Shared Success

Carrie Vaughan, for HealthLeaders Magazine , May 9, 2008
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O'Connor reviews the services that it receives from Bassett and the cost of those services annually. This allows them to adjust the contracts as things change. "I don't want to say that it is an á la carte-driven selection, but there is room for discussion and negotiation of the services needed," Ayres says.

For nearly a decade, Orange City (IA) Area Health System, a 25-staffed-bed critical-access hospital, and Sanford Health, a 23-hospital system in Sioux Falls, SD, have been partners—but strictly on a year-to-year basis. The two organizations have a management services agreement that they have traditionally renewed annually. Just recently, however, the two organizations signed a 10-year agreement.

The long-term commitment "was driven solely by the desire to get into the electronic medical environment or the digital world in a matter that we felt most secure with both financially and clinically," says Martin Guthmiller, Orange City's CEO. He adds that Sanford wanted a longer agreement, as well, because of its investment in the project. Through the agreement, OCAHS will link to Sanford's new IT platform, which is powered by Epic, and will implement an electronic medical record system this fall.

Orange City also entered into a partnership with Sanford Sheldon (IA) Medical Center and Sanford Health to open a dialysis center in Hospers, IA. "It is not unusual for rural hospital administrators to receive requests from their community for dialysis," says Guthmiller. In a population of less than 10,000, there may be only four people in need of dialysis, so it is difficult to create a center for such a small population, he explains. The idea was to build a center in the middle of a population base that could provide enough volume to support it. What emerged was a three-way equity partnership. The Northwest Iowa Dialysis Center opened in September 2006 and is expected to stand on its own—including the ability to fund its own capital improvements.

In Guthmiller's opinion, one of the best parts of Orange City's affiliation with Sanford is the opportunity to network collegially—not just at the executive level, but for lab and radiology directors and nursing staff, as well. "They can develop a best-of-breed approach in a noncompetitive environment," he says.

The stability that a partnership with a $1.3 billion health system can provide is not so bad, either. "We are not going it alone—we have help from a senior partner in various areas. That is a comfort to the local community."

Carrie Vaughan is community and rural editor with HealthLeaders magazine and editor of HealthLeaders Community and Rural Hospital Weekly. She may be reached at

Partnerships 101
Even though community hospitals and large health systems understand in theory that affiliations can be mutually beneficial, it isn't always easy to vanquish old fears. For example, many small hospitals remain concerned that the larger system is going to steal all their patients, and larger systems are concerned about the impact these arrangements may have on their bottom line if more patients are treated locally. Here are 10 tips on building a true partnership.


1. Similar mission. It is unanimous: Hospitals need to find organizations that share the same values, philosophy and culture; otherwise there may be inherent conflict from the start.

2. Slow and steady. Lay the groundwork so that the community understands what is going on and try to build a consensus that this is the right path for the hospital. Otherwise, the community may fear that someone is trying to take control of their hospital. "No matter what you do to strengthen your facility, you want to retain a strong connection to the community," says Rick Wade, senior vice president of communications for the American Hospital Association. "It takes a lot of communication and a board of trustees that is willing to go out into the community and really work on it," he adds.

3. Actions speak louder than words. Hospitals should start the process early so that they can evaluate how well a potential partner actually lives by their values, says Jim Pope, president and CEO of Wadsworth-Rittman Hospital. "You have to start talking about ways that you can work together, because if you are under the gun, then you are out of control," he says.

4. Transparency and trust. It is often a very emotional issue for community hospitals to partner with large health systems. If there is trust between the partners things generally work out, but without it the relationship will fracture, says Steve Warden, executive vice president of CIT Healthcare. Part of that trust is making sure there that are no hidden agendas, adds Wes Littrell, chief strategy officer and president of Saint Thomas Health Service Affiliates. "It doesn't work if both parties aren't looking for something that is mutually beneficial."

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