Thursday, July 16, 2015

Snapshot of Drivers of Healthcare Mergers and Acquisitions Activities

Healthcare Mergers and Acquisitions activity and resulting industry consolidation is surging.  Why?

Below is a snapshot of the drivers of healthcare mergers and acquisitions activities, particularly real-estate based services.
  • Low Interest Rates and Availability of Capital
  • Favorable Demographics/Need-based Industry
  • Cost Pressures as Public & Private Insurers Increasingly Contain or Reduce Provider Reimbursements:   - Network Formation/Bundled Payments Model Rewards Integrated Healthcare Systems that Lower Costs and Improve Quality
  • Fragmented Industry Ripe for Consolidation:  - Consolidation Increases Revenues, Economies, Efficiencies and thus Profitability; Diversifies Revenue Mix & Strengthens Balance Sheet (lowers borrowing costs).   Single-site, Standalone facilities cannot attain the economies of scale necessary to survive and compete.
  • Ability to Leverage the Real Estate – (enables low blended cost of capital and high collateralization)
  • High Regulatory, Reimbursement & IT Compliance Hurdles Cause Consolidation
  • Sellers’ Market Conditions
  • Mergers and Acquisitions is Contagious

2 comments:

  1. Thanks for above information ,i am very much helped by these mergers and acquisitions business strategies, i know other will definately find cure of thier problems regarding this.

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