Healthcare Consolidation Lessons and a Prediction

These 'hospitalist' companies, which manage a certain cadre of physicians for the hospital with which they have a contract of typically between three and five years—were mere startups a few years ago. Now they're big companies. And they're branching out into emergency and intensive care medicine. How long before they're employing teams of cardiologists on a scale unimagined in the past?

Never before have hospitals outsourced the management of such a key cohort to their success. What reason is there for a redundancy of administrative staff at such hospitals when that company can as easily manage their physicians as a large, multi-hospital system? There's money to be saved—and made.

I realize that my argument can cut both ways. Efficient outsourcing can also plausibly save the independence of the local community hospital and help it compete with its larger, more efficient peers. It's just that I think it's more likely to happen the other way around.