A distressed critical access hospital (CAH) had a preferred affiliation candidate identified and a signed letter of intent when they approached Stroudwater Associates for assistance because the affiliation process was stalled. It quickly became apparent that their preferred partner—a large regional referral center—did not understand the value proposition of having a CAH as part of their health system and was uncertain of how to proceed. The partner had no rural affiliates and no experience with rural healthcare delivery.
Stroudwater recommended that the client conduct a process to evaluate a broader selection of affiliation options alongside their preferred partner. During that process, Stroudwater educated all interested parties as to the unique value proposition of having a CAH affiliate (home office cost allocation, rural health clinics, 340b eligibility, swing beds, etc.). During that process, an alternative preferred partner emerged that had previous experience with distressed rural hospitals, a track record of successful turnarounds, and expertise in operating rural affiliates.
While the initially preferred partner was unable or unwilling to grasp the value of a rural affiliate, this health system had already evaluated and quantified the benefit. Our client vetted its options and selected the newly identified partner based on its expertise, track record, and the quality of the terms of its proposal.
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