Using a corporate structure 'check-up' to spot potential problems.

Abstract

Hundreds of hospitals across the country have now completed a corporate restructuring. As a result, many hospital boards and administrators are now dealing with a multiple-entity corporate structure for the first time. Moreover, the legal, accounting, management, and other specialists who helped to plan and form the new structure probably will not be involved in its day-to-day operation and maintenance. This combination of factors creates a risk that the various entities will not be run as required in order to maintain their separate corporate status. This article explains why it is important to preserve the separate corporate status of these entities, it identifies common problems in this area, and it shows how an audit of the corporate restructuring can help prevent those problems.