Common use of Joint Operating Agreements Clause in Contracts

Joint Operating Agreements. Unlike the absolute financial and structural control affiliations previously described where a centralized authority has power over participating hospitals’ boards of directors and assets, regional hospital systems are now affiliating through a joint operating agreement that may be implemented through a partnership or through a non-profit corporation. The hallmark of the joint operating agreement type of affiliation is that participating hospitals retain their separate identities, boards of directors, and a certain amount of autonomy even though considerable management and financial authority is shifted to the governing body of the JOA. For example, authority to make moral or ethical decisions based on religious principles is usually retained by the hospitals. Powers ceded to the governing body of the joint operating agreement and powers reserved by the hospitals may be spelled out in a variety of documents, including a joint operating agreement, a partnership agreement, articles of incorporation, bylaws, a code of regulations, or management contracts. Because a joint operating agreement affiliation is not a true merger, it has come to be called a "virtual merger." Virtual mergers are intended to unify operations to achieve cost efficiencies necessary to compete successfully in a managed care environment by eliminat­ ing duplications, consolidating managerial decisions, and offering third-party payers unified access to cost effective services.

Joint Operating Agreements. Unlike the absolute financial and structural control affiliations previously described where a centralized authority has power over participating hospitals’ boards of directors and assets, regional hospital systems are now affiliating through a joint operating agreement that may be implemented through a partnership or through a non-profit corporation. The hallmark of the joint operating agreement type of affiliation is that participating hospitals retain their separate identities, boards of directors, and a certain amount of autonomy even though considerable management and financial authority is shifted to the governing body of the JOA. For example, authority to make moral or ethical decisions based on religious principles is usually retained by the hospitals. Powers ▇▇▇▇▇▇ ceded to the governing body of the joint operating agreement and powers reserved by the hospitals may be spelled out in a variety of documents, including a joint operating agreement, a partnership agreement, articles of incorporation, bylaws, a code of regulations, or management contracts. Because a joint operating agreement affiliation is not a true merger, it has come to be called a "virtual merger." Virtual mergers are intended to unify operations to achieve cost efficiencies necessary to compete successfully in a managed care environment by eliminat­ ing duplications, consolidating managerial decisions, and offering third-party payers unified access to cost effective services.