Martin Henrichs from UBS discusses the rapid progress of M&A transactions and the key drivers for hospital and lab consolidation.
Consolidation – Key drivers and approaches for healthcare providers:
1. Why do we need to talk about consolidation?
Consolidation, the merger and acquisition (M&A) of different payers or providers, continues to be highly prevalent and fueled by powerful global trends in healthcare. These trends include a rise in global healthcare spending due to an aging population; the growing incidence of chronic diseases and comorbidities; the rapid scientific and technological progress; and increasing patient expectations. As a result, both payers and providers are in a race to grow their business through consolidation.
2. What are the benefits of consolidation to payers and providers?
Consolidation provides various, clinical, operational and financial benefits to payers and providers. On the one hand, both parties strive to increase their size to reach the critical mass which, for example, strengthens their negotiating position. On the other, M&A promises economies of scale and efficiency gains, which gives growing enterprises opportunities to improve profitability and leverage investments in modern technology, modern hospital architecture, and new delivery concepts.
3. How can providers make themselves essential in a consolidating market?
Consolidation activities are becoming increasingly common and may even gain momentum in the years ahead. There is a need for action, especially among smaller and less specialized providers. They can prepare by differentiating, acquiring, or joining forces with other health networks. While mergers frequently involve a considerable integration of expenditures, collaborations and strategic partnerships can also lead to desired results.
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