Hospital Affiliation Agreement

Home » Agreement Articles » Hospital Affiliation Agreement

Hospital Affiliation Agreement

A Brief Introduction About the Hospital Affiliation Agreement

To cope with changing medical trends and improving technology, hospital affiliations are becoming more common. Mergers or leases can become costly and therefore, hospitals are opting for clinical affiliations. So what does a hospital affiliation mean for the healthcare institution. It helps them in leveraging the expertise and the work that the other institutions are doing, giving them access to resources, training and expertise that can enhance healthcare in the area. Affiliations are designed to foster strategic and financial relationships between the centers while recognizing that long term goals might evolve over time.

Who Takes the Hospital Affiliation Agreement?

This is the agreement taken by hospitals to stay independent but join the workforce with any other organization. It helps the hospital to tap on clinical and financial knowledge for leverage. The identity of the hospital is also maintained and the health care facilities of the hospital are improved drastically. There are several universities that sign this agreement with the hospital. The planning and execution of the medical education program are taken by the university.

Purpose of the Hospital Affiliation Agreement

The major purpose of the affiliation agreement is to provide hospitals with the required resources to improve healthcare without having to invest in capital expenditure. Hospitals are increasingly using these affiliation agreements to use the expertise of the universities or other medical centers.

Contents of the Hospital Affiliation Agreement

A standard hospital affiliation agreement template contains the following terms

  • The purpose of drafting the agreement
  • The objectives that each party aims to achieve as part of the agreement
  • Acknowledgment of compliance with all the relevant state and federal laws.
  • The term of the agreement with a specific duration mentioned
  • Superseding powers of the contract over all previous contracts
  • Process for amending any provisions in the agreement
  • Termination and its process – types of termination and any penalties or damages to be recovered for premature termination
  • Relationship between the parties throughout the course of agreement duration
  • The autonomy of operations and extent of information sharing, along with the jurisdictional rights
  • Responsibilities of the colleges, facility, students, and the faculty in providing services to the hospital
  • Assignment and liability of both the parties in the contract
  • Access to records and confidentiality agreements
  • Compliance acknowledgments
  • Licenses and certifications required for operation.

How to Draft the Hospital Affiliation Agreement?

When drafting the hospital agreement, some of the points you need to consider are

  • The size and scope of funding between the hospital and the medical universities
  • A clear understanding of the inherent dependencies of both the parties in the contract
  • Powers of decision making to act quickly to capitalize on market opportunities.
  • Process of funding new or business development opportunities
  • Creation and membership of a highly active affiliations committee
  • Powers of cross governance and ability to participate in the other’s boards
  • Reporting structures for the executives
  • Basis of funding arrangements
  • The assignment of responsibility for planning and executing
  • Responsibility of the university in providing protection against all forms of infections and diseases
  • Responsibility of the university to provide the hospital with the necessary proofs of the students’ health and fitness
  • The responsibility of the university to inform the students and faculty about the relevant state and federal laws
  • Details of termination of the student’s or faculty’s assignment with the hospital and the grounds for such termination
  • Whether the benefits extended by the hospital to its employees shall be extended to the students and faculty – whether, for the purposes of this contract, students and faculty shall be considered on the rolls of the hospital or not
  • Details of indemnification and extent of protection against liability of each party against the other.

Negotiation Strategy

Negotiations strategies in a hospital affiliation agreement would mostly be about the performance-based funding and the extent to which cross-governance would be permitted. Quid pro quo for services provided by each party would depend on the nature of benefit the other one is receiving.

Benefits and Drawbacks of the Hospital Affiliation Agreement

Some of the benefits of hospital affiliation agreements are:

  • It helps in leveraging the expertise and resources of the other party without any capital commitments
  • These agreements provide a good training ground for the students and research platforms for the faculty
  • Enhanced healthcare can be provided due to better technology available to the institutions.
  • Branding and philosophy can improve the competitiveness of the hospital
  • It creates consistency across the physician enterprise
  • It creates metrics on which to measure performance.
  • Exclusivity contracts and joint development contracts make sure there is a consistent development of mutual objectives
  • Cross-representation can add new perspective to the organization

Drawbacks to the contract generally arise due to incorrect interpretation of the contract. Some of them are:

  • Limited understanding of the bidirectional nature of the agreement creates conflicts about the contractual performance
  • Lack of formalized process for funding and capitalizing on market opportunities can result in loss of sales and incorrect utilization of market opportunities
  • Insufficient cross governance can create a lack of coordination which can affect the overall performance
  • Time spent on contract management can be detrimental to the strategic planning of the relationship.

What Happens in Case of Violation?

Breach of contract(1) activates the termination clause in the agreement. Parties may approach the court for specific performance, or for an injunction if exclusivity is breached. For damages cause, the arbitrator might award compensatory damages calculated as a percentage of perceived profits lost. In some cases, the agreement might provide for specific liens on any assets owned by either party for a breach. In general however, a contract is terminated without cure.

This agreement is beneficial for the small clinics as well as the big hospitals. The colleges and universities are also affiliating with the hospitals so that the students can learn about health care and hospitals can get benefits from it. The medical field is reaching at heights with the affiliation strategy and it will definitely prove to be more successful in the coming years.