To make it in the new environment, hospitals need to compete with each other in new ways--not only by lowering prices but by increasing emphasis on certain kinds of care, such as maternity services.
Those competitive pressures were evident in the decision to merge Unihealth's Valley Hospital and Northridge Hospital.
Under the consolidation, the management staffs were blended and departments such as patient accounting and some lab services were combined, said Jeffery Flocken, chief executive officer of both facilities.
Equally important, though, is that managed care contracts will apply to both hospitals. The population near Valley is less affluent and older than that near Northridge. Northridge Hospital Medical Center, now known as Northridge Hospital Medical Center, Roscoe Boulevard Campus, turned a profit of $1.4 million last year. By contrast, Valley, now known as Northridge Hospital Medical Center, Sherman Way Campus, lost $3.8 million, according to preliminary figures from the Office of Statewide Health Planning and Development, which may not include some revenue from Medicare patients.
Levinsohn of Triad is aggressively planning what he hopes will be a glittering re-emergence for Sherman Oaks Hospital and Health Center, starting with some fresh paint but including a new wellness center and community seminars.
The Sherman Oaks facility also plans to reach out more to AIDS patients in the Valley. Promoting its strengths in tending to burns and AIDS is part of the plan to make the hospital viable.
"We have two important niches," Levinsohn said. "We intend to use that to our advantage."
Besides niche playing, hospitals will probably continue to network and merge to survive in the market, Langness said.
He views the trials of hospitals as akin to those of the auto industry in the 1920s. Where there were once hundreds of car makers, the Great Depression and the move to economies of scale cut that number back to a handful.
"The same thing is happening in the health field," Langness said.