3 Traits Independent Hospitals Need to Succeed

Achieving and sustaining success as an independent hospital won't work just anywhere, says MarinHealth's CEO.

This article is a sidebar to the cover story, "Staying Power: How CEOs Can Lead Through Uncertainty," which appears in the July/August 2019 edition of HealthLeaders magazine.

Lee Domanico has made a career pulling hospitals back from the brink of financial ruin.

Domanico's most recent venture took him just north of San Francisco, to Marin General Hospital in Greenbrae, California, which recently changed its name to MarinHealth Medical Center, where he says there's great promise for the independent hospital to thrive without being tethered to a larger health system.

That being said, achieving and sustaining success as an independent hospital won't work just anywhere, he says. There are three intrinsic traits that such institutions need to succeed.

1. Geographic Advantage
 

"You need to have the benefit of geography and location, meaning that hopefully your geography creates some barriers to entry," Domanico says. "Related to that, you need to be a relevant hospital in the marketplace. You have to be relevant, or you have to make yourself relevant to the payer community, for sure."

MarinHealth Medical Center has this geographic edge because there's the Golden Gate Bridge to its South, the bay to its East, the Pacific Ocean to its West, and Wine Country to the North, Domanico says.

2. Secondary Revenue Source
 

"You need an alternative source of revenue or capital," Domanico says. "In our case, it's the tax base because we are a district hospital."

The organization raised $400 million to begin building a new hospital. Another independent institution could root its alternative financial reserves in an endowment or another significant philanthropic opportunity, for example, Domanico says.

 "I think the biggest struggle for independent hospitals is amassing enough capital and debt capacity, given the capital-intensive nature of hospitals, particularly in California with the seismic retrofit mandates," he adds.

3. Partnership Mindset
 

The idea of being independent might seem to suggest a hospital is going it alone, but Domanico says independence from a health system opens doors to collaborative opportunities with a greater diversity of potential partners.

"You absolutely have to have a partnership-oriented hospital and medical staff," he says. "You need a medical staff that doesn't split their patients and their referrals, and you need a medical staff that wants to partner with the hospital, particularly in the ambulatory care space, so you're collaborating on serving the market in a service area rather than competing."

Cover Story: Staying Power: How CEOs Can Lead Through Uncertainty