Health systems are increasingly turning to looser joint operating structures as they seek new merger partners, with Virginia Mason and CHI Franciscan being the latest examples.
Creating joint operating companies such as the Virginia Mason $ 4.5 billion system and CHI Franciscan planning to establish in the Seattle-Tacoma area allows suppliers to capture the benefits of the merger while avoiding Be the trap. In this particular case, using a common structure can be an attempt to isolate the property of a Catholic and a secular organization. Or systems may consider it the best opportunity to avoid an antitrust challenge.
"I would doubt that any one factor is decisive here," said Rick Zall, a partner at Proskauer and president of its healthcare industry practice.
In a joint operating company, parties often do not combine assets and instead create a new top company. This structure allows both parties to reap the benefits of a merger, namely scale and efficiency while avoiding the complexity and finite of combining assets. It will allow a reputable organization like Virginia-based Virginia Mason to retain more independence than a full acquisition by Washington's CommonSprite Health division, a huge, valuable hospital system. 137 billion dollars.
"Sometimes it's the fastest way to really integrate and create a unique business," Zall said.
Healthcare is still a local business and a joint operating company structure leverages …