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What is the Future of Healthcare Mergers and Acquisitions?

By Jacqueline DiChiara

- As healthcare mergers and acquisitions reach a record high, will financial consequences follow? The roles of critical access hospitals (CAHs) continue to change as more are closing their doors due to financial strain.

mergers and acquisitions

There is solid debate among whether or not mergers and acquisitions lead to greater cost efficiency, as EHRIntelligence.com reported. To more clearly comprehend the overarching role of mergers and acquisitions and their link to CAH’s, RevCycleIntelligence.com spoke with Stuart Lindeman, President and CEO of Mission Health Communities.

RCI.com: What is your primary upcoming focus when it comes to mergers and acquisitions?

Stuart Lindeman: We are really focusing on where we can build a large enough presence to have an effect on the market. I would unlikely buy one nursing home or one pharmacy. But if I could go to the state of Kansas and buy twenty, it makes sense for me to go there. There are very few states we won't look at, as long as I can build a cluster, as long as I can build a presence there and be able to build my team for that state, region, or division.

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  • Acquisitions are a growing market.  People are living longer and there are more seniors. The ACA and the federal government push the least expensive place they can provide healthcare – in a post-acute area, a rehab center, or a nursing home. We will continue to see strong growth over the next five to ten years, and strong acquisitions.

    RCI.com: What are your strategies for increasing revenue?

    SL: The government is pushing costs down, and I think that's okay. The strong providers and the strong companies will do well in that.  We’ve got to become more efficient, and we can still grow our revenue.  Just because reimbursement is being reduced doesn't mean we won't continue to drive our revenues up.

    A company just looking at their bottom line is a dying company. We really have to grow the top line. I'm looking at 50 different acquisitions over a couple of months, because that's the way our business will grow. I know what kinds of margin I can drive out of this business, and I just have to keep increasing my revenue.

    As we see increased mergers and acquisitions, initially costs are up, but over time, as we are able to integrate them into our system, actually the costs are coming down. Initially, costs will be higher because you're taking over a business. After putting systems and processes in place, we see expenses get more normalized and revenue starts to increase. 

    RCI.com: What future opportunities are you most focused on?

    SL: Not a lot of people understand this business well and that that has really helped us. When I start looking at acquisitions, I'm thinking, "Why didn't these other people see it this way?" As we look at more acquisitions and more opportunities, I’m happy people don't always recognize the opportunity out there for the employees, residents, and patients.

    The other opportunity I'm seeing is for the non-for-profits. I become more convinced every day that non-for-profits don't understand the businesses as well, and they're not able to do some of the things that some of the for-profit organizations are able to do.

    A lot of critical care hospitals are struggling. These small-town hospitals are not making it, and they're having to diversify some of their business. We're already working with some of the critical care hospitals, the small rural hospitals to try to partner with them, rather than compete with them.

    If there’s an accident and it takes someone two hours to get to a hospital, senior care is where we can work closely with the critical care hospitals to provide services that may not make sense for them to provide, such as sharing staff.

    We believe very strongly in this business to continue to grow revenue and be able to provide more services and quality of services. Over the next 5 to 10 years, we will see a ramp up of acquisitions in this area. We will continue to see a lot more opportunity when it comes to acquisitions or mergers.