In a recent HealthLeaders Media Intelligence Report, healthcare leaders describe involvement in contractual relationships that stop short of a formal merger or acquisition, but M&A activity remains a dominant model. HealthLeaders Media Council members discuss their experiences with such arrangements.
This article first appeared in the September 2015 issue of HealthLeaders magazine.
Executive Vice President
and Chief Financial Officer
North Shore-LIJ Health System
Great Neck, New York
The nature of the arrangements that our organization chooses is determined based on the entity that will be joining our system. For instance, if we have acquired another hospital, then it would fall under the corporate parent. Occasionally, there are hospitals that we don't bring in to the system right away, for a number of different reasons. At times, we enter in to an affiliation agreement, which is an agreement that we'll work together on certain activities and maybe grow a relationship over time.
From a strategic perspective, what's important is the location of a facility and whether it fits a business need in an area where we may not have a presence, its financial position and health, and, of course, clinical infrastructure. What kinds of services do they offer, and what is the quality like?
Each acquisition gets easier than the last. After you've done this enough times—the due diligence, the partnering, bringing two organizations together—you develop a sense of what we need to look at. There are fewer surprises down the road. Sometimes you find unexpected things, like understaffing or construction work that needs to be completed, but it gets easier as you learn which questions need to be asked ahead of time. There are fewer surprises.
Lena J. Weiner is an associate editor at HealthLeaders Media.