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IDS conversions to for-profit status: structuring the deal.
1McDermott, Will & Emery, Los Angeles, CA, USA.
Summary
Not-for-profit integrated delivery systems (IDSs) can convert to for-profit status via asset sales, joint ventures, or lease agreements. Executives must analyze legal, business, and political factors to choose the best structure for their organization.
Area of Science:
- Healthcare Management
- Health Services Research
Background:
- Not-for-profit integrated delivery systems (IDSs) face decisions regarding asset conversion.
- Conversion to for-profit status offers strategic financial and operational opportunities.
Purpose of the Study:
- To outline common conversion structures for not-for-profit IDSs.
- To guide executives in selecting an optimal conversion strategy.
Main Methods:
- Analysis of three primary conversion structures: asset sales, joint ventures, and lease/management agreements.
- Examination of legal, business, and political implications for each structure.
Main Results:
- Each conversion structure (sale, joint venture, lease) presents distinct advantages and disadvantages.
- The optimal choice depends on the specific circumstances and strategic goals of the IDS.
Conclusions:
- Informed decision-making requires a thorough understanding of conversion drivers.
- Careful consideration of legal, business, and political factors is crucial for successful asset conversion.