SunHealth Alliance will convert to a for-profit cooperative Oct. 1 from its current standing as a for-profit stock corporation.
The transition, approved by its board Sept. 9, means that SunHealth members will receive a share of the group's profits as before-tax dividends. By law, cooperatives must divide at least 20% of their profits among their patrons. Irving, Texas-based VHA, an alliance of 944 hospitals, is similarly structured.
Charlotte, N.C.-based SunHealth is owned by 155 healthcare companies operating 301 hospitals. More than 80 other hospitals use its group purchasing services.
The alliance will distribute its profits so that members are rewarded for a higher participation in its programs, said Ken Mitchell, its associate vice president of materials services. Previously, it waived some service fees to reward shareholders for participation but offered no direct financial incentives to affiliates.
SunHealth's board also approved the creation of a Center for Community Health Improvement, which will coordinate programs to help hospitals design and deliver integrated health services. Ben Latimer, SunHealth's president, discussed the proposal earlier this year (Aug. 8, p. 75).
Like SunHealth, other purchasing groups and alliances are examining ways to increase their members' use of services and contracts. Health Services Corp. of America, a Cape Girardeau, Mo.-based purchasing group, is considering various changes in its organizational structure that would give members part ownership of the group.
"There needs to be a strengthening of the relationship that groups have with their systems and networks," said Earl Norman, its chief executive officer.
Last year, the purchasing arm of HAPSCO Group converted from a 501(e) corporation, which can serve only not-for-profit hospitals, to a for-profit cooperative. Now its members can share its earnings and it can serve long-term-care facilities and other organizations in healthcare systems, said Patrick Mazzolla, its president.
Earlier this year, HAPSCO's shared services group converted to a taxable cooperative, called AllHealth. The two organizations' boards were to consider a merger last week.