CHICAGO, February 14, 2006 - As surgical procedures continue to migrate from the hospital to an outpatient setting, and as malpractice and economic forces embattle today's healthcare professionals, joint venture partnerships - when structured properly - may offer a safe haven for doctors and hospitals alike.

Just how hospitals, physicians and third-party investors can and should structure these partnerships to keep pace with consumer and market demand is outlined in the recently-released report, Joint Ventures with Physicians and Other Partners, the fourth installment of the Financing the Future II series, from the Healthcare Financial Management Association (HFMA), which is sponsored by two healthcare industry leaders - GE Healthcare Financial Services and Kaufman, Hall & Associates, Inc.

Between the early 1980s and early 2000, nearly 60 percent of all surgical procedures moved from acute care to ambulatory surgical settings.This trend, among others, has increased the need for hospital-physician alignment.

"In an era of consumer-driven healthcare, the healthcare industry is faced with an ever increasing pressure to meet customer demand," said Richard Clarke, president and CEO of HFMA. "This setting is changing the way hospitals and physicians align themselves to gain access to new areas of capital and meet high standards of expertise and convenience."

Barry MacDowell, president of Indiana-based Reid Hospital & Health Care Services, agrees, "You can't fight the desire of consumers for more convenient services; you can't fight the desire of physicians for more economic security. You can't stop these social and human trends, so it is better to acknowledge they exist and try to find strategies to deal with them."

Among those strategies, joint ventures represent an opportunity to supplement slumping incomes, access new streams of capital, and meet the growing consumer demand for convenience and cutting-edge care. The report highlights ways that healthcare and investment decision makers can assess joint venture partnerships, including:

• Determining whether to compete or collaborate in pursuing an opportunity;

• Implementing a best-practice evaluation process, including drafting tailored principles;

• Identifying required attributes of a hospital-physician joint venture;

• Analyzing strategic development options and identifying initiatives that will provide market strength and competitive differentiation; and

• Drafting a sound business plan addressing strategic, legal, financial and regulatory domains.

"All parties must be on a level playing field in order to properly address issues of structure and control that are typical in joint ventures," said Jeffrey A. Malehorn, president and CEO of GE Healthcare Financial Services. "A solid business plan with clearly drawn objectives, in conjunction with routine monitoring of those objectives, can make or break a hospital's positive end results."

Fitch Ratings, Outpatient Business Growth: Nonprofit Hospitals' Struggle for Volume. Health Care Special Report. New York, Sept. 10, 2004.

Successful joint ventures serve as examples of best practices in the guide, including:

• Baylor Health Care System, a large health system serving the Dallas/Ft. Worth area, opened a full-service heart hospital in 2002 through a joint venture partnership with physicians. Within the hospital's first year of operation, dramatic improvements in cost reduction and efficiency were realized, including more than $12 million in cost savings.

• OhioHealth, an eight-hospital system in Ohio, established two separate and equally successful joint ventures. A partnership with Comtex, a hospital linens laundry service, significantly reduced laundry costs and provided jobs in the community. By partnering with MedFlight, a hospital helicopter service, OhioHealth became one of the nation's largest critical care networks, serving the entire state of Ohio.

"Hospital-physician partnerships have helped healthcare systems boost technological diversity, while affording consumers a range of convenient treatment options," said Kenneth Kaufman, managing partner at Kaufman Hall. "Joint ventures can represent a win-win situation at a time when capital is tight and demand is high."

The first Financing the Future series, led by HFMA in partnership with GE Healthcare Financial Services - with research conducted by HFMA and PricewaterhouseCoopers, began the process of highlighting strategies hospitals and other healthcare providers could use to improve access to capital through successful financial planning and execution.

The second Financing the Future series, created by HFMA in partnership with GE Healthcare Financial Services and Kaufman Hall, continues this process by defining, providing examples of, and encouraging the implementation of a best practice, corporate finance-based approach to financial management in healthcare organizations.

Financing the Future II includes six reports published over 18 months for healthcare financial leaders, their staffs and healthcare executive board members. Each report illustrates how actual hospitals and health systems have applied corporate finance principles to achieve successful financial performance and capital access. The first report published in May 2005 covered key principles of better practice financial management, while the second report focused on the "right" capital structure. The third report discussed strategic financial planning and capital allocation. The latest report covers joint ventures with physicians and other partners, a trend that will prove to grow further in 2006. Future reports will tackle strategies for financially struggling hospitals (Report 5); and the outlook for capital access (Report 6).

The next report in the series will be issued in May 2006.

To order this report, or previous reports, contact HFMA at 800-252-4362, and select option 2, or visit www.financingthefuture.org.

HFMA is the nation's leading membership organization for nearly 34,000 healthcare financial management professionals employed by hospitals, integrated delivery systems, managed care organizations, ambulatory and long-term care facilities, physician practices, accounting and consulting firms, and insurance companies. Members' positions include chief executive officer, chief financial officer, controller, patient accounts manager, accountant, and consultant. HFMA offers educational and professional development opportunities, information on key issues, technical data and networking opportunities, with the ultimate goal being to create a more supportive environment in which members do their business.

For more information, visit the Association's Web site at www.hfma.org.

GE Healthcare Financial Services, a business unit of GE Commercial Finance, is a provider of capital, financial solutions, and related services for the global healthcare market. With over $13 billion of capital committed to the healthcare industry, GE Healthcare Financial Services offers a full range of capabilities from equipment financing and real estate financing to working capital lending, vendor programs, and practice acquisition financing. With its knowledge of all aspects of health care from hospitals and long-term care facilities to physicians' practices and life sciences, GE Healthcare Financial Services works with customers to create tailored financial solutions that help them improve their productivity and profitability.

For more information, visit

Founded in 1985, Kaufman, Hall & Associates, Inc. is counted among the country's most respected independent financial and capital consultants, working with healthcare organizations of all types and sizes. Kaufman Hall provides financial advisory services to debt transactions; prepares and implements integrated strategic, financial and capital plans; designs comprehensive capital allocation processes; and assists in the evaluation, structuring and negotiation of merger, acquisition and divestiture transactions. In addition, Kaufman Hall developed and markets the ENUFF Advisor® Suite of financial management software products. Kaufman Hall serves its clients from offices in Chicago, Los Angeles, San Francisco, Boston and Atlanta.

For more information, visit www.kaufmanhall.com.

Press inquiries should be directed to:

HFMA
Bridget Vrba
312-596-3479
bridget_vrba@chi.bm.com.

Deia Campanelli
GE Healthcare Financial Services
312-441-6169

Kaufman, Hall & Associates, Inc.
Kenneth Kaufman
847-441-8780
Kkaufman@kaufmanhall.com