Journal of Healthcare Management - May/June 2013 - (Page 171)

I ntegrated H ealt H S ySte MS Sterns notes: Health systems, while long on strategy, are often short on capital, constrained by the rules governing tax-exempt borrowing, unable to raise equity due to nonprofit ownership, and limited in the use of their liquidity by potential rating agency downgrades. Health systems will (in the future) search for creative financing techniques or more complex partnership structures that can deliver alternative third-party capital. So, if the central contention of this column holds, much of the future costs related to U.S. health system consolidation, integration, and strategy redirection will be financed from current cash flows; cash on hand; and/or other financing methods, including less traditional, alternative methods of financing strategic facilities. According to Ronald Smith, cofounder and principal of Frauenshuh HealthCare Real Estate Solutions, in Minneapolis, Minnesota, a growing number of large, financially strong not-for-profit U.S. healthcare systems are financing the building of strategic facilities (e.g., one or several large ambulatory care centers) through alternative methods to establish positions in market-relevant locations with greater speed and capital efficiency than they could have done otherwise. Smith comments: Community health systems with strong balance sheets and significant geographic footprints are becoming increasingly interested in partnerships with firms like ours that develop, own, and lease larger, clinically sophisticated ambulatory ‘destination strategies’ to house strategic clinical programs and physicians. These health systems see value in opting for the advantages of third-party capital offering flexibilities provided by innovative facility leasing options, including the syndication of facility ownership to employed and independent physicians who are aligned (or are aligning) with health systems. If not-for-profit U.S. health systems draw down balance sheet liquidity for all the reasons cited, the obvious question is, “How is it replenished?” rEBUildiNG liQUiditY Tom Marr, MD, associate medical director of HealthPartners in the Twin Cities area of Minnesota, offers insight on the application of the IHS model. HealthPartners is a large, integrated health system that owns financing and provider components of the system. He says: HealthPartners has visibility and experience on the financing and production aspects of healthcare delivery in multiple markets served. We appreciate the speed with which downward pressures on healthcare costs translate to demands for clinical care process and total-cost-of-care innovations and transformations. Our ability to generate sufficient levels of total organization balance sheet liquidity does hinge, largely, on our ability to manage total costs of care to lower levels at a rate that exceeds the downward pressures on healthcare premiums at related reimbursements, all while maintaining the highest levels of clinical care and assurance of evidence-based best practices. Other leaders of longstanding and operationally mature IHSs see value in a marketplace in which third-party payers transfer financial value (and attributed lives) 171

Table of Contents for the Digital Edition of Journal of Healthcare Management - May/June 2013

Journal of Healthcare Management - May/June 2013
Contents
Interview with Thomas C. Dolan, PhD, FACHE, CAE, President and CEO, American College of Healthcare Executives
Equity in Care: Picking Up the Pace
How Might a Reforming U.S. Healthcare Marketplace Threaten Balance Sheet Liquidity for Community Health Systems?
Assessing the Productivity of Advanced Practice Providers Using a Time and Motion Study
A Positive Deviance Perspective on Hospital Knowledge Management: Analysis of Baldrige Award Recipients 2002–2008
How to Improve Breast Cancer Care Measurement and Reporting: Suggestions from a Complex Urban Hospital
The Fear Factor in Healthcare: Employee Information Sharing

Journal of Healthcare Management - May/June 2013