Hospital consolidation is accelerating nationwide. Many standalone hospitals and small health systems, even the strongest ones, are recognizing that they may not have the strategic and financial resources required to achieve such capabilities and, thus, are exploring strategic partnerships with other organizations. Whether the organization is currently engaged in partnership discussions, contemplating partnership, or expects to do so at some point in the future, hospital and health system leaders should ensure that their organizations are prepared.

This two-part article aims to help board members and executives look ahead in order to avoid some of the more common obstacles experienced by hospitals in exploring and executing partnership transactions. Part one of this article sets the stage and specifically addresses the types of due diligence discoveries that have proven problematic in recent transactions. Part-two, to appear in the April issue of BoardRoom Press, will describe contractual issues that have been problematic in recent transactions and provide concrete strategies related to how to avoid such problems.