Many different circumstances can motivate hospitals and health systems to consider new partnership relationships. An independent hospital may seek to be part of “something larger” if they see it as necessary to succeed in a value-based environment or to have reasonable access to scarce capital and other resources. A health system may seek low-cost partners, want to reach a new geographic area, or be presented with an opportunity to respond to a smaller system or single hospital seeking a partner.
Whatever the circumstances, the decisions are likely to be emotionally charged. Veralon helps bring objectivity to determining whether and how your organization should pursue partnership opportunities: through affiliations, mergers or acquisition.
While there is overlap in the nature of our work for “buying” entities (organizations, usually health systems, that are seeking to expand an existing network) vs. “selling” entities (organizations that are seeking to join an existing network, often independent hospitals, but may also be a small health system), there are also differences. Here is how it breaks out:
For “Buy-Side” Organizations
Veralon’s work is tailored to the specific needs of each client, and may include:
Board and leadership education: Boards vary in the extent to which they are familiar with the requirements and impacts of value-based payment and population health management. Veralon can help your board and leadership deepen their understanding of how these and other factors will shape organizational needs, and the pros and cons of expanding partnership relationships for meeting those requirements.
Network development: Many health systems have formed opportunistically. If yours is among those, or even if you find yourself making ad hoc decisions as RFPs come your way, at a certain point it may be beneficial to take a hard look at how you want to shape your system moving forward.
Veralon will help you determine whether you want to use additional partnerships to reach specific geographic areas or populations, or to grow specific services, as well as whether there are specific characteristics that you seek in future partners. This positions your organization to decide to proactively pursue additional partnerships at this time, and to respond strategically to approaches from other hospitals or health systems
Identify optimal affiliation structure: There are many possible structures to consider, from contractual relationships between entities that remain completely legally separate, to subsidiary board relationships, to acquisition, to full merger. Through a series of facilitative discussions, we explore stakeholder perspectives on your organizational needs, educate leadership on options and their implications, and provide examples of models being used by specific, relevant organizations.
Responding to requests for proposal (RFP): Healthcare organizations that are seeking partners are likely to formulate and present you with a request for proposal, exploring your interest in a partnership relationship, laying out what they are seeking, and asking what you are willing to bring to the table. We can assist you in responding to RFPs, evaluating whether the opportunity supports your organizational direction, and if so, what may be required to make your proposal an attractive one.
For “Sell-Side” Organizations
Board and leadership education: Based on your organization’s current situation, Veralon will help your board and leadership understand the requirements for future success, and how these requirements can be addressed under continued independence and by various partnership scenarios.
Independence assessment: You may want to consider an independence assessment to determine if your organization has reasonable expectations for acceptable financial performance. This quantitative and objective analysis will focus on market and financial projections, assessment of capital capacity, identification of required capabilities and gaps in those capabilities, and the likely cost to remedy those gaps.
Identify optimal affiliation structure: If it appears that you can remain independent, we will familiarize your organization with various models for collaboration and affiliation between healthcare organizations, short of merger. These may include contractual relationships or affiliations focused on your organization’s specific needs (such as data management requirements for population health, an organization taking a minority ownership position of another organization, and several others).
If a decision is made to affiliate, we will evaluate the pros and cons of various potential structures with you, as described in the section for “buying” organizations.
The conclusion of the Partnership Strategy work is a decision on whether to remain as is, or seek a partner/partners to acquire, merge with, or affiliate with.