by
John R. Fischer, Senior Reporter | August 01, 2018
From the August 2018 issue of HealthCare Business News magazine
“From the equipment manufacturer side, you would be acquiring a customer base, and so there would be some kind of noncompete arrangement,” he said. “From the ISO point of view, they would be selling some specialized group of skills they have developed, so if they’re selling more out, then they would have to look forward to inventing a new set of skills for something that is not yet addressed by the market.”
Walker points out that opportunities may emerge, in terms of personnel and productivity time, for regional players when larger organizations cut costs in acquiring other entities.
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“In those cost-cutting times, there are a handful of customers that will get left exposed in different small territories,” he said. “Those are the areas where those regional guys pop up. They may have been recently displaced or recently retired and they see opportunities because they have friends in those facilities that need service and support. So they start a company. We’ll see a bunch of little ones pop up over the next few years.”
He also expects to see a slowdown in mergers and acquisitions due to lower margins and depletions of money from private equity firms, the driver of many consolidations.
“They are looking to acquire and spend the money wisely and put it in play to be in the space that has what everybody feels has got the most room for profit,” said Walker. “Margins are a fifth of what they were when I got here. They are really depleted because of all the things we’ve been through.”
Holloway says that transparency, clarity on future direction and brand changes are crucial to the success of consolidations and ultimately ensure customers have access to the best prices.
“I think the best integrations are up front in giving clear time scales and clear points of contact, and a clear outline of expectations for integration,” he said. “Making all parties involved aware of that is important because that helps subdue concern that customers often have when these consolidations go ahead.”
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