Healthcare partnerships changing
Partnerships are occuring based on strategic rationales rather than financial
As most everyone in the healthcare industry knows, mergers, acquisitions and partnerships have been increasing, but the reasons behind this and the forms these partnerships take, are changing.
The main driver for M&A and partnerships between healthcare organizations was once mostly financial, but in today's world, it is more about strategic positioning, said Kit Kamholz and Michael Finnerty, both managing directors at consulting firm Kaufman Hall, during an education session Tuesday morning at the Healthcare Financial Management Association's ANI 2013 conference in Orlando, Fla.
What's driving the move from a predominantly financial rationale to a largely strategic one is the intellectual capital that is necessary to support the transformation to new business models, said Kamholz.
"We're starting to see now that organizations are looking at their goals and objectives and what they're trying to accomplish," Kamholz said. "If there is a specific element or a specific need, we're starting to see partners align around that particular need and create unique relationships to solve those particular problems."
Strategic rationales include an increased focus on branding and regional coverage; concerns about narrow networks; greater understanding of goals and objectives and what is needed to meet them; and patient population management.
The market is responding by creating "super regionals," such as Baylor Health Care System and Scott & White; forming new systems, such as Providence Health and Swedish; forming for-profit and not-for-profit joint ventures, such as LifePoint Hospitals and Duke University Health System; and leveraging brand to expand market reach, such as Mayo Clinic, which now has 12 partners across the country.
Other types of partnerships that haven't been seen much before include insurers acquiring hospital providers, like Highmark's purchase of West Penn Allegheny Health System; insurers acquiring physician groups; providers acquiring interests in insurers; and providers making acquisitions that will extend their care continuum.
