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Hospital Mergers Are Out. ‘Strategic Alliances’ Are In. Is Obamacare Responsible?

by Dan Diamond, California Healthline Contributing Editor

Lloyd Dean’s hospitals treat more than 5 million Californians per year. And he has a vision for how they’ll get their care in the future — whether at work, on vacation, or in another state altogether.

“Wherever you go in this country, you have Dignity with you,” Dean, the CEO of Dignity Health, said in an interview last year.

Historically, Dean’s comment might have signaled that Dignity, a California-based system of about 40 hospitals, was going to follow the approach of HCA or Ascension — two hospital organizations that grew from regional to national health systems through a series of mergers and acquisitions.

But Dignity isn’t merging its way to new markets just yet. Instead, the health system is looking for other ways to build its relationships, and last week agreed to a joint venture in Arizona with Ascension Health and Tenet.

That deal was notable because all three organizations already are among the nation’s largest hospital systems. But it was especially telling because each system is taking part in a new wave of dealmaking — non-merger-mergers, for lack of a better term.

“I think ‘alliances’ is the right word,” Melinda Hatton, general counsel of the American Hospital Association, told California Healthline.

“And they’re all related to market forces, some of which are attributable to the Affordable Care Act.”

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Josh Sandberg

Josh Sandberg is the President of Ortho Sales Partners and Partner for The De Angelis Group. He also serves as Co-Founder and Editor of OrthoSpineNews.

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