Catherine, This is a topic that really interested me, because I Mergers in healthcare have become de rigueur with the changes brought on by the Affordable Healthcare Act. And most of the reason lies in the fact that the cost of healthcare is directly related to the organizational structures that allow a healthcare provider system to operate. The United States spends more per capita than most nations on healthcare. The average annual per capita government spending on healthcare administration was reported as $1,059 in the United States, or 31% of the total healthcare expenditure. This has been blamed on heavy reliance on private insurers who have heavy overhead administration costs, particularly in underwriting, billing, and marketing expenses. In turn, negotiating with hospitals and other healthcare providers requires the establishment and operation of a bureaucracy that further increases costs, something particularly difficult for smaller organizations (Elhauge, 2010). …show more content…
By adopting a profit/loss business-model-based philosophy, planning and organizational behaviors also have to adapt. The hospital must be managed in a way that mimics the traditional life cycle of any other business, including reduction of unprofitable services. When services are cut in healthcare, unlike in other businesses, there are also moral obligations involved: how they affect patient outcomes, access to healthcare resources, and community health are considerations that need to be taken into account prior to drastic changes. This may instead prompt a streamlining of services based on the leadership of medical and nursing management rather than following the motivations of financial leaders as may be done in other organizations (Langabeer,