The herd mentality that gripped the hospital industry in the mid- to late 1990s, when the prevailing wisdom was that only through size and market domination could a provider succeed, turned out for many to be a stampede in the wrong direction.
A wave of healthcare system divorces in 1999 and 2000 served as proof that hospitals are not interchangeable commodities that can simply be snapped together to form a larger unit. In many cases, the efficiencies and market leverage with payers that mergers were supposed to provide never occurred.
Notable breakups include Penn State Geisinger Health System in Pennsylvania, Unity Health in St. Louis, Baptist/St. Vincent's Health System in Florida and UCSF-Stanford Health System in California.
One of the first deals to sour was Optima Health in Manchester, N.H. Opposition to the merger of the only two hospitals in town mounted after the system proffered an unpopular proposal to consolidate acute-care services at one site. Another factor was a finding by the state attorney general that the system violated charity laws.