Smaller hospital shareholders of the SunHealth Alliance will be grouped into "suballiances" when their equity is transferred to the giant company SunHealth has joined.
The policy is meant to lessen variations in the amount of equity members hold, said Pat Poston, SunHealth senior vice president for planning and legal affairs. At least a few SunHealth members are unsure what it means for their standing in the new company.
SunHealth negotiated and completed its merger with rival AmHS/Premier in a matter of months (Nov. 27, 1995, p. 2). Most rank-and-file SunHealth hospitals had little warning because, at the time, a merger between SunHealth and another alliance, VHA, long had been rumored.
The new company, operating under the temporary name of APS Healthcare, is more than five times the size of SunHealth, with 1,700 hospital members and $10 billion in annual contract purchases.
Shareholders will hold interests in APS equal to their equity in the founding alliances. SunHealth, however, represented proportionately more small hospitals than AmHS/Premier and had more shareholders-150 compared with 95. Small hospitals generally own less equity than systems or large facilities, Poston said.
About 60 SunHealth hospitals with revenues of less than $100 million will be pooled into several suballiances of their choosing by March 31, Poston said.
That will make it easier to consolidate alliance programs, Poston said. Some programs have incentives based on membership, instead of equity or size, she said.
"Rather than asking smaller members to acquire more stock, we devised the mechanism of allowing them to hold shares together," Poston said.
Suballiances are legal organizations for the aggregate holding of stock, and because of that, hospitals within them must vote in aggregate. They still will be full owners of APS, Poston said.
The loss of individual votes may matter less with the creation of APS. Unlike its founding alliances, APS will be governed by an 18-member board, which will make most decisions. Shareholders will elect a new board every three years; they will have reserve power for only a few matters, such as the dissolution of APS, said Jack Bernard, AmHS vice president of corporate planning and marketing.
The organizational changes probably are fair trades for the advantages of APS, such as stronger group purchasing power, said William Anderson, chief executive officer of 100-bed South Florida Baptist Hospital in Plant City, a SunHealth shareholder.
"Since I'm directly affected by this grouping thing, I'm going to hold my options open," Anderson said. "But once they have time to get out and explain it, and we get more comfortable, I think it will work out."