HEALTHCARE NEWS FLASH July 16, 2014
Table of Contents Sales & Marketing ................................................................................................................. 3 FINANCE ................................................................................................................................ 6 Technology ............................................................................................................................ 9 Strategy .............................................................................................................................. 13
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Sales & Marketing Lahey Health, Winchester Hospital Make Partnership Official July 09, 2014 | Becker’s Hospital Review http://www.beckershospitalreview.com/hospital-transactions-and-valuation/lahey-healthwinchester-hospital-make-partnership-official.html Burlington, Mass.-based Lahey Health and Winchester (Mass.) Hospital have made their partnership official after an extensive review of the proposed affiliation by the Massachusetts Health Policy Commission. Lahey signed a letter of intent last June to affiliate with Winchester Hospital, and the two organizations reached a formal agreement in September. Last December, the Health Policy Commission announced it would conduct a cost and market impact study of the proposed affiliation of Lahey and Winchester Hospital. The commission had two major concerns with the proposed partnership. The first was that the affiliation would allow the two organizations to raise prices and ask for higher reimbursement from private health insurers. Second, the commission was concerned Lahey could drive up medical spending by adding facility fees to the hospital’s service bills. After review, the Health Policy Commission voted to approve the affiliation agreement and recognized that Lahey and Winchester Hospital had demonstrated the ability to ensure care is delivered in the most cost-effective setting. Under the agreement, which is not a full-scale merger or acquisition, 229-bed Winchester Hospital has joined Lahey as part of a shared governance model. “We are thrilled to officially welcome Winchester Hospital into the Lahey Health family,” said Howard Grant, MD, president and CEO of Lahey Health, in a news release. “Together we will deliver on our commitment to provide greater value, higher-quality care and improved programs and services to the thousands of area residents who rely on us for their healthcare needs.”
Mercy Memorial Health System to Join ProMedica July 09, 2014 | Becker’s Hospital Review http://www.beckershospitalreview.com/hospital-transactions-and-valuation/mercy-memorialhealth-system-to-join-promedica.html Mercy Memorial Hospital System in Monroe, Mich., a 238-bed nonprofit community hospital, has signed a letter of intent to join Toledo, Ohio-based ProMedica.
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MMHS and ProMedica will now begin a due diligence period, which could take several months to complete. Once that is finished, the board of trustees for each organization will have to approve the agreement, and the hospitals would enter into an exclusive negotiation period to further refine the agreement. “The trustees unanimously determined that ProMedica best met the board’s objectives to expand services and also to increase access to high quality healthcare in the Monroe region,” said Donald Spencer, MD, chairman of MMHS’ board, in a news release. MMHS will maintain a board of trustees after it becomes a member of ProMedica.
Columbia Memorial Hospital, Albany Medical Center to Form Alliance July 09, 2014 | Becker’s Hospital Review http://www.beckershospitalreview.com/hospital-transactions-and-valuation/columbia-memorialhospital-albany-medical-center-to-form-alliance.html Columbia Memorial Hospital in Hudson, N.Y., and Albany (N.Y.) Medical Center have begun working toward a strategic affiliation. The alliance would help the hospitals better coordinate clinical services, develop care integration practices and identify operational efficiencies. The governing boards, medical staffs, other employees and fundraising arms for both hospitals would remain separate under the affiliation, according to a news release. Leaders from both hospitals have identified healthcare reform as the driver of their decision to form an alliance. “This move allows us to explore how we can work together with Albany Med to deliver better coordinated patient care and improved access to specialty services,” Columbia Memorial President and CEO Jay P. Cahalan said in the release. “As the healthcare landscape changes, virtually all providers will need to build stronger alliances with industry partners to meet community healthcare needs and to achieve operational efficiencies. These formal discussions demonstrate our proactive approach to addressing the changes ahead.” The hospital boards are conducting a due diligence process to assess a possible affiliation and determine what matters need outside approval. This process is expected to take several months, according to the release.
San Gorgonio Memorial Hospital, Loma Linda University Health Care to Affiliate July 08, 2014 | Becker’s Hospital Review http://www.beckershospitalreview.com/hospital-transactions-and-valuation/san-gorgoniomemorial-hospital-loma-linda-university-health-care-to-affiliate.html San Gorgonio Memorial Hospital, a nonprofit hospital in Banning, Calif., has entered into exclusive talks with Loma Linda (Calif.) University Health Care concerning an affiliation, according to a report from The Press Enterprise.
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Jerilynn Kaibel, chairwoman of the SGMH board, told the Enterprise the hospital wants to reach an agreement that would involve the health system taking on a long-term lease to operate the hospital. She said San Gorgonio Memorial Healthcare District voters would need to approve the arrangement, which would not involve the sale of the hospital, according to the report. Earlier this year, the hospital hired MDS Consulting to evaluate potential affiliation partners. SGMH officials said last year they wanted to affiliate with Loma Linda University Medical Center but backpedaled on that decision in favor of conducting a broader search.
Georgia Hospitals, Health Systems to Form Partnership July 02, 2014 | Becker’s Hospital Review http://www.beckershospitalreview.com/hospital-transactions-and-valuation/georgia-hospitalshealth-systems-to-form-partnership.html Oconee Regional Health Systems and Oconee Regional Medical Center, both located in Midgeville, Ga., have agreed to partner with Central Georgia Health System and The Medical Center of Central Georgia in Macon. Through the partnership, the healthcare organizations aim to improve the value of healthcare, provide the community with joint service-focused quality and increased service offerings in Midgeville, according to a news release. “This partnership will allow our health system to keep its identity intact while greatly enhancing the patient-focused healthcare we have provided our local residents for so many years,” said Jean Aycock, president and CEO of ORHS and ORMC, in the release. “Central Georgia Health System and The Medical Center of Central Georgia have excellent reputations, and their leadership and added resources will result in greater opportunities for local healthcare.”
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FINANCE Moody’s Affirms Atlantic Health System’s ‘A1’ Rating, Outlook Stable July 15, 2014 | Becker’s Hospital Review http://www.beckershospitalreview.com/finance/moody-s-affirms-atlantic-health-system-s-a1rating-outlook-stable.html Moody’s Investors Service has affirmed the “A1” rating for $459 million of bonds issued to Morristown, N.J.-based Atlantic Health System, a four-hospital system, by the New Jersey Health Care Facilities Financing Authority. The affirmation of AHS’s rating was based on its ongoing improvement in balance sheet metrics, growth of the organization and financial performance stability. AHS is the market leader in northern New Jersey in its primary service area. Admissions were up 3 percent in 2013, and outpatient visits to the health system’s facilities also grew by 15 percent. The affirmation of AHS’ stable outlook reflects the expectation that the system will continue to demonstrate stable operating cash flow margins and maintain liquidity and balance sheet metrics in 2014.
Moody’s Affirms Crittenton Hospital Medical Center’s ‘Baa3’ Rating, Outlook Negative July 15, 2014 | Becker’s Hospital Review http://www.beckershospitalreview.com/finance/moody-s-affirms-crittenton-hospital-medicalcenter-s-baa3-rating-outlook-negative.html Moody’s Investors Service has affirmed Rochester, Mich.-based Crittenton Hospital Medical Center’s “Baa3” bond rating on $105.5 million of outstanding bonds issued by the Michigan State Finance Authority. The affirmation of CHMC’s bond rating was based on a number of factors. CHMC showed improved performance in the first five months of 2014, which was driven by new senior management’s revenue enhancing and expense saving initiatives. Through the first five months of 2014, CHMC had a positive operating margin of 0.5 percent and an operating cash flow margin of 9.8 percent. The hospital also benefits from its demographically favorable service area and consistent market share, as it is the only hospital located in Rochester, Mich. CHMC also currently faces challenges, such as its position as a small stand-along hospital in the greater metro-Detroit market. The hospital has posted operating losses for the last four years.
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Fitch Affirms MedStar Health’s ‘A’ Rating, Outlook Stable July 14, 2014 | Becker’s Hospital Review http://www.beckershospitalreview.com/finance/fitch-affirms-medstar-health-s-a-rating-outlookstable.html Fitch Ratings has affirmed an “A” credit rating for MedStar Health, an integrated healthcare system composed of 10 hospitals. MedStar’s rating was based on a number of factors, such as its maintenance of a consistent level of profitability. The health system has operating margins of around 2 percent, which has allowed the MedStar to generate an average of $241 million in annual cash flow from its operations over the last four years. MedStar had total operating revenues of $4.2 billion in 2013. MedStar also has a strong market share, with more than 21 percent of the market share in its primary service area, which encompasses the cities of Baltimore and Washington D.C. and the 11 surrounding counties in Maryland.
Moody’s Affirms Children’s Hospital’s ‘Aa2’ Rating July 14, 2014 | Becker’s Hospital Review http://www.beckershospitalreview.com/finance/moody-s-affirms-children-s-hospital-s-aa2rating.html Moody’s Investors Service has affirmed Boston Children’s Hospital’s “Aa2” rating and stable outlook. The hospital’s rating reflects its reputation as a premier pediatric academic medical center and teaching hospital for Harvard Medical School. The hospital had nearly $248 million of combined research grants and contracts and indirect cost recovery in 2013. The hospital also has a strong balance sheet, positive margins and a very strong market share in the Boston area. The hospital’s stable outlook was based on the expectation that the hospital will maintain its reputation for pediatric clinical care and research activity.
Healthcare spending up, but so are jobs July 14, 2014 | Fierce Health Finance http://www.fiercehealthfinance.com/story/healthcare-spending-so-are-jobs/2014-07-14 Healthcare prices are on the rise again, but so are the number of people employed in the sector. That’s the conclusion of the most recent report by the Altarum Institute’s Center for Sustainable Health Spending.
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Healthcare prices rose 1.8 percent during the month of May, significantly higher than the 12-month moving average of 1.3 percent, according to Altarum. Hospital prices grew 2.1 percent during the month, while pharmaceutical spending rose 3.6 percent. However, physician and home healthcare prices both grew less than 1 percent. The overall rise in prices had been forecast by a variety of healthcare economists, particularly after the implementation of the Affordable Care late last year led to millions more Americans having steady health insurance. Another recent Altarum report indicated spending grew by 7.7 percent in March. But whether such increases will become consistent remains to be seen. Healthcare spending is currently growing at a 4 percent annual rate--much slower than the March figure--while utilization of services is growing 2.2 percent per year. Hospital utilization is currently growing at a 2.1 percent rate. “The rise in healthcare prices and employment during the second quarter suggests that spending will rebound,” said Charles Roehrig, director of the center, in an announcement. “However, we are still not detecting signs of the increases in utilization expected from expanded coverage under the Affordable Care Act and suspect the effect may be more incremental and gradual than first expected.” Meanwhile, jobs in the healthcare sector grew by 21,000 in June, a far greater clip than in past months, according to Altarum. In the first half of the year, jobs only grew by a net of 2,500 a month on average. Most of the positions were in ambulatory care, which added 13,100 jobs. Hospitals added just 2,200 jobs overall. But over the past year, job growth in healthcare has been relatively anemic. The sector added a total of 225,100, a 1.6 percent increase. By contrast, the overall non-healthcare U.S. labor market grew by 1.9 percent.
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Technology Tenet, Humana Launch ACO for Medicare Advantage Members July 15, 2014 | Becker’s Hospital Review http://www.beckershospitalreview.com/accountable-care-organizations/tenet-humana-launchaco-for-medicare-advantage-members.html Tenet Healthcare Corp., based in Dallas, and Louisville, Ky.-based Humana have signed a new multiyear contract and are launching an accountable care organization for Humana’s Medicare Advantage members in Atlanta. Under the contract, Humana members with commercial plans will continue to have in-network access to Tenet’s hospitals, outpatient centers and physicians. In addition, patients in five cities who are enrolled in Humana’s health insurance exchange plans will gain in-network access to Tenet’s facilities. The five cities are: Atlanta; Birmingham, Ala.; Houston; Memphis, Tenn.; and San Antonio, according to a news release. Humana and Tenet are also launching an ACO for Humana’s Medicare Advantage members in Atlanta. The organizations seek to enhance the quality of care for this population by improving care coordination. “We are committed to providing our members with more choices for better healthcare, and this expanded agreement does just that,” said Paul Davis, vice president of national contracting for Humana, in the release.
E-prescribing makes huge gains July 15, 2014 | Healthcare IT News http://www.healthcareitnews.com/news/e-prescribing-makes-huge-gains The prevalence of prescribing via electronic health records has skyrocketed over the past decade. Almost unheard of in 2006, nowadays more than 70 percent of physicians e-prescribe, according to new data from the Office of the National Coordinator for Health IT. Thanks in large part to two federal initiatives – first the Medicare Improvements for Patients and Providers Act of 2008, or MIPPA, and later meaningful use – e-prescribing has made huge gains through the first quarter of 2014, the report from ONC’s Meghan Hufstader Gabriel and Matthew Swain shows. Using data from Surescripts, the nation’s largest e-prescription network, the study shows a steep and steady climb for eRx – from 7 percent in 2008, when MIPPA was passed, to 24 percent in 2011, when meaningful kicked off, to 70 percent today.
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The growth has occurred nationwide, Gabriel and Swain point out. At the end of 2008, only one state, Massachusetts, had physicians prescribing via EHR on the Surescripts network at a rate that exceeded 20 percent. Just over two years later, in January 2011, 35 states could boast e-prescribing rates above 20 percent, with five states above 40 percent. By this past spring, those numbers were even higher, with every state above 40 percent and 28 states exceeding 70 percent of their physicians using EHRs to prescribe. Minnesota, which stood at 100 percent; Iowa, at 95 percent; and Massachusetts, at 94 percent, had the highest rate of physicians e-prescribing as of April 2014. Beyond the doctor’s office, e-prescribing has made even bigger gains in pharmacies – in the same period, the percentage of community pharmacies nationwide wired to accept prescriptions via EHR has reached 96 percent. Maine and Delaware are the top two states, with 99 percent each. Meanwhile the number of new and renewal prescriptions sent electronically has increased a whopping 14-fold, according to the ONC report. In 2008, just 4 percent of new and renewal prescriptions were sent electronically. By 2013, that number was 57 percent. Interestingly, the four states with highest volume of prescriptions – California, Texas, New York and Florida – are all below the national average, Gabriel and Swain show, which “presents an opportunity to increase the proportion of new and renewals sent electronically among these states.”
EHR payouts climb near $25 billion July 11, 2014 | Healthcare IT News http://www.healthcareitnews.com/news/ehr-payouts-climb-near-25-billion Electronic health records incentive payments to eligible hospitals and providers have continued their upward trend, with the Centers for Medicare and Medicaid Services paying out a whopping $24.4 billion to date. That rose steadily from June’s $23.7 billion, and May’s $22.9 billion. Also on the rise are the numbers of participating Medicare eligible providers, which climbed 991 to 317,294, Medicaid EP’s increased 1,249 to 157,890 and hospitals inched up by 10 to 4,737. Most of the attention and subsequent questioning during the HIT Policy Committee meeting on Tuesday focused on the finding that just eight eligible hospitals and fewer than 1,000 have attested to Stage 2 of meaningful use. Elisabeth Myers of CMS’ office of e-health standards and services cautioned that it would be “dangerous” to draw conclusions from such a small data set, since the only EPs and EHs that were even in the running to attest to Stage 2 by now were those providers that had installed a 2014certified EHR by Jan. 1 of this year, conducted a calendar-quarter reporting period by April 1, and attested by June 30.
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Delving into the demographics shows that there aren’t any major differences across various hospital and medical group size; however urban professionals are slightly overrepresented this time, said Jennifer King, chief of research at ONC’s office of planning, evaluation and analysis. In terms of organization size, King added, ONC sees a good proportion of smaller practices in the Stage 1 cohort that would be able to go to Stage 2.
CPOE market to reach $1.2 billion by 2018 July 08, 2014 | Fierce Health IT http://www.fiercehealthit.com/story/cpoe-market-reach-12-billion-2018/2014-07-08 Over the next five years, the computerized physician order entry market is set to grow from $938.4 million to more than $1.2 billion, a growth of 6.5 percent, according to a report from research firm MicroMarket Monitor. The growth of the market, in part, is because of extensive use of CPOE systems by emergency healthcare service providers, hospitals, nurses and office-based physicians, according to an announcement on the report. Providers use the systems for a smoother, more efficient workflow. North America has the biggest CPOE market, according to the authors of the report. They say it is expected to grow from $552.9 million in 2013 to $771.2 million in 2018. Key players in the U.S. market include Allscripts, athenahealth, Cerner Corp., Carestream Health Inc. and Epic Systems, among others. However, the authors add that the cost and time involved in installing the systems can have a negative impact on market growth. A major deterrent to adoption of CPOE systems is the cost. Displaying how much a test costs caused a 9 percent reduction in the number of tests ordered, according to a study published in JAMA Internal Medicine. As the market grows, there will be room for changes and how it can be used in practice. The system should be defined by improvements to patient safety, according to Chris Snyder, chief medical information officer at Peninsula Regional Medical Center. Snyder said, as FierceHealthIT recently reported, that although adoption of the system is challenging, it can open up doors for stronger governance structures. The CPOE systems have already had a positive impact--their use for electronic prescribing averted 17.4 million medication errors in the United States in a single year, according to a study in the Journal of the American Medical Informatics Association.
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Epic, Cerner garner higher percentage of hospital contracts July 02, 2014 | Fierce EMR http://www.fierceemr.com/story/epic-cerner-garner-higher-percentage-hospital-contracts/201407-02 Electronic health record giants Epic and Cerner are edging out other vendors when it comes to volume of hospital contracts, according to a new report from Orem, Utah-based KLAS Research. The company’s study, “Clinical Market Share 2014: Competition Mounts as Markets Collide,” found that only Epic, Cerner and Meditech gained market share in 2013. Researchers had reviewed large and small hospitals’ EHR solutions, including those using Allscripts, CPSI, Healthland, McKesson, Medhost (HMS) and Siemens, as well as the aforementioned three. Epic and Cerner had the most “wins” or new contracts with both large and small hospitals. Epic also boasted a larger percentage of new customers; many of Cerner’s and Meditech’s new contracts were “add-ons” to their existing contracts. “EMR vendors that cater to smaller facilities are feeling the pinch and saw a decrease in wins across the board,” report author Colin Buckley said in a statement. “It is simply getting increasingly difficult for small-facility vendors to compete with their larger-facility counterparts.” The results on market share differ somewhat from reports about how well hospitals actually like their EHRs. One recent study found Allscripts the top ranked EHR vendor for large hospitals and academic medical centers, scoring best in seven of 18 indicators and displacing Epic, which held the top spot for the past three years. Cerner and McKesson also earned high scores in the large hospital market. And in yet another study, this one on the small hospital market, CPSI took top honors for the fourth year in a row; other top ranked vendors included Allscripts, Cerner, and Epic, as well as GE Healthcare.
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Strategy BlackBerry forges ahead in healthcare
July 15, 2014 | Healthcare IT News http://www.healthcareitnews.com/news/blackberry-forges-ahead-healthcare BlackBerry continues to expand further its scope in the healthcare arena after one of its subsidiaries unveiled a new clinical operating system for medical devices. QNX Software Systems, which was acquired by BlackBerry in 2010, today released its new operating system that is IEC 62304 compliant. With its sights set on alleviating the regulatory and financial burden for device manufacturers, the operating system supports both single core and multicore devices based on ARMv7 and Intel x86 processors. The OS also features application programming interface so that it’s compatible with other QNX operating systems, officials note. “When it comes to medical device software, the OS sets the tone: Unless it provides the architecture to enable reliable operation and a clear audit trail to substantiate claims about its dependability, the entire process of device approval can be put in jeopardy,” said Grant Courville, director of product management at QNX Software Systems, in a July 15 press statement. “By providing an OS that has been independently verified to comply with the IEC 62304 standard, we are helping manufacturers reduce the cost and effort of developing devices that require regulatory approval from agencies such as the FDA, MDD and MHRA.” This is far from BlackBerry’s first big move into the healthcare space. Just this April, the telecommunication behemoth announced it was financially backing cloud-based health IT company NantHealth, a startup spearheaded by billionaire healthcare mogul Patrick Soon-Shiong, MD.
CHS, Natchez Regional Medical Center Sign Definitive Agreement July 14, 2014 | Becker’s Hospital Review http://www.beckershospitalreview.com/hospital-transactions-and-valuation/chs-natchezregional-medical-center-sign-definitive-agreement.html Community Health Systems, based in Franklin, Tenn., and Natchez (Miss.) Regional Medical Center have signed a definitive agreement allowing CHS to acquire all of Natchez Regional’s assets. The Adams County Board of Supervisors unanimously approved the sale of 179-bed Natchez Regional to CHS last week. Under the agreement, CHS will pay $18 million in the sale — $10 million in cash up front and $8 million in prepaid city and Adams County ad valorem taxes. The sale comes after Natchez Regional filed for Chapter 9 bankruptcy in February. Natchez Regional CFO Charles Mock said liabilities of the hospital exceeded its assets by $3 million.
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Claims growth trends portend new spending challenges July 7, 2014 | Healthcare Payer News http://www.healthcarepayernews.com/content/claims-growth-trends-portend-new-spendingchallenges#.U8ZGFZSSxuM The growth of total U.S. medical costs is slowing down, but one segment is expanding fast enough to catch insurers by surprise. While U.S. healthcare spend trends are now just one or two percentage points above overall inflation, prescription drug costs are rising mroe quickly than hospitalization costs, according to a report by the S&P Dow Jones Indices. S&P’s Healthcare Claims Indices show that overall healthcare costs rose 3.5 percent in the 12 months that ended February 2014 — slower than the nearly 5 percent increase seen a year earlier, before the full Affordable Care Act took effect. Medical costs, for inpatient and outpatient hospitalization and professional services, rose 3.1 percent between February 2013 and February 2014. Notably, the report found, inpatient fee-forservice rose 2.6 percent, down from 4.3 percent in 2012-2013, and outpatient fee-for-service costs rose 4.9 percent, down from 6.3 percent. During most of 2013 and the first two months of 2014, prescription drugs rose 3.5 percent — two percent points higher than the rate of growth in 2012-2013 — at the same time that individual health plans were starting to grow in membership. “With the exception of prescription drugs, healthcare expenditures are growing more slowly than a year ago,” said David Blitzer, managing director and chairman of the S&P Dow Jones Indices, which analyzes claims data on 33 large health insurance companies and 60 million Americans. “The greater growth in prescription drug costs reflects a combination of higher prices for both generic and branded pharmaceuticals and shifting market shares between generic and branded.” Blitzer said that spending for large and small groups and administrative-only plans are at stable growth rates (about two to three percent), while individual plan claims are “most volatile,” especially at smaller plans. As of February, individual plan spending was growing at a rate of 7 percent, which is still below the spike of 9 percent seen in the summer of 2012, as new insurance regulations like the medical cost ratio took effect. The growth of individual costs slowed 2013, but the recent data seems to shows a jump in expenditures, which in the coming year especially may be driven in part by prescription drug spending for new individual exchange members. One of the biggest drivers of pharmaceutical spending is for speciality drugs, which could soon account for more than half of all drug costs, according to Alan Lotvin, MD, executive vice president of speciality pharmacy at CVS Caremark. Skeptical of the likelyhood of government price controls, Lotvin argues that insurers and benefit managers need to take more proactive approaches to making speciality drugs both more accessible and effective.
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Siskin Hospital Officially Acquires St. Barnabas Healthcare Center July 07, 2014 | Becker’s Hospital Review http://www.beckershospitalreview.com/hospital-transactions-and-valuation/siskin-hospitalofficially-acquires-st-barnabas-healthcare-center.html Chattanooga, Tenn.-based Siskin Hospital for Physical Rehabilitation has officially acquired St. Barnabas Healthcare Center, which is also headquartered in Chattanooga. Under the agreement, Siskin Hospital — a nonprofit rehabilitation hospital — will increase its bed count from 109 to 217, with the addition of 109 beds at St. Barnabas. Siskin Hospital will also add long-term care services at St. Barnabas. “The joining of St. Barnabas and Siskin Hospital is an important investment in our future,” said Carol Sim, president and CEO of Siskin Hospital, in a news release. “Patients and insurers are looking for more options for rehabilitation, mostly focused on how to ensure the highest level of recovery for the lowest cost, and the beds at St. Barnabas give us another option to offer them.”
Healthcare consolidation on the rise July 03, 2014 | Fierce Healthcare http://www.fiercehealthcare.com/story/healthcare-consolidation-rise/2014-07-03 Consolidation among hospitals and health IT companies will grow this year in the wake of the Affordable Care Act, according to a new survey report by Bass, Berry & Sims, published in association with Mergermarket. Healthcare organizations are the subsectors most likely to see an increase in acquisitions and mergers in 2014-2015, the report, “Healthcare & Life Sciences M&A Outlook,” finds. Eighty-six percent of healthcare and life services professionals expect mergers and acquisitions to increase in the industry, with capital needs and economies of scale as two major reasons for the consolidation. The healthcare industry is seeing “significant implications of the ACA take hold,” Angela Humphreys, a member of Bass, Berry & Sims and healthcare transactions attorney, told Brian Ahier, director of standards and government affairs at Medicity, in a LinkedIn post. “Reforms like these are pushing providers to do more, better, for less--which in turn drives them to consolidate to become stronger in this new healthcare climate,” she said. Some of the pressures from the ACA--such as finding ways to run more efficiently, coping with shifts in reimbursement policies and replacing depleting inpatient revenues--lead to hospital consolidation. In addition, 20 percent of the report’s respondents said that physician groups will be a top area of consolidation over the next year. Mergers can serve as a good avenue for groups trying to upgrade their business models, the report said.
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The report’s respondents also identified the need for IT support capabilities as a major driver for consolidations in the future. Technology in the healthcare industry is continually changing the way things are done, and with those changes come more regulations. One way healthcare providers can keep in line with new rules--such as the HITECH Act and Office of the National Coordinator of Health IT’s 10-year interoperability plan--is through acquisitions. And many healthcare providers have a long way to go when it comes to implementing interoperability, which means more acquisitions are likely.
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