Nonprofits turn to for-profit partnerships

Community hospitals are joining doctors in developing for-profit specialty hospitals.

By Cheryl Jackson, AMNews staff. Nov. 5, 2001.

Under the threat of physicians severing ties with their facilities or losing business to competing specialty hospitals, nonprofit hospitals are more often establishing for-profit heart hospitals with physicians.

In Indianapolis, two heart hospitals are being developed by competing community hospitals. Similar deals are in development in Milwaukee as well. And in Fresno, Calif., health leaders are watching to see what the effect is of such a facility under construction as a competing facility adds beds for heart patients.

Heart services are among the most lucrative businesses for cash-strapped hospitals.

"Hospitals are saying, 'I could lose 100% of my volume or I could lose 50%,' " said Craig Kornett, senior director at Fitch Ratings, which rates hospitals' debt. "No margin, no mission. You've got to protect your margin. These physicians were going to do this on their own anyway."

No one is tracking the growth of such ventures, according to the American Hospital Assn.

But the examples of such ventures are increasing, said Rick Wade, spokesman for the hospital group.

"That's the way hospitals are seeking to keep physicians in the community. Lock them in. Give the physicians a stake in that particular service," he said. "How do you assure the commitment of the solid teams of physicians in providing that care? You give them a stake in that institution."

The community hospitals have to make the facilities for-profit to get physicians' participation, Wade said, but any profit the hospitals make is put back into the parent companies. [...]