Churn, Consolidation, and Charting a Course

Edward Prewitt, for HealthLeaders Media , October 14, 2013
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This article appears in the October issue of HealthLeaders magazine.

At HealthLeaders Media events, I've asked numerous healthcare executives whether they agree with Cosgrove's bold prediction. To a person, they are dubious—though also anxious, as they wonder what Cosgrove knows that they don't. Yet in one sense, consolidation has already occurred; most metropolitan areas of the country are dominated by two or three major players. Meanwhile, creative partnerships abound, such as not-for-profit Cleveland Clinic's "strategic alliance" with for-profit Community Health Systems, the Franklin, Tenn.–based giant that operates 135 hospitals in 29 states. These agreements fall short of outright merger or acquisition, but they have the potential to change how healthcare is delivered in many communities.

The causes of the churn in healthcare organizations—declining reimbursements, the need for capital access, the shift toward outpatient care, the transfer of out-of-pocket costs to patients—are not going away. These forces weigh most heavily on independent community hospitals, which still form the bulk of healthcare organizations in America. Their executives and boards are torn between the desire to stay true to their community roots and to avoid being left without a chair when the music stops. Already, many small independents face a poor competitive situation. Speaking in our cover article from the buyer point of view, Bill Atkinson, president and CEO of WakeMed Health & Hospitals in Raleigh, N.C., points out that "a rural hospital with a tough population base to cover is the same thing the next morning after you buy it."

HealthLeaders Media's role is to explore the perspectives of executives on the big issues facing healthcare. In this transformative period for the industry, consolidation is a major anxiety—but not the only one.

Recently, I joined 37 financial executives at the Broadmoor resort in Colorado Springs for our third annual CFO Exchange. Over two days, they discussed the mega-trends of healthcare in small-group sessions moderated by our editors: Leading Through the Big Clinical Shift, The Risky New Payer Universe, and Evolving Cost-Reduction Strategies. Look to HealthLeaders Media here and online for continuing insights on what will become of healthcare organizations, and what they must become in the future.

This article appears in the October issue of HealthLeaders magazine.

Edward Prewitt is the Editorial Director of HealthLeaders Media.




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