Hospital M&A Activity: Continued Consolidation

August 3rd, 2017

As we see occurring in many other market segments, the healthcare industry, and hospital segment specifically, is consolidating. But is this trend simply driven by the uncertainty in the healthcare market due to, among other things, the Affordable Care Act (ACA) or the continual failure – thus far – by a GOP-led Congress and the Trump administration to successfully repeal (and replace) the ACA? Although a more stringent regulatory climate tends to convey tougher business operations and, subsequently, industry consolidation, hospital segment data appear to suggest that this may not actually be the case – at least in this market. These data suggest both positive and negative outcomes for accounts receivable management (ARM) companies servicing the healthcare industry, but considering the size of U.S. healthcare and the hospital segment, continual consolidation shouldn’t be particularly harmful.

As we can see in the below graph titled Hospital M&A Activity, there’s been a resurgence in the number of hospital M&A deals since the Great Recession. Specifically, the number of annual deals grew about 11.9%, on average, each year since 2009, increasing from 52 to 102 in 2015. However, the overall picture reveals that perhaps the number of deals are simply returning to the levels experienced before the rapid – and potentially overstated – economic expansion of the early and mid-2000s before the ensuing Great Recession. The number of hospital M&A deals dropped nearly 23%, on average, each year since 1998, falling from 139 to just 38 in 2003. The most extreme suggestion from these data is that the ACA and greater operational expenses, among other things, are leading toward more rapid consolidation. However, as alluded to previously, the most likely scenario is that companies have been slowly growing accustomed to providing healthcare in the “new” economy since the Great Recession and M&A activity is receding to “normal” levels.

Additionally, there were, in fact, fewer hospitals in 2014 (most up-to-date available data) than in 1994, the first observed year of data. But how much has consolidation actually impacted the hospital segment? Join KG Prime to access this full article and learn more about the healthcare industry and the ARM industry.

Comments are closed.


How will the Growing Peer-to-Peer Lending Industry Impact the ARM Industry?

October 24, 2017

Who do small-business owners turn to when they don't have enough internal capital but want to invest? Traditional commercial banks, or peer-to-peer lenders?....

» see this post    » all posts

The Impacts of the Recent Hurricanes on the Economy and the ARM Industry

October 19, 2017

In the past few months, the U.S. was devastated by a series of hurricanes. Do natural disasters have long- or short-term affects the accounts receivable management industry? ....

» see this post    » all posts

Are Effective Strategic Planning Resources Available for ARM Companies?

October 17, 2017

It's that time of year again. Owner-operators and executives are getting together to set plans for 2018. Are there any effective strategic planning resources available to the ARM industry?....

» see this post    » all posts


Kaulkin Ginsberg Company Releases Middle Market ARM Benchmarking Report

October 12, 2017

Kaulkin Ginsberg Company announced it's release of the middle-market ARM Benchmarking Report available to KG Prime Universal members.....

» see more

Kaulkin Ginsberg Company to Release Exclusive and Comprehensive Index

September 13, 2017

Kaulkin Ginsberg Company will release an exclusive and comprehensive index detailing the economy's effect on the ARM industry. ....

» see more

The Kaulkin Ginsberg Fall 2017 Fellowship Semester Begins

September 12, 2017

Kaulkin Ginsberg Company, in conjunction with the University of Maryland, College Park's Department of Economics, began its fall 2017 fellowship semester earlier this month for the fourth year.....

» see more