The risks and opportunities of acquiring a distressed facility.

Often, distressed healthcare institutions have salvaged their deteriorating situations by merging or consolidating with or selling their assets and operations to a neighboring institution. This article reviews the analysis that should be undertaken by a financially sound institution when it considers acquiring a distressed institution. Acquiring a failing institution provides many good opportunities as well as many great risks.

Filing for bankruptcy: a sign of failure or hope for the hospital?

Hospitals that file for bankruptcy are usually viewed as admitting failure or defeat. However, bankruptcy can become a constructive financial management tool if used appropriately. Under Chapter 11 of the Bankruptcy Code, hospital management can use bankruptcy to reorganize the failing financial situation of the hospital into one that is financially stable and able to continue operations indefinitely.

Shared service alternatives offer flexibility and tax benefits.

Because the performance of shared service and tax-exempt status under Section 501(c)(3) of the Internal Revenue Code can be incompatible, hospitals planning to provide services to each other or to other organizations on a fee-for-service basis may wish to do so through a separate corporate entity. Using either a Section 501(e) shared service organization, a Sub-chapter T cooperative, or a taxable business corporation, a compromise can be reached between operational flexibility and tax benefits.