The healthcare industry is “ripe for mergers and acquisitions”, according to a survey report from Bass, Berry & Sims PLC. The vast majority (86%) of respondents expect mergers and acquisitions to increase in the healthcare and life sciences. 
Recent headlines seem to confirm their prediction. Last month, Pennsylvania’s Holy Spirit Health System became an affiliate of Geisinger Health System, and, in Michigan, Beaumont Health System, Oakwood Healthcare and Botsford Hospital are negotiating a merger that would create the largest hospital system in the region, Beaumont Health. According to Bass, Berry & Sims PLC, the Affordable Care Act plays a key role in these mergers and acquisitions. Decreased reimbursement from Medicare and Medicaid has forced many hospitals to band together in order to offset the revenue decline. With many ACA initiatives aimed at reducing inpatient admissions and inpatient lengths of stays, many hospitals and healthcare organizations are also looking to expand their offerings into the outpatient setting, often acquiring an established outpatient provider in the community. Healthcare organizations are also partnering with urgent care clinics to offer a more cost effective solution to non-emergent patients who often present to the emergency department. The report also said there will likely be an increase in physician group consolidation, as mergers and acquisitions can be a good way for physician groups to update their business models and enhance their IT capabilities. The government’s requirement that physicians adopt electronic health records represents a significant financial investment, and many hospitals and health systems already have robust systems in place.
Recent headlines seem to confirm their prediction. Last month, Pennsylvania’s Holy Spirit Health System became an affiliate of Geisinger Health System, and, in Michigan, Beaumont Health System, Oakwood Healthcare and Botsford Hospital are negotiating a merger that would create the largest hospital system in the region, Beaumont Health. According to Bass, Berry & Sims PLC, the Affordable Care Act plays a key role in these mergers and acquisitions. Decreased reimbursement from Medicare and Medicaid has forced many hospitals to band together in order to offset the revenue decline. With many ACA initiatives aimed at reducing inpatient admissions and inpatient lengths of stays, many hospitals and healthcare organizations are also looking to expand their offerings into the outpatient setting, often acquiring an established outpatient provider in the community. Healthcare organizations are also partnering with urgent care clinics to offer a more cost effective solution to non-emergent patients who often present to the emergency department. The report also said there will likely be an increase in physician group consolidation, as mergers and acquisitions can be a good way for physician groups to update their business models and enhance their IT capabilities. The government’s requirement that physicians adopt electronic health records represents a significant financial investment, and many hospitals and health systems already have robust systems in place.
