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Strategic Alliances to Outsource or Vend IT

Susan Patton, for HealthLeaders Media, March 26, 2010

This means that EJVs can sign contracts and arrange exchanges in the market. EJVs also have separate organizational structures, rules and procedures, management teams and employees. Corporate law, partnership law, LLC law, limited partnership law governs equity joint ventures.

Cooperative Hospital Service Organizations
The IRS provides tax exempt charitable organization status to cooperative hospital service organizations which perform certain services for two or more tax-exempt (non-profit) hospitals including those hospitals owned and operated by the local, state or federal government.

The services listed in IRC 501(e)(1)(A) are:

  • data processing
  • purchasing (including the purchasing of insurance on a group basis)
  • warehousing
  • billing and collection (including the purchasing of patron accounts receivable on a recourse basis)
  • food
  • clinical
  • industrial engineering
  • laboratory
  • printing
  • communications,
  • record center
  • personnel services (including selection, testing, training, and education of personnel)

The health industry has little choice but to belt-tighten and relentlessly pursue efficiencies either alone or in cooperation and collaboration with others in the industry, other industry sectors and/or the government. The wide array of potential equity and contractual strategic alliance options provides a vast and flexible tool kit from which to extract efficiencies and improve the quality of business essentials, such as IT and IT support, mining data to tackle difficult and complex structural problems in the delivery system related to access, quality and cost. Common needs can bring parties together to seek common solutions.


Susan Patton is a senior attorney based in the Ann Arbor, MI, office of the law firm Butzel Long. She may be reached at patton@butzel.com or 313-225-7000.
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