In a recent press release, Loyale Healthcare, a leading healthcare financial technology company, examines mergers and acquisitions in healthcare – don’t forget about the patient.
Consolidation in the healthcare industry continues at a record pace. But are these deals destined for success? Whether driven by a desire to operate more efficiently or to expand the brand and business, healthcare providers must place patients at the center of their M&A planning and execution
Merger and acquisition activity in the healthcare industry was up 13 percent in 2017 compared to the previous year, an all-time high in the industry. 2018 looks like another record year with the sector reporting $156 billion in first-quarter deals alone, according to Bloomberg.
Traditionally, mergers and acquisitions have been limited to hospital consolidation driven by costs and empty beds. But another trend has developed. This recent wave of consolidation is characterized by a more strategic, consumer-focused perspective. This merger strategy recognizes the probability that patient choice will be a determining factor for success in the future of healthcare providers.
The traditional healthcare merger between hospitals and health systems is referred to as a horizontal merger. Many consumer-driven mergers are referred to as vertical mergers, because they include participants from a variety of industry sectors, including pharma, insurance companies, investors, tech companies and others.
Both horizontal and vertical mergers are severely challenged by one fundamental obstacle – the propensity to lose patient revenue and loyalty as the merger distracts operational and financial staff, creating an opening for competitors to steal patients.
The question is… will either of these mergers improve services to the patient and will they be financially successful?