The current rise in mergers and acquisitions amongst physician practices and healthcare systems is undeniable. What used to be a booming industry in the 1990s fell prey to the recession. However, healthcare systems are now willing to pay more and the ones with a lot of capital are buying hospitals, medical facilities, and multispecialty groups led by physicians on top of single practices. For now, despite uncertainties, healthcare companies are taking advantage of the current economic climate and making acquisitions to maximize opportunities for growth.
According to experts, the Affordable Care Act (ACA) and other market forces are driving the boost in activity. Nevertheless, many opine that because of the mounting pressure in private practice these days that it is inevitable that physicians will agree to acquisition offers from multi-hospital systems. Meanwhile, another motivation for large healthcare companies in acquiring medical practices is insurance related in that they attain a stronger bargaining position, according to a health policy expert from UC Berkeley's School of Public Health.
A recent study showed that 10% of community hospitals in the US has already been merged or acquired, with a marked increase in activity from 2011 to 2012. According to the American Hospital Association one of the benefits of this trend is the retention of vital services. There is also an increase in efficiency by which the medical needs of the community are delivered. In addition, the ties of the merged institutions are strengthened, as well as the ties of healthcare institutions to individual medical practitioners.
However, observers are pointing out one huge disadvantage of the current trend of increase in mergers and acquisitions in the health care delivery system in the United States. As a result of this trend of consolidating medical practices and healthcare facilities, patient care costs are reportedly increasing. The parameters that incur high costs are inpatient hospital admissions, diagnostic procedures, medicines, and other types of medical care received by patients. A study demonstrated that the expenditure in merger facilities are almost 20% higher than incurred in physician owned organizations. Concerted efforts at improving the coordination and quality of the provision of patient care require the biggest budgets. This observation is founded on the fact that healthcare facilities are indeed very complex institutions to maintain.
Nevertheless, when healthcare organizations and private practitioners work together they are able to provide better patient care. Their combined resources offer patients with more advanced facilities when compared to traditional models. One of the objectives of merging is to reduce cost while providing high quality services. Perhaps in time a balance will be attained.
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