Will hospital corporations move into private practice?
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In spite of what first seemed like insurmountable hurdles, two competing Denver hospitals have joined together in an innovative plan to provide magnetic resonance imaging (MRI) services. Their alliance may be a model for other hospitals in the same type of competitive environment.
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Nowhere in the United States' economy has the role and function of management changed so dramatically as in the hospital industry. And no functionary has felt it as keenly as the chief executive officer (CEO) of the multihospital system. The enlargement of the CEO's responsibility--from governance of the hospital to the development of the multihospital system to the evolution of the healthcare corporation--has mainly taken place in the last two decades. The purpose of this study is to look at the changing mission, environmental demands, and organizational structures of healthcare corporations from the vantage point of top management. With a grant from the Hermann Hospital in the Texas Medical Center, interviews were conducted with a select group of CEOs of major hospital systems. A study overview is presented here.
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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.
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