Two Leaky Lifeboats Strapped Together?
Friday, October 22, 2010
Priyanka Dayal McCluskey too Robert Weisman at the Boston Globe report that Boston Medical Cemter too Tufts Medical Center are considering a merger, "a bargain that, if approved, would travel the biggest matrimony of Boston teaching hospitals inwards virtually 2 decades."
They note:
A merger would link 2 nonprofit hospitals that both process many low-income patients too take away maintain endured fiscal struggles.
While such conversations are worth pursuing, the number facing the institutions is whether they would travel stronger together than they are separately. If not, this could travel a illustration of strapping 2 leaky lifeboats together, leading to a faster demise than if they remained apart.
What are the obstacles to success? First, 1 of the consequences of the Affordable Care Act has been a diminution inwards populace back upward for security cyberspace hospitals, similar BMC. There's no indication that authorities policy volition modify on that front.
Second, TMC has the weakest referral base of operations of all the teaching hospitals inwards Boston and, despite best efforts on that front, it remains behind the other large hospitals on that front.
Third, BMC has a large number of unions (is it 14?) that, inwards the words of a prior CEO, "make it impossible to manage."
For a merger to succeed financially, nosotros need to await for accretive value. Would it travel possible to eliminate layers of overhead, laissez passer economies of scale inwards purchasing too other functions, too negotiate improve contracts alongside insurers?
Is it possible to rationalize areas of clinical care? For example, both hospitals take away maintain kidney transplant programs that are, frankly, also pocket-size to justify inwards the ain right. By combining them, costs could travel reduced too outcomes probable improved. Might at that spot travel other examples?
But it is often hard to accomplish such rationalizations, inwards that the doctors inwards each infirmary mightiness experience a proprietary involvement inwards their programs. Someone would take away maintain to negotiate a novel clinical leadership agreement.
Which brings upward the biggest number of all: Most mergers are non mergers. They are takeovers yesteryear 1 party. The BIDMC illustration is apt. A so-called merger of New England Deaconess Hospital too Beth State of Israel Hospital inwards the mid-1990's was genuinely a takeover of the old yesteryear the latter. This led to resentment, alienation, too close bankruptcy. (In contrast, the successful "merger" of MGH too Brigham too Women's Hospital to create Partners Healthcare System was non a clinical merger at all.) The cultural issues associated alongside mergers reign supreme, too I trust that the parties at BMC too TMC are thinking through those aspects every bit good every bit the clinical too draw of piece of job concern aspects.
Interestingly, the Globe floor notes that piece Tufts is connected alongside Tufts University School of Medicine too BMC is affiliated alongside Boston University School of Medicine, "the medical schools . . . would non travel component of the deal."
A inquiry to inquire is, why not? We don't need to catch a merger of the 2 medical schools to rationalize their undergraduate medical didactics too graduate medical didactics programs. There mightiness travel efficiencies to travel garnered there. And alongside the weakness of its other didactics affiliate, Steward Healthcare, possibly Tufts Medical School should travel considering to a greater extent than of a strategic alliance alongside its colleagues at BU to ensure the forcefulness of its medical didactics program.
They note:
A merger would link 2 nonprofit hospitals that both process many low-income patients too take away maintain endured fiscal struggles.
While such conversations are worth pursuing, the number facing the institutions is whether they would travel stronger together than they are separately. If not, this could travel a illustration of strapping 2 leaky lifeboats together, leading to a faster demise than if they remained apart.
What are the obstacles to success? First, 1 of the consequences of the Affordable Care Act has been a diminution inwards populace back upward for security cyberspace hospitals, similar BMC. There's no indication that authorities policy volition modify on that front.
Second, TMC has the weakest referral base of operations of all the teaching hospitals inwards Boston and, despite best efforts on that front, it remains behind the other large hospitals on that front.
Third, BMC has a large number of unions (is it 14?) that, inwards the words of a prior CEO, "make it impossible to manage."
For a merger to succeed financially, nosotros need to await for accretive value. Would it travel possible to eliminate layers of overhead, laissez passer economies of scale inwards purchasing too other functions, too negotiate improve contracts alongside insurers?
Is it possible to rationalize areas of clinical care? For example, both hospitals take away maintain kidney transplant programs that are, frankly, also pocket-size to justify inwards the ain right. By combining them, costs could travel reduced too outcomes probable improved. Might at that spot travel other examples?
But it is often hard to accomplish such rationalizations, inwards that the doctors inwards each infirmary mightiness experience a proprietary involvement inwards their programs. Someone would take away maintain to negotiate a novel clinical leadership agreement.
Which brings upward the biggest number of all: Most mergers are non mergers. They are takeovers yesteryear 1 party. The BIDMC illustration is apt. A so-called merger of New England Deaconess Hospital too Beth State of Israel Hospital inwards the mid-1990's was genuinely a takeover of the old yesteryear the latter. This led to resentment, alienation, too close bankruptcy. (In contrast, the successful "merger" of MGH too Brigham too Women's Hospital to create Partners Healthcare System was non a clinical merger at all.) The cultural issues associated alongside mergers reign supreme, too I trust that the parties at BMC too TMC are thinking through those aspects every bit good every bit the clinical too draw of piece of job concern aspects.
Interestingly, the Globe floor notes that piece Tufts is connected alongside Tufts University School of Medicine too BMC is affiliated alongside Boston University School of Medicine, "the medical schools . . . would non travel component of the deal."
A inquiry to inquire is, why not? We don't need to catch a merger of the 2 medical schools to rationalize their undergraduate medical didactics too graduate medical didactics programs. There mightiness travel efficiencies to travel garnered there. And alongside the weakness of its other didactics affiliate, Steward Healthcare, possibly Tufts Medical School should travel considering to a greater extent than of a strategic alliance alongside its colleagues at BU to ensure the forcefulness of its medical didactics program.