Strategic Partnerships in Healthcare: Physician Owned Hospitals & Not-for-Profit Health System

The market has demonstrated there is significant strategic value in partnering with physician-owned and led organizations. Approximately 20% of all physician- owned acute care / specialty hospitals have partnered with a not-for-profit health system. An additional 30% of physician-owned hospitals have partnered with a for-profit corporate operator (e.g., Surgery Partners, USPI, SCA). These partnerships allow for alignment with independent physicians that may otherwise have been resistant to other arrangements, such as full employment with a local health system.

There are approximately 120-130 surgical / acute care hospitals that have some physician ownership, and of those, just over half are truly independent. The remaining hospitals are involved in a joint venture partnership with a local health system, a corporate operator (e.g., Surgery Partners, USPI, SCA, MFC), or both. These transactions often take the form of a partial acquisition that ultimately creates a joint venture. This allows for retiring physicians to realize liquidity at a higher valuation while providing an opportunity for young partner physicians to continue to participate as leaders within the organization and maintain or increase ownership.

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