parent entity. The counties would still maintain ownership of their respective facilities, but they could lease them to the newly created organization. Mr. Williams says these types of transactions could be very beneficial if community hospitals are looking to gain managed care clout. Total sale or full-asset merger. The last option, or extreme on the right of the spectrum, is a full merger or sale. A community hospital can sell to a non-profit organization, such as the April merger between Lehigh Valley Health Network in Allentown, Pa., and Greater Hazleton (Pa.) Health Alliance, or an investor-owned company, such as the March deal between Brentwood, Tenn.-based LifePoint Hospitals and Bell Hospital in Ishpeming, Mich. Choosing the right path For hospitals that decide some type of affiliation or restructuring needs to take place, both Mr. Parmer and Mr. Williams suggest leaders take a methodical, well-planned course of action. They recommend hospitals consider these five points when pursuing an affiliation. 1. Mission. First and foremost, Mr. Parmer says any new partner — be it a health system or management company — must have similar a goal, mission and culture. "We'd make a list of three to four must-haves, and mission and common philosophy were always right at the top," Mr. Parmer says. "Some [hospital] groups that haven't achieved all they hope to — you can see it was a noble idea, but you just had two things getting put in same box that were characteristically different." tal Corporation owns, lts with hospitals through zations — CHC Hospitals, nd CHC ContinueCare, on purpose of preserving munity hospitals. "Make certain your board is educated, informed and knows exactly which direction you're going," Mr. Parmer says. "Board perspective is important." 3. Physician alignment. Hospital-physician integration today is one of the top priorities for hospital executives under healthcare reform, due to varying projects such as bundled payments and accountable care organizations. However, leaders should not assume the medical staff should only be involved with clinical matters. In order to foster positive relationships with physicians, which will help future physician recruitment, hospital executives have to have open discussions with them. "You need to think of medical staff and physician alignment," Mr. Parmer says. "There is not much autonomy in our market, and there are not a lot of clinically integrated structures. You need to have awareness of the medical staff and how to achieve that alignment." 4. Operational assessment. Hospital CEOs and CFOs have more data available to them now than any other point in their careers. Mr. Williams suggests executives use that data to understand how operationally efficient their hospital is — as well as their potential partner. For example, will financial and operational benchmarks improve if a deal is made? Will labor productivity, revenue cycle, supply chain and IT be strengthened? 5. Readiness for healthcare reform. Hospital affiliations have failed for a variety of reasons in the past, but in order for them to succeed in the future, transactions have to be centered around how this new era of reform — namely, the environment created by the Patient Protection and Affordable Care Act — will affect each party five, 10 and 20 years down the road. "Hospitals are in a transition period of moving from being attractive to patients by their location in marketplace to competing to be selected for participation in health insurance exchanges and ACOs," Mr. Williams says. "Those are the things we have to keep in mind." n Community Hospital Corp. owns, manages and consults with hospitals through three distinct organizations — CHC Hospitals, CHC Consulting and CHC ContinueCare, which share a common purpose of preserving and protecting community hospitals. HELP WHERE HOSPITALS NEED IT. CHC Community Hospital Corporation 972.943.6400 CommunityHospitalCorp.com Community Hospital Corporation owns, manages and consults with hospitals through three distinct organizations — CHC Hospitals, CHC Consulting and CHC Continue Care, which share a common purpose of preserving and protecting community hospitals.

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