Strategic Alliances and Partnerships in Health Care

It is not uncommon in the health care industry today for two or more parties to form an alliance for commercial and strategic purposes. “Strategic partnerships” and “strategic alliance” are terms that are commonly referred to and are now very popular among health care consultants and advisers.

In health care, strategic alliances and partnerships among providers – in particular, competitors – have been a common approach to branching into new markets, acquiring costly technology or services, combining capacity or purchasing power, and achieving economic efficiencies in health care for decades. Hospital-physician joint ventures, joint operating agreements among hospital competitors, joint ventures over hospital cost centers, group purchasing organizations and shared service organizations, joint management arrangements, and operating leases are all common forms of strategic alliances that have been utilized in health care by and among providers.

This chapter looks at strategic alliances and partnerships among health care providers and suppliers (e.g., administrative or technical service providers, outsourcing firms, manufacturers, technology companies), describing the purpose, types, and approaches to developing strategic partnerships in health care. We will also discuss the role of the lawyer as deal maker in the context of a strategic partnership, as well as the principal laws and regulations that need to be considered as part of the development of any strategic partnership among providers and suppliers in health care. Finally, we will identify the elements of a successful strategic partnership and suggest some ways health care deal makers can enhance the strategic partnership’s chances for success.