Healthcare mergers and acquisitions have been consistently increasing since the Affordable Care Act altered the way health systems create revenue. Hospitals are integrating networks, healthcare technology companies are merging with vendors and cloud-based supply chain management companies are merging with companies specializing in automated payments. A 2015 report from PricewaterhouseCoopers dubbed 2016 the year of "merger mania."
At the Becker's 2nd Annual CIO/HIT + Revenue Cycle Conference on July 27, a panel of experts discussed mergers and acquisitions in the world of healthcare IT and revenue cycle management.
Munzoor Shaikh, a senior specialist with West Monroe Partners, a multinational management and technology consulting firm based in Chicago, echoed the sentiment of the PwC report. "In our experience, it seems like [mergers and acquisitions] activity has been very heavily increasing," he said.
The extraordinary rate of M&A activity in revenue cycle and health IT is driven by the substantial changes currently altering healthcare. The need to update technology and meet federal quality measurement demands is driving the mergers of many independent physician groups, which is in turn driving mergers in health IT, according to Kyle Wailes, executive vice president of provider services at Fort Lauderdale, Fla.-based Intermedix.
"The rate of change in the healthcare industry from care settings to physician consolidation is really driving mergers and acquisitions throughout the entire rev cycle and more broadly across healthcare IT," he said.
Scalability plays a major role in any M&A decision. Relying on organic growth to expand services and improve technology is not a pragmatic option for many organizations in healthcare services.
Bill Lenihan, president of Sagamore Health Network, a Carmel, Ind.-based health system, said, "The technology firms and technology companies are scalable, so investing in that capability basically gives you unlimited capacity to serve clients. On the services side, it is scalable, but the issue is [scale] is difficult to come through organic growth, it's got to really come through acquisition."
Evolving demands are also fueled by the shift to value-based care. A new service-based culture is taking root in healthcare, making satisfying the expectations of the consumer incredibly important. As patient expectations evolve, so too must the quality of services and the technology used to treat them.
Regarding consumer expectations, Chance Veasey, senior vice president of info and healthcare line of business with Charlotte, N.C.-based Velocity Technology Solutions, said, "The expectations of consumers have placed pressure on healthcare IT providers to deliver reliable services. This has driven organizations to coalesce and bring better technologies to bear."
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