Tough times call for hospital cooperation

I know it's depressing, folks, but there's no escaping it--this year we're likely to see more than the usual volume of hospital bankruptcies. With hospital margins already thin, investment returns tanking, uninsured patient volumes rising and more, it's just a matter of time.

The question is whether such bankruptcies--and in some cases, subsequent closures--will have a ripple effect that makes the impact even worse. If a few hospitals contract services or close their doors, it will be a hardship for those communities, but if a significant number do so, the whole industry will feel it.

It's a funny thing. When hospitals are healthy, and competing viciously with each other, each probably wishes the others would disappear in a puff of smoke. In the worst cases, hospital leaders find ways to undercut each other that would do a Wall Street corporate raider proud.

But at the same time, if more than a few close down needed services, the remaining facilities may be forced to provide them. And if too many other hospitals close, of course, the survivor could be faced with an overflowing ER, surges in uninsured patients and strained resources. In most markets, hospitals manage to maintain a balance between these extremes, but once competitors disappear, it's thrown completely off-kilter.

So, does this mean hospital leaders should throw down their arms and love their rivals? Not necessarily. But it does suggest that if they've ever considered ways to cooperate, this is a good time to dust them off. 

For example, I imagine it would be in the interests of all hospitals serving a large urban area to work together on programs diverting the less-sick patients to community centers, as all face the same issues in their ERs. A more radical step, though not unprecedented, might be to cooperate in ventures like collections agencies, as a shared agency would help each player find patients that fall out of the debt collection process. (After all, such patients might seek services from multiple hospitals.) Jointly funded advertising, shared referral lines and other marketing outreach projects might work as well.

The bottom line is that if hospitals want to survive major structural shifts in their marketplace, it may be time to sincerely rethink their ideas about competition. After all, it does no good to obliterate competitors if it brings you down too. - Anne