Have Mergers and Acquisitions Become a Norm in the Healthcare Industry?

Health Care

2017 has been no different than 2016 when it comes to mergers and acquisitions of hospitals. The healthcare sectors has already witnessed a string of M&As in the first three months of 2017 and the trend has certainly carried on with several more M&A announcement being made quite recently. For instance, the University of Kansas Health Systems revealed that it has agreed to jointly work with Ardent Health Services as well as operate St. Francis Hospital, which was bought from SCL Health. This partnership is expected to see an investment of around $50 million made in Topeka hospital in order to revive it.

In a similar story, Mississippi Baptist Health Systems is on the verge of sealing a deal with Memphis-based Baptist Memorial Health Care. According to an online source, Mount Sinai Health System and South Nassau Communities Hospital are in talks for a potential collaboration. Likewise, in an attempt to strengthen capacities, Los Angeles’ Torrance Memorial and Cedars-Sinai revealed plans of formally associating with each other. This association is expected to enable both the organization to offer better services and improve quality, access, and coordination between patients and care givers. If the deal materializes, it will create a springboard for many more of such collaborations in specialty and primary care. Further, it will allow greater access to leading-edge clinical trials as well as lead to well-organized allocation of resources between both the organizations.

In the healthcare sector acquisitions continue to be an important strategy for players who aim to reduce additional costs at the same time are focused on enhancing quality and increase service offerings.  Over the past couple months, the sector has witnessed some of the biggest mergers such as Lahey Health and Beth Israel Deaconess Medical Center’s merger and also Unversity of Pittsburgh Medical Center’s partnership with PinnacleHealth System. Healthcare system executives and hospitals are increasingly putting their faith on combining strengths to ensure a sustainable growth. M&As place medical and healthcare companies at an advantageous position, especially when the sector is enduring severe disruptions. Factors such as declining payments, innovative competitors, dropping inpatient count, and a wider base of price sensitive consumers have undoubtedly made difficult for players to survive without additional support. However, some hospitals still seem to be reluctant on choosing M&A to cut down on costs despite its proven outcomes.  For example St. Dominic Hospital continues to operate independently and is also a part of network that is led by physicians who are clinically integrated.

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