There’s more consolidation in the hospital marketplace as institutions look to build scale and offer a fuller menu of healthcare services
Across the United States, multi-hospital health systems and stand-alone academic medical centers are looking for the right collaborations, alliances, and consolidation opportunities. This is happening because hospitals of all sizes and types recognize the need to be part of a comprehensive, integrated provider network in their region.
This is a trend that has ramifications for clinical laboratories and pathology groups that operate in the regions where these alliances and collaborations happen. That is because such collaborations can often change the competitive market for medical laboratory testing in the communities served by the partners in the alliance.
Pathologists and clinical laboratory managers should not be surprised to see today’s nontraditional healthcare delivery models becoming tomorrow’s industry norm
Big healthcare players are spending hundreds of millions of dollars to acquire unexpected targets. The biggest of these deals signal that healthcare consolidation and integration is a continuing trend. It is also a reminder to clinical laboratory managers and pathologists that the competitive healthcare marketplace is transforming at a steady pace.
Three such deals emphasize that the consolidation trend is alive and well:
- Dignity Health purchased U.S. Healthworks this summer. No terms were disclosed, but some analysts estimate that the purchase price may have been more than $500 million.
- DaVita Partners, a major player in dialysis services, is to purchase Healthcare Partners for $4.4 billion. Healthcare Partners operates 150 clinics in three states, plus has a national network of 8,300 independent physicians.
- United HealthGroup, Inc., in deal announced last fall, acquired Monarch Healthcare, an independent physician association with 2,300 doctors in Southern California. Purchase price was not announced.
Acquisitions Have Potential to Reshape Competitive Landscape (more…)
Poor rates of growth in hospital revenue and admissions is not good news for clinical laboratories
During 2010, not-for-profit hospitals showed the lowest rate of growth in at least two decades, according to a report released by Moody’s Investors Service, a holding of Moody’s Corporation (NYSE: MCO). This may be an early sign that hospital laboratories will soon be asked to work with leaner budgets during the coming year.
In its report, dated August 10, 2011, financial analysts at Moody’s predicted a mean growth rate of 4% in revenue for not-for-profit hospitals. There are multiple and complex factors contributing to the drop in mean revenue growth of not-for-profit hospitals. The report authors wrote that: