Affiliation between health care providers is expected to continue at a relatively rapid pace as organizations address the pressures of mounting healthcare legislation and the need for scale and diversification of service offerings.
Some senior living providers have recently targeted affiliation as a means to accomplish these goals, especially among non-profit operators that offer heath care services among their communities.
An affiliation may show promise of greater access to capital, relationships with physicians, stronger management teams and cost savings, but leaders must critically evaluate whether the arrangement is the best strategy for their organization, according to an article titled “Critical Considerations in Healthcare Affiliations” published in Health Care Law Today. Prior to settling on a decision to affiliate, leaders should consider the alternatives, writes author partner and health care business lawyer Roger D. Strode with Foley & Lardner LLP.
They should also consider a variety of factors categorized under the term “duty of care,” which “requires directors and officers to act prudently in light of all reasonably available information in overseeing a health care organization’s business and making decisions on its behalf,” the article states.
This duty of care requires that leaders obtain and consider all information relevant to the potential affiliation partner and the transaction; engage the appropriate experts (investment bankers, economists, accountants, legal counsel) and give careful consideration to their advice to ensure they understand the transaction and its implications; ask questions and be skeptical; and consider reasonable alternatives to affiliation.
Finally, before choosing to affiliate, health care providers should research what approvals and consents must be obtained, looking into what regulatory hurdles and constituencies are involved, Strode writes.
Doing these things gives deference to leaders’ decisions and protects their actions by presuming them to be made in good faith, on an informed basis and in the best interests of the organization.
To read the full article, click here.
Written by Emily Study