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Acquisitions, partnerships with academic medical centers an emerging workforce trend

Some health systems are viewing these academic medical center acquisitions as a means of getting closer to the talent pipeline.

Jeff Lagasse, Associate Editor

Statistics have been trickling in for years now that indicate a worsening shortage of physicians, nurses and skilled labor in healthcare, and health systems are responding. Some are beginning to consider acquisitions of academic medical centers as one way to address the talent shortage.

Acquiring an academic medical center isn't an inherently new concept for health systems; in the past, they've done it to build scale and establish new service offerings.

But Rick Kes, healthcare senior analyst and senior manager at consultancy company RSM US, has seen a strategic shift as of late. Beyond just acquiring scale, some health systems are viewing these academic medical center acquisitions as a means of getting closer to the talent pipeline, hoping to entice new medical trainees to work for the larger institution.

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"It's a signal that health systems are saying, 'OK, we've got this supply and demand issue with our labor -- a lot of demand, and not a lot of supply -- and we need to be proactive with how we fill that demand,'" said Kes. "One of their strategies is getting close to the people they want to hire, maybe while they're training to be a nurse of physician or what have you, and getting them at an earlier stage in their career. And hopefully when they graduate, incentivize them in some manner."


One example of such a deal was just announced in April. Atrium Health, Wake Forest Baptist Health and Wake Forest University announced the signing of a memorandum of understanding to combine and create an academic healthcare system in North Carolina, partly to fuel new scientific discoveries via large-scale research.

Access to talent was also a consideration, though. A combined organization would educate nearly 3,200 total healthcare learners each year,including students, residents and fellows across more than 100 specialized training programs.

Kes said it's too early to tell how effective this strategy will be, as the approach is a fairly new one and there's not enough data yet to make that determination. But he thinks it could definitely be a viable option, particularly for a health system with some resources at its disposal.

"My estimation is that this could definitely work, and be a good strategy for a health system to employ," said Kes. "The risks are obviously pretty similar to any affiliation or acquisition -- you're potentially going to expose yourself to new risks. If all of a sudden you've got a whole new line of business, maybe the executive team of the health system wasn't up to speed on it."

Good change management and post-affiliation processes would mitigate some of those risks, he said.


While larger health systems obviously have deeper pockets, Kes sees an opportunity for smaller players to take advantage of the academic pipeline as well.

One option is to not fully acquire the academic medical center. Instead, a system could simply create a better affiliation with one. It may not necessarily have to be a formal affiliation -- more of an established program for how the talent pipeline would connect back to the larger system.

The enticement for emerging health professionals to enter into employment with the health system would likely come via incentives, such as an internship -- anything that helps to create a better relationship with the university in question. An affiliation or joint venture could create the same kind of relationship that a formal acquisition would, and at a fraction of the investment.

As time goes on more data will be collected that can quantify the efficacy of these arrangements, but one thing is clear: The talent shortage is happening now, and health systems are beginning to jockey for the best position when it comes to attracting new hires.

"The labor shortage of trained nurses and doctors could persist," said Kes. "Only 75,000 jobs were added (to healthcare) in the month of May, compared to several hundreds of thousands of jobs on average in 2018. I don't know if that's another signal that something is changing from a labor dynamic perspective. That could change what happens in the future."

Twitter: @JELagasse

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