June 28, 2011

5 Changes That Can Increase a Hospital’s Value

A growing trend in healthcare is for hospitals and health systems to sell, partner or merge to form larger, more integrated organizations. These transactions offer several benefits to all parties involved, including improved efficiencies, cost savings and streamlined services. Hospitals that are selling can optimize the outcomes of the sale by learning how to increase the value of their facility.

The simple answer to increasing value is to increase earnings and decrease costs. But, in a time of declining reimbursements and a slowly recovering economy, manipulating the earnings/costs dichotomy becomes more difficult.  have no control over certain external factors, such as if the state has a certificate of need process, competition, demographics and geography, that influence the hospital’s value.

Hospitals in states without CONs are likely to have a lower value than those with CONs because there is no limit on where new hospitals are built. If a new hospital is built in the same town as an existing hospital, for instance, the latter will see a decrease in value. However, there are factors leaders have control over that can increase the hospital’s value.


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