Healthcare Organizations with Corporate Structure

Healthcare Organizations with Corporate Structure

The 21st century has embraced a number of transformations in numerous sectors. Profits have become the main driving force in every financial institution. It has been a challenge for healthcare firms: profit or non profit in deciding on the model to use considering the fact that managing souring costs and dipping revenues has been a great concern.

A great number of hospitals have undertaken a corporate restructuring for them to make through the tough financial circumstances. One of the best examples in this context is the Kaiser Permanent. This firm uses the multi corporate structure system in running its operations of management. (Berwick, James & Coye, 2003).

The Kaiser Permanent has 3 different entities in it with every entity heading numerous subsidiaries bearing the name of the main firm. These entities are: The Kaizer Foundation Health Plan which in turn heads numerous regional subsidiaries and The Kaizer Foundation Hospitals and the Permanente Medical Groups.

Benefits of employing multi corporate structures in healthcare organizations

In management, all the separate entities are taken to be one entity for purposes of remittances of tax to the government. (Annas, 2006).

The not-for-profit arm of the firm is exempted from paying tax. Therefore the firm loses nothing in running Kaizer Foundation Hospitals which are not-for-profit.

Kaizer Foundation Hospitals holds numerous subsidiaries such as hospitals and many other affiliate hospitals that tender services. Through the subsidiaries, the not-for-profit arm of the entire firm does its for-profit functions and then directs the revenues back to the main/parent firm (Berwick, James & Coye, 2003).

Distinct entities in the firm are taken to be managed and owned separately. There is no legal obligation from the parent firm to bail out the entity under trouble.

As in most cases, subsidiaries operate in different regions of the country. This offers a great opportunity for expansion and growth of the firm.

Lastly, the large number of facilities of health in the firm gives room for specialization in the health sector. (Annas, 2006).

The use of multi corporate structures in its management and leadership, The Kaizer Permanente has witnessed dramatic growth and expansion and still it is on its growth.

References

Annas, J., (2006). “The patient’s right to safety—improving the quality of care through litigation against hospitals”. N Engl J Med; 354:2063-6.

Berwick, M, James, B. & Coye, J., (2003). “Connections between quality measurement and improvement”. Med Care; 41:I30-8.