New Frontiers in Hospital Joint Ventures
In our first article, we examined the history of joint ventures (JVs) and summarized some of the potential benefits to a non-profit hospital or health system considering a JV.
In this article, we will speculate as to the directions this flexible yet complex organization structure may take in the future and solutions it may provide to the healthcare industry. We will also cite some recent examples of joint ventures and other affiliations and assess the circumstances under which success is more likely than not.
Seller and Buyer Joint Ventures
There are many examples of hospital joint ventures. These are often referred to as “seller JVs,” where a hospital that otherwise would have been sold retains a minority stake in a new company. These JVs usually involve a non-profit as the minority partner and an investor-owned company as the majority and managing partner. The benefit to the “seller” is that it remains involved in the governance of the JV and has an ongoing financial stake and potential return, as well as receiving a cash payment for value of the assets contributed to the JV. A more recent phenomenon is the “buyer joint venture,” in which two parties team up to acquire a hospital. The most prominent of these has been Duke LifePoint (DLP), the joint venture between Duke Quality Network, a North Carolina non-profit corporation, and LifePoint Hospitals, a publiclytraded hospital company. DLP has acquired through acquisitions or joint ventures a total of 11 hospitals since its inception in 2010.
These arrangements are becoming more mainstream, as is demonstrated by Watertown Regional Medical Center’s recent decision to create a seller JV as the first for-profit conversion in the state of Wisconsin.