OC Reilly Blog: Partnership Precautions

By George M. Vunovic, Vice President of Technology Solutions, OC Reilly Inc.


As the health care industry continues on its journey of evolution and revolution, some health systems have turned to strategic partnerships to help provide important services and capabilities that otherwise would require major capital investments.

This course of action can reap significant benefits, but if not structured properly, could also lead to problems that can be not only costly, but also tough to get out of.  Caution and precaution should rule the day.

In the October 2014 edition of Healthcare Financial Management magazine, an article titled “Five Strategies for Combating Market Uncertainty to Deliver Value” cites the upside of such strategic partnerships.  The article reads, in part:

“Health systems increasingly are creating ‘soft’ partnerships with other providers – another strategy blessed by rating agencies.  Augusta-based Georgia Regents Health System (GRHealth) is one example…GRHealth is exploring tighter partnerships with select vendors when it makes sense.  In July 2013, the health system signed a 15-year contract with a medical device vendor that will save an estimated $150 million…” 

It would appear that the decision-makers at GRHealth performed substantial due diligence in selecting their strategic partners.  Alliances at this level, with millions of dollars at stake, require the expert analysis and attention to detail that can only come from a perspective gained by professionals with first-person experience on both the buyer and vendor sides of the equation.

When all of the research, analysis, and subsequent negotiated terms of a strategic partnership line up properly, all parties benefit.  But without this degree of professional scrutiny and input, terms agreed to initially may become problematic later as plans get implemented and the true costs begin to accrue.  As with any other business dealing, strategic partnerships deserve the best efforts possible, from the best people available, long before the contract is signed.

In today’s ever-changing health care environment, even a seemingly attractive and advantageous initiative like forming strategic partnerships carries no guarantee of success.  It only makes sense to even the odds by insisting on expert analysis, particularly when it comes to supply chain and medical equipment management issues.