Strategies for survival in the hospital industry

Hospitals, besieged by new competitors and pressured to cut costs, are entering a new and unfamiliar environment. As usage declines and the government's new prospective payment system makes itself felt, hospitals are feeling the pinch. Nonprofit hospitals face competition from newer, for-profit providers of health care. These authors discuss the factors that have led some hospitals to close and forced most others to consider how they can lower costs while maintaining high-quality care. Several strategies exist to help hospitals cope with their new problems. The authors point out the advantages and disadvantages of downsizing, diversification, and joint ventures, among other practical measures that hospitals can take.