Three hospitals in Ohio have formed a for-profit company that could cut costs through group purchasing but also through healthcare layoffs.
The Cleveland-area health systems – EMH Healthcare, Southwest General Health System and Parma Community General – could use the hospital joint venture to work together on group purchasing, IT projects and administrative services.
“We can no longer operate in isolation and expect to retain the necessary strength required to meet our mission to our community,” Dr. Don Sheldon, CEO of EMH Healthcare, said in a statement.
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Sheldon said it was too early to know if the joint venture, called the Community Health Collaborative, would lead to layoffs, but didn’t rule it out. “It would be premature to say that this would result any layoffs, but there certainly are efficiencies to be obtained by consolidating our efforts,” he said, according to Crain’s Cleveland Business.
Each system will continue to maintain existing relationships with other healthcare groups. The three systems chose to band together because they’re similarly sized, similarly positioned and face similar challenges, according to the statement.
With hospitals feeling as if they’re under constant cost pressures, shared services agreements among health systems are becoming more widespread. “Hospitals have to continue to focus on cost management, and shared services are a way they can do it without legal problems,” an industry consultant told Becker’s Hospital Review for a 2010 article.
Three Michigan hospitals, including University of Michigan Health System in Ann Arbor, recently pooled together to create a similar shared services organization. “We believe the future is working together and partnering, not controlling and owning,” one of hospital’s CEOs told Becker’s.
