New Models for Community Hospital Joint Ventures

New Models for Community Hospital Joint Ventures CoverJoint ventures between investor-owned and nonprofit health care organizations are not new; in fact, they have occurred for at least 25 years. Until recently, nonprofits were employing this type of transaction to address their need for capital without “selling out” and losing control over a vital community asset. The joint venture structure provided nonprofits with an influx of capital while allowing them to retain both a governance role and an economic interest.

In the past few years, however, two new growth-oriented models have appeared. In these models, the nonprofit partner is involved more as a buyer-partner than a seller.

Joint Venturing a Referral Network

Over the past 18 months there has been a significant increase in interest by both investor-owned firms and nonprofits in jointly developing outlying markets that serve as referral sources for the nonprofits. Many urban markets have become concentrated, and new participants — nonprofit or investor-owned — find trying to enter them “late” unattractive. In addition, many successful urban nonprofits have no intention of selling or sharing ownership. So, a joint approach to developing an outlying network can help the nonprofit develop its system without diluting its capital resources.

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