Bloomberg.com came out with an online article yesterday, Hospital Mergers Loom as U.S. Overhaul Fails Centers.
“Failure to pass the health-care overhaul may accelerate a push by Community Health Systems Inc., Health Management Associates Inc. and LifePoint Hospitals Inc. to acquire facilities weakened by the recession,” wrote David Olmos.
“The nation’s largest publicly traded hospital chains are stalking medical centers that have been hurt by the cost of charity care and unpaid bills in a recession, and are no longer confident stalled health legislation will add 30 million newly insured customers, said Sheryl Skolnick, an analyst at CRT Capital Group LLC in Stamford, Connecticut,” the article continues.
Predictions of market consolidation have been the topic of various conference presentations and healthcare executive newsletter articles for the past year at least. And, market consolidation is one of the 5 trends that H.T. Klatzky has been including in industry overviews for our client CMO’s.
Healthcare strategists are predicting a market-altering level of health system consolidation across the nation during 2010-2011. Access to capital continues to be a prime motivator in order to provide large “multi-system systems” with the ability to invest in costly but essential IT infrastructure (read: electronic medical record), clinical technology and updates to worn physical plants. Profitability is still statistically linked to scale in supply chain efficiencies, as well as in clinical care management programs that can be implemented enterprise-wide.
The Business Week article focused on the activities of for-profit, publicly traded companies like Community Health Systems (CHS), Health Management, Inc., and LifePoint, Inc. Investment bankers quoted in the story predicted that targets would largely be nonprofit rural and urban hospitals in communities where privately insured people are few and where most of the hospital’s patients are covered by government health programs or who lack insurance.
Our prediction is that existing larger, multi-system hospitals who employee both primary care networks AND physician sub-specialists in key growth areas or who are pursuing creative physician practice agreements will be in the best position to see what the next year or two will bring.
- posted by Joanne Cirillo
