Ownership of a joint venture entity is divided among the partners in the agreement. However, some have raised concerns that maintaining a high stake interest in the hospital would give a foundation a large investment in the venture without the level of governing authority achieved by holding controlling interest. At this point, the IRS is developing revenue rulings that will address this issue. The new entity will be governed by a new management structure integrating various sectors of the previously distinct hospital entities.
Hospitals can merge with a neighboring hospital or merge into a system.
A merger was not used to convert any of the case study hospitals. As competitive pressures in the health care sector continue to make hospital consolidation attractive, the tendency of hospitals to merge, rather than to loosely affiliate through alliances is growing. This enhanced activity has led to a corresponding increase in the investigation and legal challenge of these agreements by the antitrust enforcement agencies. In this light, most merger arrangements are more likely to create efficiencies and intensify competition than to impede fee market competition. After hospital mergers, there is a tendency to consolidate resources in better-off communities despite promises to maintain substantial resources at both.