The for-profit giants are assessing whether they are spending resources in the right markets. "Organizations like HCA and HMA are stepping back and re-evaluating," says Reiboldt. "They are assessing where they need to be long-term and if there's anything they can do to enhance margin. Volume is critical but there's also only so much volume that [these pairings] can achieve. You still have to be efficient with the capital. So they'll do smarter deals in 2012, but there will still be a few high-profile ones."
M&A in 2012 will depend not only on the need to integrate but also access to capital, which remains challenging for some facilities. Which prompts the question: could healthcare see further investment by private equity firms? Reiboldt thinks it's unlikely.
Private equity investment was a trend in several merger and acquisition surveys in 2009 and 2010. Since then, Reiboldt says he's heard of numerous private equity sponsors interested in healthcare—but once these firms explore the landscape, they find "there's a significant amount of work, resources, expertise and focus involved." He adds that private equity firms that have pursued healthcare opportunities have opted to back experienced, innovative management teams rather than take control of the operation.
"[In 2012] everyone involved in these transactions will need to look at the synergistic value of these ventures. You may not make money on a [medical practice's] volume, for instance, but the more aligned the organizations are, the more likely the volume is to get pushed [to the other organization]," explains Reiboldt.
As you consider your partnership needs and M&A plans in 2012, don't shy away from unlikely pairings. They could be surprisingly complementary.