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Many medical groups experience dilemma in negotiating buy-in agreements between owners and non-owner group members of clinic property. Anything less than broad-based ownership can promote a divisive undercurrent within the organization and the group's very perpetuity may be held in jeopardy. The author offers a complicated financing strategy which redistributes building equity, thereby reducing buy-in value.
As access to capital tightens, more hospitals are exploring the benefits of partnerships with private companies. A California hospital, burdened by the long-term debt it incurred for a medical office building, worked together with its medical staff and an outside real estate developer. By selling the building to the developer, not only was the hospital able to finance a much-needed expansion and reconstruction project, but the hospital's medical staff had an opportunity to become limited partners in the ownership of the building.
The relationship between an organization's staff structure, particularly the relative proportions of its administrators and line staff, and the organization's size, ownership status, financial condition, and scope of services is a subject that has attracted a good deal of attention from organizational theorists. At the present time, the subject is especially important to the hospital industry because of widespread concern about hospital costs and interest in how personnel expenses contribute to these costs.
Public hospitals, as public entities, are limited in many of their activities by state constitutions and statutes. One area where activity can be particularly limited is the joint venture. Constitutional and statutory limitations can influence several aspects of the joint venture: scope of activities, geographic boundaries, authority to enter into joint ventures, gift of public funds prohibition, and stock ownership. Therefore, public hospitals must be aware of possible legal obstacles and carefully consider their options.
Researchers at Harvard's Center for Health Policy and Management used regression analysis to evaluate the effects of ownership and other factors on the economic performances of investor-owned and nonprofit HMOs. The major finding was that the for-profit HMOs studied were more costly than the nonprofits, yet had barely higher revenues. Other influences on HMOs' costs and incomes were analyzed, and are summarized here.
Catholic health care facilities must consider the business and legal risks, canon law, and other constraints when planning a joint venture with physicians. Participants should first establish goals and compatibility, then determine the venture's type (property, service), form ("true," lease, contract), and structure (corporation, partnership, joint property ownership, trust). The administrator must decide whether the facility will participate directly in the venture or form a separate organization. Participants must determine their relationships with the venture, choosing among many options. The administrator should consider whether a venture raises any canon law issues, especially regarding ecclesiastical and secular assets, approval by the local bishop or Holy See, and need for consultation. Other pertinent legal issues include: Fraud and abuse. The venture should not appear as compensation to induce referrals. Physician referrals. Many states prohibit or restrict referrals by physician participants. Antitrust law. Participants may be liable for actions constituting on antitrust violation. Securities low. Organizers must clarify Securities and Exchange Commission registration exemptions and observe state "blue sky" laws. Tax issues. Catholic health care facilities must consider such factors as tax-exempt status, unrelated business income, taxable subsidiaries, and public charity status. Other considerations include tax ramifications for physicians; tax shelter registration; certificate of need (CON), licensing, and building standards; effects on reimbursement and pension plans; organizational and bond documents; corporate medical practice and fee-splitting questions; and labor and contractual issues.
Until recently, trustees who acted "in good faith" were not held personally liable for mistakes in judgment. But in two recent cases--Smith v. Van Gorkom and Hanson Trust PLC v. MLSCM Acquisition, Inc.--the courts found directors liable for making hasty, ill-informed decisions regarding ownership issues. The rulings said that when boards make major decisions, they must be able to demonstrate that they approved a fair transaction. They can do this by consulting with senior management and corporate counsel and, if needed, with independent authorities. Boards should obtain pertinent documents to review before making a decision and should have ample time to obtain necessary data. Meeting minutes should document these precautions. In their rulings, the courts did not second-guess the boards' business judgment. Rather, they found that the unprepared directors acted so quickly that they could not have made an intelligent decision. The rulings convey a commonsense message: Trustees who exercise authority without adequate information risk damaging the corporation and its services. As trustees attempt to fulfill their legal obligation to probe and question before approving major actions, tensions with management may arise. Boards and corporate officers, however, must find ways to reach corporate consensus on important decisions while maintaining an appropriate division of authority.
Many not-for-profit healthcare institutions are using REITs as a new source of capital. These institutions are finding REITs an attractive source because they provide 100 percent funding, reduce the responsibilities of hospital management, and allow access to a new base of capital. However, to be a source of capital, REITs require the sale of the institution's assets. This transfer of ownership can create significant differences in the management of the healthcare institution that might not be a welcome change.
This article examines the financial performance of small multihospital systems relative to freestanding hospitals. Small systems, defined as seven or fewer hospital units, were analyzed for three ownership categories: investor owned, church related, and secular not-for-profit. Finding few statistically significant differences between system and independent hospitals indicates that small systems are unable to fulfill the financial promises of system affiliation.
Healthcare systems with geographically dispersed facilities that are not the dominant providers in their regions are having difficulty, but Catholic systems can more effectively meet their mission and goals by developing geographically linked, regional systems under one parent corporation. As inpatient utilization declines and the fiscal bottom line deteriorates, the question of merger frequently arises. When Catholic and non-Catholic facilities discuss collaboration, the issue of whether the new entity must be owned and organized consistent with Catholic doctrine engenders the most emotion. Sometimes Catholic facilities offer a "condo arrangement" for a few services that are inconsistent with Catholic doctrine or offer to terminate their sponsorship. A preferred option is a collaboration or merger of Catholic healthcare facilities of various religious sponsors operating in the same market area. Some of the sticky issues in most mergers include gaining a clear consensus on the mission, goals, and organizational values; developing a sponsorship-ownership-governance pattern acceptable to the various parties; and demonstrating the ability to acquire more capital and reduce operating expenses. The most effective short-term solution for Catholic facilities and systems is to emphasize specific product lines, but this strategy will probably falter as the dominant facilities enhance their clinical sophistication, gain greater public recognition, and increase their market shares in these product lines. Long-term solutions will lie in Catholic facilities' ability to diversify horizontally and vertically to develop a geographically linked, multilevel system with an alternative healthcare payment system under one holding company.
In late 1986 the Sisters of Mercy Health System-St. Louis surveyed selected Catholic healthcare systems to determine what works when defining sponsorship and mission effectiveness functions and positions. Additionally, it attempted to ascertain how the systems' age, growth pattern, and maturity affected their definition of the corporate and institutional roles of sponsorship or mission effectiveness. Fifteen of eighteen healthcare systems responded to the survey. The systems ranged in age from six months to 14 years. In 14 systems the sponsorship, mission, or mission effectiveness functions were corporate positions; the 15th considered this function consultative. The positions covered 21 "primary responsibility areas," among them ethics, human resources, planning, ministry development, canonical issues, and legal affairs. The primary responsibilities of the positions increased and gradually leveled off as the system matured. The survey indicated that the 15 systems needed about six years to develop and implement the sponsorship, mission, or mission effectiveness functions. The initial activity focused on sponsorship. The implementation phase seemed to reach a new level of maturity when mission effectiveness concerns became a priority. This evolution assumed a mature understanding and ownership of the sponsors' values and spirit.
This paper reports an exploratory study which examined the attitudes of hospital nursing executives to aspects of the Health Care Facility Accreditation Program conducted by the Australian Council on Healthcare Standards. A comparative analysis of responses obtained via a structured questionnaire was undertaken on the basis of accreditation status, facility type (that is, private or public ownership) and bed capacity. Findings suggest that while the public/private categorisation is not a factor influencing level of involvement with accreditation, organisational size is related directly to program participation. Respondents from smaller facilities (less than 100 beds) demonstrate a different appreciation of program objectives than do their counterparts from larger organisations. Analysis indicates a significantly lower level of satisfaction with the program on a number of items relating to accreditation standards. All respondents show similar variations in their perception of those service areas which have been influenced by accreditation involvement.
The last decade has seen an enormous increase in the use of business techniques in the ownership and operation of psychiatric hospitals. Many physicians have reacted negatively to these developments and have raised many concerns about their impact on patient care. However, commercialism in hospitals is not new. Certain key business values, including attention to a guiding mission statement, the needs of consumers, accountability, and marketing, have a positive impact on the quality of milieu treatment.
To survive, let alone thrive, in an increasingly competitive and threatening environment, health care organizations must skillfully manage their dependencies. Such dependencies traditionally have been managed through marketplace exchanges (buying and selling) and ownership relationships (acquisition, merger, and business development). An alternative strategy for designing and managing interorganizational relationships, the quasi-firm, is introduced. The quasi-firm is a hybrid market/ownership arrangement that allows participating organizations to pursue strategically important purposes while simultaneously preserving a high degree of functional and legal autonomy. We suggest that this distinctive interorganizational form is particularly well suited to the features of the new health care marketplace.
The purpose of this study was to statistically answer a set of predefined objectives concerning pharmaceutical procurement. The key indicators were assumed to be cost per patient day and turnover rate. Of the 5,911 surveys mailed, 709 surveys were returned for a 12% response rate. The following statements were based on attempts to answer the six predetermined objectives. Pharmaceutical purchasing is controlled by pharmacy departments to the extent that comparisons to pharmaceutical purchasing by materials management departments was not possible. Prime vendor purchasing is the procurement method of choice. Competitive bidding through a group process is so popular that a valid comparison to nongroup bidding could not be accomplished with the results of this survey. Certain variables of group purchasing such as group age, contract adherence, and volume commitment, do not appear to be correlated to purchasing outcomes in this study. When comparing government to private hospitals, the private sector seems to have an advantage in managing turnover rates. Cost per patient day results were less conclusive. As single and multiple hospital systems were compared for purchasing outcomes, the results were not totally conclusive. Although, multiple hospital systems had a significantly higher turnover rate. Finally, a comparison based on the use, or lack of use, of prime vendor arrangements demonstrated interesting results. The duration of contract did not significantly affect the purchasing outcomes. Other hospital variables such as size, type, ownership, and organization, demonstrated notable trends. The importance of examining hospitals based on case mix and mission seems to be most important. Also, the ability to relate purchasing outcomes with formulary management strategies needs further study before conclusive statements can be adopted.
This article examines how physicians act, react, and organize when managed care forces them to consolidate into larger groups and business corporations. Physicians have experimented with ownership by hospitals or business corporations to gain capital, management skills, and information systems. Now they're moving toward physician-owned groups with "outsourcing" of administrative and information system functions. The mood, movement, and momentum of physicians, in short, is toward integrated physician organizations bound together by information that amplifies on their core competencies and capacities to deliver care.
Statutory law and court cases currently leave fair use of copyrighted material poorly defined and fail to provide effective guidance for the use of others' work. Copyright legislation is undergoing significant change, accelerated by the evolution of computing and communication technologies. This paper reviews copyright issues, fair use guidelines, and applicable laws and statutes to help administrators and educators understand and comply with copyright regulations. The paper describes principles of copyright and ownership, the rights of copyright holders, and the conditions under which copyrighted material can be used by others. Recently introduced legislation, such as the 1998 Digital Millennium Copyright Act, may significantly affect how educators can use copyrighted material in the future. The integration of computer and communication technology into education raises a number of intellectual property issues for dental schools. This paper provides some general guidelines regarding copyright issues in academic environments.
OBJECTIVE: To examine the extent to which Illinois nursing facilities have developed relationships with other healthcare providers, particularly managed care organizations (MCOs). STUDY DESIGN: A cross-sectional survey of nursing facilities designed to determine: 1) relationship objectives; 2) obstacles to developing relationships; 3) currently available services; 4) staffing for these services and; 5) nursing facility approaches to networking. The survey was sent to a census sample of 867 nursing facilities serving the elderly in Illinois. Descriptive and multivariate logistic regression analyses of relationships determined to be formal/risk-sharing were performed. STUDY POPULATION: The sample included 523 Illinois nursing facilities. A total response rate of 60% was achieved (523/867). RESULTS: Higher strategic goals, urban location, nonprofit ownership status, higher percentages of private pay and/or Medicare clients (vs Medicaid), and provision of home care and subacute services were all significant predictors of formal or risk-sharing relationships with MCOs. CONCLUSIONS: Facilities with more relationships and higher goals have more formal/risk-sharing relationships with MCOs. Facilities in urban areas have more relationships, likely due to the fact that rural facilities have fewer options and operate in different markets. In addition, nursing facilities rely on Medicare referrals from hospitals, and these Medicare patients, especially those in urban areas, are increasingly controlled by MCOs.