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.
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