M&A Activity Raises Concern Over Future of Traditional Hospital Operations

According to Morgan Stanley, the U.S. health care M&A market began 2018 with almost $39 billion worth of deals announced in January – the strongest start in over a decade. The recent rise in U.S. healthcare sector mergers and acquisitions, coupled with the pressures of more big tech companies entering the digital health space, is raising concerns around traditional hospitals and health care systems. They are experiencing increasing stress on their operations and patient care delivery, due to scaling and capacity issues with their IT systems.

Hospitals and health care systems are acquiring each other for a range of reasons, including tightening profit margins, achieving new economies of scale and a push for value-based care. With recent announcements of large national and regional health care systems and hospitals merging, such as Mercy Health and Bon Secours, the potential for IT system disruptions impacting everything from hospital operations to appointment scheduling to patient billing could be on the rise.

Additionally, as new health care-delivery entrants with a tech focus such as Apple, Amazon and Google gain market clout, traditional health care systems and hospitals face pressure to remain competitive. These new global digital health delivery entrants are predicted to generate $536.6 billion by the end of 2025 from $196.3 billion in 2017, growing at an average of 13.4 percent per year, according to a report by Transparency Market Research (TMR).

As traditional health care systems continue to merge, the fear is that a disparate patchwork of IT systems will emerge, vulnerable to competition from digital health companies who can deliver care and treatment directly to patients more efficiently.

“The consolidation and acquisition of U.S. health care providers may result in their IT systems becoming weakened to support delivery of patient care, and the tech giants swiftly moving in to fill the gap,” said Intelenet Global Services U.S. Healthcare Services Sector Lead Bill Anderson. “Providers need to keep pace to avoid being left behind.”

“To ensure seamless integration, health care providers can use technology-enabled systems to integrate various streams of medical data to create a more efficient work flow process,” adds Anderson. “This will also allow increased transparency for different medical professionals to have access, allowing for more informed decision making and collation of consumer data.”

Furthermore, according to Anderson, the adoption of technology-enabled systems will equip decision-makers within the health care sector with the tools to revamp their clinical operating models that hold their data.

“This will allow them to deliver scalable, efficient, and high-quality patient care while reducing operational costs,” he said.