News and Insights
To Remain Independent or Not? That is the Question
Provider consolidation has been accelerating at a rapid clip in the healthcare industry in recent years. In fact, the pace has increased 14% on average in each of the last seven years, impacting all delivery system types.1 “Mega-mergers” involving combined assets of 2B or more are growing more frequent, too. These have typically averaged four per year, but by mid-2017 that milestone is already history. This trend is likely to continue, by some estimates cutting the number of independent health systems in half or more over the next 10 years.
Numerous factors fuel this consolidation, including reduced reimbursement and the concurrent linkage of payment and outcomes, payer consolidation, the growing administrative burden of regulation (spurred by PPACA, MACRA, etc.), and the resulting pressure on operating margins. For many, M&A offers a path to greater scale and price leverage with suppliers and payers. However, it’s important to note that M&A is not a panacea. Consolidation comes with its own challenges and tradeoffs, and there is no guarantee of success.Read More
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