Who Joins the Franchise, Affiliation Model of Hospital Networks? An Analysis of Hospital and Market Characteristics of Members

Abstract

Joining nonownership based, organization-driven networks and alliances is a common strategy for hospitals to pursue yet little is known about what types of hospitals join these collaborations, due in part to challenges in identifying members. One novel network form that has recently emerged, and made identification feasible, is franchise-like “affiliation networks” in which affiliate hospitals pay an annual membership fee that allows access to the clinical expertise and resources of high-status, nationally ranked sponsor hospitals. Affiliation networks and their members publicize affiliation. Using 2006-2015 data on United States’ hospitals, we find hospitals with higher patient acuity, teaching hospitals, and hospitals located in areas of higher utilization intensity were more likely to join an affiliation network. Joining affiliation networks does not appear to be in response to highly competitive markets because hospitals in less competitive environments are more likely to join and hospitals with higher net incomes are more likely to join.