Formation of medical and hospital groups.

The first impression of most physicians and hospitals when dealing with managed care companies (MCOs) is that the size or "bigness" of the MCO is a major factor in the success of the MCO in negotiating contracts. This is only true to a degree. Physicians and hospitals have developed a tendency to make an unqualified bolt to also be "big", to put themselves on a more equal negotiating footing with MCOs. They should consider first the circumstances associated with organizational growth that lead to an effective outcome versus those that lead to failure. Effective outcomes happen because local market share can be controlled; management data systems that work are in place; and senior management has depth as well as maturity.