Is Bigger Healthcare Better?
Lots of mergers are going around in healthcare today. Whether you're the big system looking to add a piece you don't have or you're the small community or government-owned hospital that doesn't see a way to compete in the accountable care world, the prevailing opinion is that big is better.
But it's not necessarily so. While size and scale can be an effective buffer, there's no substitute for running a business well, given the new rules of the playing field in healthcare. Big systems with lots of capital can make big mistakes. Their strategies to cope with healthcare reform can fail as easily, if not quite as quickly, as those of smaller hospitals.
Whenever something in healthcare becomes so ingrained that the wisdom of pursuing it seems obvious, that seems to be the time to reconsider.
Remember physician practice acquisition in the 90's? Remember when PHOs were all the rage? What about when hospitals scrambled to start or acquire health plans? For some, those decisions worked out well. For others… not so much.
When these strategies failed to pan out as anticipated, millions were wasted, and ultimately many of those structures were either dismantled or divested. It seems that much of the fear and rush to judgment that drove those spending sprees is back, as the business model changes to force hospitals, health systems, and physician practices to adopt technology, and as importantly, to take on risk.