Healthcare Financing Insights

Healthcare Trends: Continued Consolidation

Healthcare Trends: Continued Consolidation

4/20/2017

“Our experience with First American has been fantastic, they took the time to get to know us both as a company and as individuals – but it was still a very quick process.” 

-John Murray, Loretto Health and Rehab Center 

Consolidation continues as health systems respond to consumerization and changes in payer mix. Competing for patients and providers may require health systems to expand their footprint throughout a larger geographical area. Strategic acquisitions often involve acute care or critical access hospitals, specialists, ambulatory surgery centers, and long-term care facilities. Often they look to acquire acute care or critical access hospitals that are not able to sustain operations independently. 

By partnering with larger organizations, smaller hospital can refinance their debt and obtain help with their financial operations. In addition to financial backing to obtain better margins, smaller hospitals may also want the clinical benefit of being part of a larger organization. Additionally, they benefit from offering more services, adopting a reputable brand, and gaining additional expertise. 

For small hospitals that consider consolidating to get better costs of capital, there are other options that can help them remain independent. Alternatively, if an organization wants to be purchased but needs help with their balance sheet, there are options to put cash back on their books. Leasing and financing can help save cash in both these scenarios. 

COSTS ASSOCIATED WITH CONSOLIDATION: 

+ Updating medical equipment: Many times with consolidations, organizations will continue offering their specialized services, but to a wider population. To serve the wider population, they must upgrade or replace medical equipment to stay competitive in the industry and best serve their patients. 

+ Acquiring new technology: New technology costs are also common, to make sure technology equipment is compatible across the system and security needs are met. 

+ Renovating building interior: Interior renovations are common to keep a consistent look through out the system, adapt to new technology, and give patients the best possible experience. 

Does your hospital prefer to remain independent, or are you looking to be acquired? Or are you acquiring? 

 
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Contact us at financing@fahf.com to discuss. 


 
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