Case Study: Defining an Appropriate Affiliation Strategy for an Independent Hospital

Background

Our client, a standalone 200-bed hospital located in the eastern U.S., had experienced reasonable financial success over the last decade as an independent provider in a rural community.  Faced with the challenges of reform, an aging facility and an aging medical staff, the board felt it would be wise to explore affiliation options.  However, the board lacked a process for strategically identifying what type of affiliation would best position the hospital for the future and who would be the best partner.

How HSG Helped

As the client was also a strategic planning client, HSG was aware of the client’s strategic priorities, its operations, infrastructure needs and financial outlook going forward.  HSG leveraged this information in assisting the board in a “Corporate Structure Scenario Evaluation” which identified:

  • the needs of the hospital going forward to maintain service to the community
  • what the board wanted to get out of an affiliation
  • what type of corporate structure was preferable
  • what expectations the board had of an affiliation partner – governance, operational implications, financial implications

Results

Based on the results of the Corporate Structure Scenario Evaluation, HSG was able to identify potential affiliate partners for the hospital and make a recommendation based on the board’s input.  An RFP developed by HSG was submitted to the potential partners.  Based on the responses, the board was able to make an informed selection of a partner.