Emulating strategies without going for-profit

Economic conditions are forcing hospitals to consider new and different business models. For executives hoping to maintain nonprofit status, experts say, there are several avenues to help avoid an unwanted acquisition.

“If we’re going to stay nonprofit, clearly the issue of cost containment will continue to be an issue for all of us as we move forward,” said Skip Cimino, president and CEO of Robert Wood Johnson University Hospital–Hamilton. “Ensuring the patient experience is one that every patient comes away with a real sense that we have directed the right resources to their care — I think that’s going to be vital in terms of the interests of where we go as a nonprofit organization.”

Cimino also said nonprofit hospitals will need to look at the structure of for-profit entities to see if any efficiencies can be translated to the nonprofit model. Purchasing agreements — which he said his hospital has entered into — and negotiating group contracts are two ways nonprofits can emulate for-profit strategies.

For-profits “tend to come in more aggressive in marketing, so the hospitals that may have gotten a bit stodgy in the marketplace suddenly take notice and start to worry about marketing,” said Dave Knowlton, president and CEO of the New Jersey Health Care Quality Institute, in the West Trenton section of Ewing. “That generally improves what they’re offering to the public.”
Partnering with for-profit entities may also be a viable option, but the idea is new and has yet to go through the full New Jersey regulatory process.

Robert Garrett, president and CEO of Hackensack University Medical Center, said the hospital’s joint venture with LHP Hospital Group Inc., of Texas, to reopen Pascack Valley Hospital, in Westwood, and operate Mountainside Hospital, in Montclair, brings the “best of both worlds,” and could be the future of health care.

“The for-profit partner brings the expertise of running a community hospital, and they also bring to the table a lot of access to capital,” Garrett said. “In other parts of the country where these partnerships have started to exist, it’s really worked and it’s really helped a lot of hospitals that might not have been able to survive without that type of partnership.”

 

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