Resisting The Healthcare Consolidation Frenzy

Merger and acquisition activity shows no signs of slowing, yet some hospital and health system leaders see independence as a viable strategy.

Hospital consolidation is on a tear. Whether the trend is ultimately attributable to a need for health systems to work more collaboratively, to deliver economies of scale, to recapitalize, or, for the more skeptical, to develop greater contracting power with commercial insurers, the consolidation trend is collecting a huge number of hospitals under a dwindling group of operators and shows no signs of slowing.

But there are hospitals and health systems that are determined to stay independent. They may collaborate with other facilities to a greater degree and may borrow expertise from other systems in order to better integrate, but on a governance and asset-ownership level, they want to buck the trend for a variety of reasons.

Moving faster

Some see an element of panic in the recent wave of consolidation. As hospitals and health systems contemplate a drastic-though-slow-moving shift in their business models from volume- to value-based reimbursement, many leaders and boards wonder whether they will be able to survive that switch on their own.