Southfield, Michigan, September 26, 2013
– To merge or not to merge? As the realities of healthcare reform become apparent, hospitals across the country are grappling with that question.
Enter The Hospital Affiliation Index
™, a proprietary tool developed by the experienced healthcare consultants at Plante Moran and Healthcare Strategy Group to help independent hospitals and small systems decide whether an affiliation or merger is the right course of action. Utilizing data from four key areas – financial positioning, competitive positioning, physician supply and quality-based care delivery – The Hospital Affiliation Index provides an analysis of a hospital’s health.
The Index helps hospitals evaluate their options along an “affiliation continuum” from management contract, joint operating agreement, membership or joint venture to an asset merger or outright acquisition.
“In a recent survey, three out of four healthcare organizations reported they were considering a merger or acquisition as a hedge against the risks associated with remaining independent,” said Matt Weekley, Plante Moran partner and national healthcare practice leader. “Some facilities may see the need to get bigger but fear being swallowed up or becoming less relevant to their communities.
“It does not have to be ’all or nothing’ when it comes to an affiliation, though. Our new Index gives healthcare executives and their boards the tools to evaluate where affiliation is an appropriate option and what that affiliation should look like.”
The Index provides an overview of the hospital, its location in context with the larger market for healthcare services, the services provided and any current affiliations. A weighted scoring system evaluates the organization’s strengths – and weaknesses – in four key areas:
- Financial positioning: The Index analyzes the financial health of the organization by reviewing financial metrics such as days cash on hand, operating margin, capital expenditures and net patient revenues. “Government regulations are putting pressure on the bottom line of healthcare providers,” Weekley explained. “The Index can show hospitals how prepared they are to meet the challenges of financial investments required by the Affordable Care Act.”
- Competitive positioning: As the healthcare system transitions from fee-for-service to value-based care, hospitals able to deliver high-quality, low-cost care through accountable care organizations, or ACOs, will be in high demand. The Index measures the relevancy of hospitals within their communities by evaluating the mix of cases treated, market influence and other factors.
- Physician supply: The Index examines physician supply in both primary care and specialties, providing an indication of a hospital’s ability to deliver collaborative healthcare. “A strong collaborative relationship between hospitals and physicians that encourages coordination across the healthcare continuum is quickly becoming the norm,” Weekley said. “Hospitals and physicians must work together to improve outcomes and efficiencies.”
- Quality-based care delivery: Federal healthcare reform is realigning financial incentives to reward quality. The Index reviews the hospital’s current performance on quality and value indicators, such as readmissions and value-based purchasing.
“The final result is a sustainability score, which will give hospital leaders the confidence they need to make the appropriate decision about their options,” explained David Miller, partner at Healthcare Strategy Group. “The Index also provides a list of potential partners and evaluates their strengths and weaknesses.
“Affiliation is often a very emotional issue. The Hospital Affiliation Index provides an objective assessment. Throughout the process, hospitals can benefit from talking with an experienced advisor who understands the current environment for mergers and acquisitions and is able to share insights on what works – and what doesn’t.”
For more information view The Hospital Affiliation Index
.About Plante Moran
Plante Moran is among the nation's largest certified public accounting, tax and consulting firms, providing a full line of services to organizations in the following industries: manufacturing and distribution, financial institutions, service, health care, private equity, public sector and real estate and construction. Plante Moran has a staff of more than 2,000 professionals in 21 offices throughout Michigan, Ohio, and Illinois with international offices in Shanghai, China; Monterrey, Mexico; and Mumbai, India. Plante Moran has been recognized by a number of organizations, including FORTUNE magazine, as one of the country's best places to work. For more information, visit plantemoran.com
.About Healthcare Strategy Group
Since 1999, Healthcare Strategy Group has provided practical solutions to strategic challenges faced by hospitals, healthcare systems, and physician practices. As specialists in strategic planning, physician alignment, and mergers and acquisitions, the organization’s goal is to position its clients for sustained growth, profitability, and long-term competitive advantage. The organization offers thought leadership through webinars and two newsletters — Physician Strategy News and Strategic Focus — each published eight times a year. For more information, visit www.healthcarestrategygroup.com