Outlook for Hospitals: Systems Are the Solution

According to Dr. Thomas Frist, Jr., president of Hospital Corporation of America (HCA), hospital management companies are good for the health care industry because they can help reduce costs and improve productivity. HCA is able to achieve such goals by: 1. insuring hospitals through its captive insurance company, 2. providing its member hospitals with lower cost computer services, 3. improving management systems to boost productivity. Two of the most important benefits of HCA are its sound credit rating, which is advantageous for financing purposes, and its economies of scale. In contrast to hospital management corporations, Rush-Presbyterian-St. Luke's Medical Center in Chicago, Illinois, a $220-million not-for-profit health care organization, engages in much research and training of health manpower. Dr. James A. Campbell, the chief executive officer (CEO) of this organization, views investor-owned hospital management corporations much like holding companies that oversee properties. Rush uses a corporate strategic management approach to foster efficiency in its research facility, patient clinics, health maintenance organization (HMO), and health care center for inner city patients.