On October 9 and 10, our Firm hosted The Real Deal Summit in Scottsdale, Arizona. It was a conference focused on growth and strategy trends in the hospital and health system industry. We had a great turnout of hospital and health care executives, in-house counsel and leaders from across the country. Here are our top 10 takeaways from the conference.
- When to Enter New Markets – Growth for the sake of growth doesn’t always make sense. The better strategy is to enter markets where your hospital or health system can elevate the level of care in the market.
- Novel Strategies for Building in a New Market – Establishing a new hospital campus in a new market is costly and has an element of risk. To reduce the risk, hospitals and health systems should consider partnering with physician groups in the area to co-develop the campus. The hospital system can build the hospital and allow physicians to develop an ASC or MOB at the same time.
- Fundraising for New Building Projects – Non-profit hospital systems are funding more building projects through philanthropy and fundraising efforts. One executive said her organization raised one-third of the cash needed for a new specialty hospital before they had broken ground.
- Joint Venture Strategies – Joint venture strategies continue to gain traction. Executives reported that finding the right partner is essential. Things to consider include: 1) reputation in the market; 2) expertise in a particular area; and 3) personalities of the leadership teams. Control over major decisions in the joint venture is another point worth considering.
- Real Estate as a Profit Center – With thin profit margins from the delivery of health care services, hospitals are looking for ways to generate returns from their real estate. One health system bought excess land when developing a new campus. The goal is to sell the excess land at a profit or to co-develop the land with complementary services such as retail, hotels and senior housing.
- Using AI to Make Strategic Decisions – More executives are using AI to determine when and where to establish new locations. Several health systems have developed their own AI platforms or partnered with a software company to develop their own AI platform.
- Outsourcing Essential Services – A number of health systems have outsourced essential services within their hospitals. Examples include lab services and food services. Executives noted that once a service is outsourced, it’s hard to bring it back in-house, so think carefully about outsourcing decisions.
- Integration Post-Merger – The integration of two health systems shouldn’t begin when the transaction closes. The process of integration should be thoughtfully considered at the beginning of a transaction. Start the transaction with the end in mind.
- Creating Affordable Housing for Clinical Providers – We have a housing crisis in the country. In many markets, there is a lack of affordable workforce housing for hospital employees. Recruitment and retention of hospital employees are often tied to the proximity of affordable housing near the campus.
- Private Equity Growth Strategies – One executive discussed successful growth strategies in the private equity space. Success in terms of growth and profits is often tied to the quality of care and finding the right physicians. Organizations that focus on the quality of care and treat all of the physicians the same end up winning.
For more information, please contact:
- Andrew Dick at adick@hallrender.com or (317) 977-1491;
- Joel Swider at jswider@hallrender.com or (317) 429-3638; or
- Your primary Hall Render contact.
Hall Render blog posts and articles are intended for informational purposes only. For ethical reasons, Hall Render attorneys cannot give legal advice outside of an attorney-client relationship.
