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Partnering to your Strengths: Key Considerations for Joint Ventures between Hospitals and Specialty Operators

Increasingly, health systems are partnering with niche operators with focused expertise and success in operating verticals like dialysis, behavioral health, urgent care, ambulatory surgery, imaging and managed care. Health systems enter into these partnerships with the hopes of driving the success of these areas, which may not be core competencies of a traditional health system but are essential for succeeding in the evolving healthcare environment. Partnership with one of these platform operators can improve access and care offerings, drive a stronger bottom line and reduce operational headache for the health system. But partnerships are not easy, and as the partnership is formed and deal terms are defined, it is essential for the health system and the partner to navigate staying aligned with their mission and business objectives, adhering to the specific regulations and standards driven by their for-profit/not-for profit status and regulatory environment, working through matters of governance and day-to-day control of operations and ensure fair economic terms – all to ultimately ideally arrive at a sustainable partnership that benefits each party .

In this presentation, we will leverage the use of specific case studies to cover:

  1. Rationale and trends in these partnerships
  2. Key points of negotiation, including governance, operational control, etc.
  3. Strategies for navigating concern around “break up” – including in the event of a change of control
  4. Financial considerations including:
    1. Asset contributions including valuation considerations
    2. How the management fee is determined
    3. How to fund growth
    4. Navigating strategic and competitive considerations and alignment