Health reform drives hospital mergers and affiliations, and makes clinical collaborations more important

Is your community's hospital one of the many rural hospitals considering sale, merger or affiliation with a larger hospital or group of hospitals, all options that are becoming more common, partly due to federal health-care reform? A recent article in HealthLeaders magazine, which examines some of the considerations, may inform your coverage.

Basing decisions on past experiences "is difficult because the creativity surrounding partnerships among hospitals and health systems is expanding rapidly," writes Philip Betbeze, the magazine's senior leadership editor. For example, clinical collaborations have become more important in affiliations. "Whether they own or don't own each other doesn't matter as much as coming up with a structure for sharing those value-based purchasing points together," Joseph R. Lupica, chairman of Newpoint Healthcare Advisors, told Betbeze, who writes: "That's a sea change compared to prior affiliations or mergers. In the past, such deals were driven by traditional aims around increasing market share and increasing bargaining power."

Health reform will create incentives for better patient outcomes, which upsets the old "iron trangle" of hospitals: "volume, rates, and the ability to decrease unit costs," said Dr. Gregg Meyer, chief medical officer of Dartmouth-Hitchcock, a New Hampshire hospital group that recently affiliated with the Mayo Clinic, more than 1,000 miles away, "because we know that patients who come to us for care will often seek a second opinion. In the past, that meant going to Boston or New York, and we lost out on that because we lost the ability to keep that care local. Now we can have a virtual second opinion with arguably the most famous health system in the world."

The article has several more examples. to read it, click here.