As the pandemic-related slowdown in health system financial moves eases, hospital joint venture deals are expected to climb in the coming months.
Here are five things physicians need to know about the hospital joint venture market, as laid out by attorneys from the law firm McGuireWoods on Sept. 7 in JDSupra:
1. The current economy presents opportunities for hospital joint ventures.
As operating margins for hospitals remain underwhelming, health systems and hospitals continue to face increased staffing costs, inflationary pressure, supply chain disruptors and higher rates of unpaid care, while adjusting to the end of COVID-19 related relief funding and declining admissions. Joint ventures provide an opportunity for health systems to form strategic partnerships to help ease these financial challenges.
2. Health systems are seeing decreased revenue and increased demand for employment and higher salary expectations.
These trends create tougher economic burdens on health systems. There is a greater demand for provider alignment strategies that joint ventures have the ability to offer.
3. Collaboration between providers and suppliers is key.
Collaboration and alignment between all parts of the healthcare industry are critical to ensure patients receive the highest-quality care. The increase in demand for value-based care models and more outpatient options are examples of growth opportunities that strategic partnerships allow health systems to capitalize on.
4. Health system joint ventures are not identical.
There are many forms of joint ventures, and the option that is right for each system is based on the clinical and business challenges the health system wants to tackle.
5. Regulatory analysis can help ensure joint ventures are properly structured.
Joint ventures are complicated and subject to complex legal and regulatory requirements. Both sides of the partnership need to consider healthcare, licensure and state laws when creating alignment strategies.