A merger with Parma Community General Hospital in Cleveland is the second in 10 days announced for University Hospitals. The health system is also planning to merge with EMH Healthcare in Elyria. This new business formation and planning is intended to improve the standing of University Hospitals as well as provide financial support for the struggling healthcare system.
The CEO of Parma Community General Hospital confirmed that the decision to merge was ‘largely financial” and speculated that the hospital may not have been able to remain independent in the future. Parma has been considering a merger for about 10 years. The two percent Medicare spending cut required by the sequestration became the tipping point for the hospital, which employs 500 doctors and 2,000 staff. Currently, doctors who work at the hospital do not charge facility fees, but this may change with the merger.
Experts have stated that many independent hospitals are being pushed toward mergers due to rising costs of operation and slashed budgets. University Hospitals plans to invest money to improve Parma’s infrastructure and equipment. Mergers may not always be beneficial, however, as some argue that they can lead to higher prices for consumers. For the most part, experts agree that hospital mergers in the future will be driven by the realities of healthcare reform.
Businesses that are considering mergers with other companies must make such decisions based on the business’s needs and financial goals. A business attorney may be able to assist company owners in making a merger decision as well as handling the contracts and negotiations attendant on any merger. A business attorney may represent one of the companies involved in a merger to ensure that the business’s interests are protected during the process.
Source: Cleveland.com, “University Hospitals, Parma Community General Hospital to merge“, Brie Zeltner, July 01, 2013