Big Business: Healthcare's a Gold Mine

Philip Betbeze, for HealthLeaders Media , January 14, 2011

Back to Stanley Black & Decker, which, incidentally, has had a healthcare solutions division since 2007 (who knew?). Anyway, it announced in December it will be spending $61.2 million to buy InfoLogix, a company that focuses on software and consulting solutions to help wring better prices on supplies for healthcare providers. For a Fortune 500 company, $61 million and change is a relative pittance, but it shows that even a company that has made its name in hand and power tools sees its future growth tied to a business in which it has historically had little presence.

At first glance, I didn't know if I wanted the same company that made the rechargeable hedge trimmer I got for Christmas handling my healthcare, but that's not really what they're doing. I'll bet they're experts at getting the waste out of their own production and parts sourcing. Healthcare could use a dose of that scrutiny. 

And that's the bottom line. Companies that have long paid through the nose for healthcare costs that they thought were outrageously out of line with the rate of inflation probably figured there was some expertise that was lacking in the business, and that there was no reason they couldn't provide it. After a little thinking, I agree with them.

Stanley is hardly alone. Things are moving fast in healthcare, and the big money is flowing. As I wrote a couple of weeks ago, Community Health Systems is very interested in buying Tenet, though their offering price seems a little low, and a recent survey by Pepperdine University shows that private equity investments in healthcare will take off significantly in 2011.

It might seem strange that in a time where people are cutting back on healthcare expenditures because more is coming out of their own pockets, companies are itching to get in, but I'd follow the money in this case. It's usually right.

Philip Betbeze is senior leadership editor with HealthLeaders Media.

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