The question of whether to pursue a partnership is a difficult one for healthcare executives. But in many cases, knowing when to agree to an affiliation is the hardest part.
The monumental events of the last three years have caused tremendous fluctuation in the performance of not-for-profit healthcare organizations. The economic impacts of the COVID-19 crisis, which have included global supply chain issues and workforce imbalances, significantly increased labor expenses for the foreseeable future and have forced organizations to rethink the way they do business.
Ironically, the federal relief funds that buoyed many hospitals during the height of the public health emergency may have complicated their futures. While money from the CARES Act and Medicare advance payments saved some healthcare organizations from financial disaster, they also masked operational inefficiencies. Favorable market conditions in 2021, with low interest rates and remaining stimulus funds flowing through the industry, kept many healthcare executives from having to make difficult decisions about their enterprises.
All of that has changed. The inflationary impacts of 2022 and subsequent cost containment crisis have resulted in an uneasy time for many organizations. Realizing that their cost structure may not be sustainable, some of these organizations are now in the early stages of contemplating critical questions: how much longer can our organization survive if market conditions persist? Is it time to seek a partner? Is it time for service line affiliations? Can we enhance revenue on our own?
Whether you pursue a partnership strategy via a clinical affiliation, join a network, or seek a merger, the most critical step is to formulate a strategy. Not doing anything, or waiting too long to act, could be the difference between finding a strong partner and closing your doors.
Edited by: Matt Maslin
Designed by: Mary Anne Akhouzine
