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Deacon Ed makes an excellent point about Catholic hospitals, and I might argue social-service institutions in general. The alleged "problem" (or in modern parlance "challenge") is so-called economies of scale. Supposedly, the dramatically greater efficiencies and ability to spread fixed costs of operations drives institutions toward soul-numbing scale. This is only partially true, and in reality highlights yet another perverse aspect of our government. As a late-life economics doctoral student in the mid-90s my Industrial Organization professor (Richard Caves, a true giant of the field) empirically showed the importance of scale to a point. His core lesson was 1) there are, indeed, physical and technical economies of scale, but 2) they are largely exhausted (at least from a market-relevance perspective) long before the kind of size we actually see in companies. The cost difference between size X and size 2X does, indeed make the 2X firm more cost efficient, BUT the difference between the 2X and the 4X is really not a big deal. Those economies become "exhausted." Here, however, government steps in, adding massive administrative costs which apply regardless of firm size, and so need to be "smeared" across a larger revenue base to avoid sinking the firm. Hence, regulations and paperwork drive a firm (or non-profit) to larger and larger size, and stoke fires of consolidation. Sarbanes-Oxley and even basic tax accounting favor larger firms -- it's the same amount of paperwork practically regardless of size. Given government's increasing need to check-in on and monitor hospitals and the like, such organizations either become large, or fail economically. Even the grant and funding processes favor the large (and, I might say, politically connected and favored) over the small and local. - Nick Palmer