Perhaps it's time to tone down the screed against conversions of not-for-profit healthcare institutions. In 1996, more than any prior year, the healthcare landscape was marked by alarm that greedy for-profit hospital chains, beholden only to their shareholders, were gobbling up the nation's not-for-profit facilities.
But as our 1996 merger and acquisition compendium illustrates, no wholesale conversion of hospitals to the for-profit sector exists (See p. 37). In fact, only about 8% of the hospitals that merged or were acquired last year converted to for-profit status, according to MODERN HEALTHCARE's calculations.
That means for-profits continue to make up only about 15% of the healthcare institutions in the country. This ratio has held extraordinarily steady, despite the industry tumult.
What's important in all the dealmaking is not simply whether the buyer is for-profit or not-for-profit. It's whether the acquiring organization has sensitivity to the common belief that hospitals are true community assets whose legacy must be retained and protected.
Two recent lawsuits filed against the proposed sale of Boca Raton (Fla.) Community Hospital to three not-for-profit systems are a case in point. Attorney General Bob Butterworth felt compelled to sue to protect the interests of the facility's donors, while the institution's founders are accusing the hospital and trustees of scheming to control between $300 million and
$500 million in proceeds from the sale.
In South Carolina, officials of Greenville Hospital System were forced to pull the plug on a planned deal with two other not-for-profit systems after community residents voted overwhelmingly against the arrangement. Opponents painted the scheme as a monopoly that would work against the interests of the community.
It's folly for any organization to neglect the interests of community members who built and nurtured local medical facilities over the years. Executives of acquiring companies must open a dialogue to assure the public that healthcare assets will continue to be directed to the needs of the community. Successfully dealing with that issue, rather than the nature of the ownership segment, is the factor that will guarantee organizational success.