The healthcare consolidation industry continues to transform as a result of all healthcare reforms and other forces like merger and acquisition activity. According to Irving Levin Associates, the industry’s merger and acquisition activity increased by almost 20% in the third quarter of 2013 compared to the same quarter a year ago, with a total of 267 deals announced in the past three months.
“In 2014, the rate of healthcare provider mergers and acquisitions are projected to increase as there’s an intensified pressure to cut costs while still improving quality care”, says Steve Messinger, Managing Partner and Board Member of ECG Management Consultants, a leading strategic healthcare consulting firm.
Messinger identifies four healthcare transaction trends that will take center stage come 2014:
1. Pickier in acquiring organizations
Smaller hospitals and health systems with weak finances will more likely be rejected for acquisitions by healthcare organizations. Messinger says, “Organizations are taking a much harder look at the financial strength of the organizations they seek to acquire. The market is getting a little more fickle in terms of the sensitivity around the quality of the assets that are out on the market.”
2. Non-ownership collaborative arrangements
Hospitals and health systems are realizing the benefits of mergers without giving up their governance. We will be seeing more providers looking to achieve greater economies of scale and negotiating power through non-ownership collaborative arrangements. One example of this trend is the recent formation of AllSpire Health Partners, a clinical quality alliance of 25 hospitals from seven Northeast health systems.
3. More hospital acquisition of physicians and medical groups
Hospitals will keep on acquiring large medical groups and independent physicians. According to Messinger, “Compensation arrangements with physicians are becoming untenable and unstable. We’re seeing a lot of organizations rethink how they work with physicians. And the large clinical organizations are starting to look at hospital partnerships in a much more forthright way.”
4. Ambiguity in Antitrust enforcement
Antitrust enforcement concerns will be another trend for hospitals and health systems looking to join forces next year. Providers will struggle to work with others to the degree necessary to coordinate care and meet healthcare reform objectives without committing antitrust violations. “Ambiguity is only going to be increasing over the next couple years,” says Messinger. “The market is forcing consolidation…and yet the antitrust enforcement and guidance around fair market value, they have not evolved as quickly.” Healthcare providers need to get comfortable with the uncertainty and keep seeking legal advice.
Outsourcing Healthcare Transaction Processing
Changes are essential for the healthcare industry to be at par with the demands of the market. The rise in acquisitions and partnerships keep the healthcare industry healthy. It is highly-important for companies in the healthcare industry to stay informed of improvements or changes in the industry to know which measures are needed to be taken for quality service.
Healthcare outsourcing companies like Infinit-O are always keeping up with the evolving market demands. We take new measures to stay ahead of, or keep up with the tight competition. Infinit-O provides reliable and cost-effective healthcare processes so you can once again focus on providing quality healthcare without worrying about the administrative tasks that go along with it.
Infinit-O’s healthcare outsourcing services include medical claims processing, which can be difficult even for the most established healthcare providers. We understand the daily headaches you have to go through to complete processing for each transaction. We provide technology and resources to help you eliminate processing frustrations and ensure your business growth and success.