Creating Public-Private Partnerships

 Meet the Author Bob Heacox

Meet the Author Bob Heacox

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Client Profile

State-owned regional health science center, consisting of a 450-bed academic medical center and two community medical centers operated together with a School of Medicine, School of Graduate Studies and School of Allied Health.

Challenge:

The Health Science Center had a long history of training new physicians and other healthcare professionals who formed the foundation for health care in the region. The three hospitals served patients from all socio-economic backgrounds, but a disproportionate share of the region's Medicaid and uninsured population.

 With the onset of the Affordable Care Act, the state determined that the current model for the Health Science Center was not sustainable. Leadership for the Health Science Center was directed to seek a local partnership with a private organization to operate the three medical facilities and provide the educational settings required for medical training. The Health Science center was given a deadline for organization, evaluation, solicitation, selection, negotiation, agreement, implementation and full transition to occur in less than two years.

Results:

We were retained by the Health Science Center to project manage the entire effort. In order to provide the capital transaction representation required for the effort, we called on an i3HCC strategic partner to work with us. Together we facilitated the organization through the evaluation of structural options and feasibility for the public-private partnerships. We drafted a confidential information memorandum (CIM) describing the organization and the defined characteristics of optimal private partner. Using the CIM, we solicited interest from organizations locally and nationally. Based on expressed interest, we worked with the State to select the successful proposers. Three different organizations were selected, covering each of the three medical centers.

Throughout each phase of the process, we worked with the Health Science Center to assemble financial models of the various scenarios and proposal offered. Each model involved coordination and input from state Medicaid reimbursement and careful consideration of reimbursement for medical education and Disproportionate Share.

During the negotiation between the State, the parent public university organization, the Health Science Center and the three selected private partners we prepared the staff of the public organizations with financial analyses and scenario assessments in order to promote a collective position in the negotiations.

Through the efforts and commitment of all involved, we met the challenging 2-year deadline on time for all three facilities. The new private partners were all approved and transitioned to operate the medical facilities.