Boards of single hospitals and smaller health systems across the country are facing the tough decision of whether to remain independent or merge into a larger health system. Lower reimbursement and margins, tighter access to capital, physician integration challenges, technology investments, and the uncertainty concerning the impact of healthcare reform implementation have caught the full attention of board members. Not surprisingly, the number of mergers, joint operating agreements, and other collaborative arrangements between and among hospitals and health systems is projected to grow significantly in the foreseeable future.

Most board members are painfully aware that this decision is, perhaps, the most profound decision a board can make, and it requires the board to perform its fiduciary duty at the highest level. This article discusses steps boards should take in making this choice and things to consider before merging.