How to enhance the efficacy of health network growth

In almost every American metropolitan area, health executives are busily enhancing the efficacy of their health networks by corporately restructuring so that their organization can become a fiscally and politically powerful oligopoly or a regulated monopoly. When the formation of these alliances are initially announced by the local media, they are reported to be vehicles to enhance access, social equity and quality of care, and to reduce costs. Since an increasing number of these health networks are currently experiencing fiscal, cultural and other difficulties, it is critical to study: (a) what factors should be considered when developing an effective and efficient health network?; (b) what are the practical issues in their strategic formation and management so they eventually achieve their full potential?; and (c) why will some divestitures among these health networks occur and how will these corporate ‘spin offs’ impact on consumers, providers, insurers and governmental agencies? Within the next decade the United States will face some inevitable economic difficulties. At that time, enhancing access and reducing costs will become more critical issues for health networks. These alliances may then need to become more responsive to consumer pressures as the Americans shift their political proclivities from the current quasi‐competitive to a more quasi‐regulatory position. In this context, the use of global budgetary targets is discussed as a possible option in the United States to constrain costs, an approach used in almost all other western industrialized nations. Copyright © 2000 John Wiley & Sons, Ltd.