Like other academic medical institutions, our client was forced to consider the compatibility of its traditional financial and governance structures in an ever-evolving healthcare landscape. With a nationally ranked academic medical center, school of medicine, biological sciences division, numerous outpatient facilities, and a significant employed physician group, the business challenges were diverse and the stakes high. Given its cost and capacity constraints at the main institution, the board and management felt the need to expand the enterprise by entering into strategic affiliations or mergers with community hospitals in the region to be able to offer a lower-cost setting for its patients and to achieve greater economies of scale. However, despite its status as a leading academic and research institution, the organization had not been able to successfully execute on this strategy and was in danger of falling behind other high-quality academics and nonprofit systems in its crowded, competitive region.
We developed a strategy and approach to partnering with community hospitals that would yield better results. Given our extensive experience in working with both community hospitals and academic medical centers, we were able to advise our client on developing a new “community hospital division.” This concept would enable the organization to successfully manage the differing missions, cultures, and management practices of community hospitals without applying the complexity (and cost) of the academic center. Having helped the system set up this new model, we then successfully applied it with the negotiation of its first community hospital acquisition in a competitive process, in which it edged out several of its regional competitors.