The American Hospital Association and nearly two dozen state and local hospital associations are forming a for-profit firm to sell member services to hospitals nationwide, MODERN HEALTHCARE has learned.
The as-yet-unnamed shared services firm would be structured as a joint venture, with the AHA and state associations as equal partners investing equal amounts of money, said Richard Wade, AHA senior vice president for communications.
The tentative business plan pegs the price of one partnership share at about $40,000, Wade said.
Dennis May, the Connecticut Hospital Association president who is leading the effort to launch the new company, said no partnership price has been determined yet. He would not disclose any other details, citing a confidentiality agreement.
Plans to form the company have been in the works for months with the partners meeting last month in Chicago to review the proposed business plan, sources said.
The partners hope to launch the company before year-end, possibly by Oct. 1.
Among the services the company is likely to offer are ways to prevent information system crises that could result from inability to compute 2000 as a double-digit year. Other services might include worker education programs, Wade said.
The new company is reflective of a changed course for the AHA under President Richard Davidson. When he came on board as president in 1991, the association began divesting its longtime fee-for-service businesses to become primarily a dues-supported organization.
But the onslaught of hospital industry consolidation has taken a toll on the AHA's dues revenues.
The association reversed field in 1996 when it decided to spend as much as $40 million to buy new for-profit lines of business (Jan. 1, 1996, p. 2).
The AHA hasn't bought any business, but it did launch a new for-profit information company last year.