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Hospital Affiliations Have a Land Rush Feel

Philip Betbeze, for HealthLeaders Media, June 24, 2011

No, they’re not going out of business, at least not the vast majority. But many of them have read the writing on the wall—which points to greater investments in affiliated services such as home care, clinics, physician practices, and nursing homes, among others—and are concluding that they are unwilling, and in most cases, unable, to invest in these pieces of the care continuum. Instead, they are making preemptive moves to affiliate with larger regional partners, thus sacrificing their independence. In short, standalone, independent community hospitals seem to be a quickly vanishing breed.

There are a multitude of advantages on the community hospital side of the deal. Of course, they gain the benefits of being in a larger network, which are vast. First, when dealing with commercial insurance contracts, they are able to tie into the contracting expertise of large systems, and more importantly, their market clout. They’re also able to tie into larger systems’ clinical (and financial) information technology systems, as well as their array of training expertise on these systems. In an era in which providers will increasingly be reimbursed based more on the quality of their care rather than the volume, this kind of implementation and training is essential. For the bigger partner, such affiliations expand their network and, let’s face it, give them a better stance at the negotiating table with the big commercial insurers at contracting time.

If you’re like me, you peruse the daily news looking for which hospital it will be today. Lately, if a day goes by without another announcement of some sort of affiliation agreement between a community hospital and larger regional player, it’s like something’s missing from my day.

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