The Rise of the Hospital Joint Venture
For those hospitals and health systems that are financially sound and have sufficient capital, entering into an affiliation allows them to best position themselves for future success—to thrive rather than just survive. Evaluating strategic alternatives from a position of strength allows the board of a hospital or health system to take its future into its own hands and identify affiliation partners that complement and enhance its operations, capitalization, compliance, and quality functions. Exploring a range of joint venture alternatives has been found by many systems to be a “best of both worlds” approach—combining the installed market presence and reputation of a non-profit system with the scale, access to capital, and management expertise of an investor-owned company.
Most hospital and health system boards are aware of the trend of consolidation; however, many fail to appreciate the full range of strategic alternatives that may exist (including the joint venture structure) and the processes and tactics that can identify and realize the board’s desired outcomes. This article is the first in a series in which we will examine 1) the potential advantages of joint ventures; 2) how to go about the process of exploring a joint venture, including selecting a joint venture partner; and 3) expected trends and future developments with joint ventures.
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