By Ryan Bullock

As regulatory changes in the healthcare industry force businesses to become more competitive in order to remain profitable, companies both small and large are feeling the pressure to adjust.

Further, many organizations face increased costs and difficulties with compliance, causing them to look to mergers and acquisitions for new means of growth, or as an exit strategy.

Costs are rising
Many businesses, such as medical equipment providers, are looking for new revenue streams to offset the rising healthcare costs, combined with constant reimbursement cuts. This is due to the increasingly difficult challenge of collecting payments, as insurance companies provide less for necessary equipment and procedures.

As more patients face high-deductible policies, they become responsible for more of their medical bills. Medicare, Managed Care Organizations (MCO), and Medicaid plans have strict policies in place that do not guarantee reimbursement, so providers must find new capital and maximize profit margins in order to continue providing high-quality care and maintain their position within the marketplace.

On top of reimbursement cuts, the population is aging, meaning patients require care for longer terms. This leads to expensive resupply programs that can be difficult to maintain under new regulations, and demand for new, advanced technology for better care.

Businesses want to expand
Providers can often increase revenues through mergers and the acquisition of smaller companies with specific product lines. Buyers either fully acquire entire businesses or individual product lines to grow their existing sales channels, or support the launch of new products or services. As a result, they will generally now have more to offer to their existing customer base, further consolidating how their target audience shops.

Companies that merge often seek to achieve specific synergies that would require an expensive or lengthy endeavor individually. Payer contract access, congruent lines of business, and operational competencies are among the number of driving forces behind mergers.

Compliance and billing often become more efficient among merging businesses once technology is streamlined across multiple facilities to simplify operations. For example, more time can be focused on increasing sales, instead of attempting to collect payments. The reduction in overall operational costs provides capital to grow a company’s service area, strengthen e-commerce presence, and increase their product offering. Also, economies of scale will support increased volume and demand with streamlined processes throughout customer service, billing, and fulfillment.

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