M&A Forecast: 1 in 5 Hospitals to Realign Over Next Decade

Philip Betbeze, for HealthLeaders Media , January 25, 2013

And further, he predicted that up to 1,000 hospitals (that's around 20% of the number of hospitals in existence in the US) will be realigned or reaffiliated during that period of time. Given the pace of consolidation we've witnessed over the past few months, he may be underestimating those figures.

"The one caveat to that statement is uncertainty around what the posture of the feds will [adopt]  around consolidations," Ahlquist says. "However, there's some guidance from feds that the given margin pressures, we're talking now about survival."

Some hospitals and health systems will pursue these combinations from positions of strength and before they reach the point of doing deals only to ensure their survival. Part of that is because most acquirers won't be looking to your survival as the key to whether they decide to do a deal or not.

"The bottom line is that hospitals... standing alone... can't deliver quality of care that is appropriate and sufficient."

But mergers are not a panacea.

Outside the merger boom, hard work must take place on care solutions, Ahlquist says.

Another word for care solutions is so-called bundling, which is the subject of a lot of talk but not so much action outside of a few pilots and ad hoc arrangements between hospitals and health systems and employers, insurance companies and even Medicare.

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