Co-management agreements are growing in popularity as health care shifts to outcomes-based reimbursement models.  Physicians and hospitals contract with one another in quality-oriented pay-for-performance arrangements, in which physicians oversee and manage service lines (most commonly orthopedics, oncology, and cardiology).

The overarching goal of these agreements is quality improvement, which benefits all parties involved — especially the patient.  The hospital benefits financially in part from reducing costs and physicians receive a base …

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Last year, hospitals and health systems underwent 98 consolidations, a 51 percent increase from 2010.  Many of these mergers and acquisitions arose in response to declining government reimbursement and the Affordable Care Act.  Smaller hospitals are having increasing difficulties maintaining a margin and many face high debt burdens, bankruptcy or even closure.

But is consolidation the clear-cut answer?

Here are 4 reasons bigger actually may not be better for all hospitals:

1. Disparate …

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Many hospitals rely on bond funding for their expansion and the purchase of new equipment.  Revenue that is created by the hospital is then used to pay back the bondholders.  The risk to bondholders is that they are generally paid after the hospital pays its operational expenses.  Therefore, if the hospital is less profitable than expected (or not profitable at all), bondholders assume the financial risk.

Hospitals have historically been rated …

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