A pooling of interests. A transaction uniting ownership interests with no "consideration," such as the assumption of debt or assets or an exchange of cash.
Example: Hospital A and Healthcare System B have signed an affiliation agreement to transfer their membership rights to a new entity, NEWCO. Three members of NEWCO's board of directors are appointed by A and seven members are appointed by B. The two entities are essentially merging their operations and uniting their respective ownership interests to form NEWCO.
purchase. The acquisition of one entity by another and consideration must be part of the transaction.
Example: Healthcare System X and Hospital Y have entered into an agreement whereby X will become the sole corporate member of Y. X has agreed to assume Y's tax-exempt debt. Both are stand-alone entities not related to one another.
joint venture. An undertaking owned and operated by a group of businesses as a separate business or project for the mutual benefit of the members of the group.
Example: Healthcare System A and Healthcare System B form a new entity, NEWCO, which is responsible for operating the hospital divisions of A and B. Both systems will contribute the net assets of their respective hospital divisions to NEWCO and share control and operating results equally.
contribution. An unconditional transfer of assets, or the settlement or cancellation of liabilities in a voluntary non-reciprocal transfer to an entity by another entity acting other than as an owner.
Example: Hospital X enters into a transaction with Healthcare System Y whereby Y, an integrated delivery system, becomes the sole corporate member of X in a change of sponsorship transaction. There is no consideration exchanged. X will retain a separate status as a subsidiary of Y and continue to report on its separate operations as a stand-alone entity.Source: Healthcare Financial Management Association's Principles and Practices Board