You could compress third and fourth year into one year in theory but that would require a level of efficiency and coordination on the part of the clinical faculty which is probably impossible to achieve, first because they are too busy to devote the time and second because patients are unpredictable and cannot be counted on to provide you with your training in a "just in time" manner.
I mean, there is a lot of standing around with one's external sphincter providing a cozy for one's thumb. What is rounding, for example, but a highly structured way to waste an afternoon? Additionally, on many rotations all you will be is a glorified clerk. You will glean your medical knowledge in an accidental, haphazard way.
Don't flame me and tell me that your school doesn't have any unproductive time in third and fourth year.
The key is to carry a little pocket book with you, say the Scutmonkey's Clinicians Pocket Reference (absolutly fantastic book) so you always have something to read during down time.
And, to be honest, not all of my fourth year rotations have been equally useful. While I did a Trauma Surgery month early as well as two Emergency Medicine months, other than a solid community Internal Medicine month I have been slacking off like a big dog since October. I did a community Pediatrics rotations where I probably only went in five times for a few hours in the entire month. I also did a month of "self-study" cross-sectional anatomy and pharmacology as an excuse to study for Step 2.
My MICU rotation last month was good but since I really only did it to learn how to intubate, put in central lines, and to learn about ventilators, I probably could have learned as much in one week if it had been packed with activity. Most of what I learned about critical care I learned from reading my critical care book during the many, many hours when nothing was going on.
I am doing a Cardiology month right now which makes me feel like a third year again as I am usually here until five. No fair!
Then I have a month of vacation and finish with a total, absolute, Mickey Mouse outpatient psychiatry rotation where I will have to do about six shifts in the entire month. I guess I could have picked a harder rotation to finish on but I am tired of medical school and just want to finish with as little expenditure of energy as possible.
Bottom line. If the long Christmas and summer vacations were eliminated, if the faculty recognized that most fourth years essentially blow off half of fourth year, and if the clinical curriculum was tightened up a bit you could easily compress medical school to three years.
With that being said, why would you want to? I'm not in that big a hurry. Medical school is actually kind of fun once you get past first year.