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Consulting firm assesses viability of hospital split

| Apr 11, 2013 | Business Litigation |

The administrators of a North Carolina hospital group are discussing possible plans to dissolve their business union. As they negotiate several options, they are also considering who will manage the company. Two counties decided they no longer want to be connected with the partnership, in part due to overall dissatisfaction in the medical community.

Specific reasons include cultural differences, a status that is viewed as lower than others, concerns about local health care services and a reduced overall profit margin. However, after the hard work of establishing a business, it might not be as easy to dissolve. A minimum of 75 percent of the hospital board needs to agree to dissolve the business. The business alliance did not technically qualify as a merger since the involved parties both retained financial control of their own facilities. However, the purpose of the group was to work together as a team.

Now board members face the challenging decision of whether to fight to keep the company together or let the dissenting counties leave peacefully. A consulting firm has been retained to help the group assess their options. Considerations include issues such as health reform, expected future growth and competition and demand in the market. The company is expected to finish the analysis by June.

Another serious consideration is looking at who will manage the hospital group. If the group goes their separate ways, they will likely need a new management company. To remain an independent facility is no longer an option because of the economic developments in recent years.

Establishing and dissolving businesses takes careful consideration on the part of all involved. A business attorney might help parties look at a variety of options when making weighty decisions.

Source: Smoky Mountain News, “Due diligence underway on MedWest hospital split,” Mike Carter, March 28, 2013

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