A recent survey of 224 hospitals nationwide, conducted by health-care
management consulting firm TriBrook/AM&G, revealed that the
number of hospitals pursuing managed-care affiliations is growing
quickly, outpacing the growth in mergers and acquisitions.
In fact, while only 18% of hospitals indicated that they are currently
affiliated with a hospital network, nearly half (48%) expect to
be affiliated by the year 2000. Only 12% of respondents expect
to remain completely free-standing into the next millennium. Currently,
more than half (52%) of respondents are free-standing hospitals.
Although mergers and acquisitions are being pursued less frequently
by hospitals, a significant 17% of respondents indicated that
they are currently pursuing merger and acquisition opportunities.
According to survey respondents, the primary reasons for rejecting
merger and acquisition opportunities are a loss of autonomy and
a lack of trust among the hospitals involved.
However, the payoff is worth the challenges of a merger or acquisition,
as this form of collaboration was rated most successful by hospitals.
On a scale of 1 to 5 (where 5 indicates highly successful), mergers
and acquisitions received a rating of 4.0, compared to 3.3 for
"The results of our survey clearly show that while there
may be some initial suspicion of the merger or acquisition process,
the hospitals that have 'taken the plunge' and completed a merger
or acquisition find that the benefits are well worth it,"
said Rufus Harris, a principal with TriBrook/AM&G who was
instrumental in developing the survey.
The primary benefits of all forms of collaborative efforts cited
by survey respondents are:
- Reduced operating expenses;
- Improved community health status;
- Increased market share;
- Reduced capital expenditures; and
- Increased managed-care contracts.
When choosing a collaborative partner, shared vision or mission
is the most important criterion, followed by image/reputation,
management style/ethics, managed-care contracts/networks, and
market share. The most important contribution hospitals believe
that they can offer to a collaborative partner include geographic
location, cost-effectiveness, image/reputation, continuum of services,
and managed-care contracts.
"Without a doubt, hospital collaborations in some form represent
the wave of the future in health care," said Rufus. "Whether
as a result of mergers or acquisitions, managed-care affiliations
or a myriad of shared service arrangements, it is clear that there
will be very few completely free-standing, independent hospitals
remaining in the year 2000."
To receive a free copy of the full results of the survey, contact
Rufus Harris at (708) 990-8070.