M&A Interest Still Strong

The value of physician practices has fallen from the halcyon days when million-dollar price tags were the norm. Today Gross says the up-front dollars paid for practices are usually small and cover only the medical records, equipment, and real estate. For hospitals the key step in acquisition negotiations is to get the physicians to commit to five- to 10-year employment contracts.

In addition to physician practices, survey respondents listed acute care hospitals, ambulatory surgery centers, and diagnostic imaging centers as important acquisition targets. There is very little interest in acquiring dialysis clinics, long-term acute care hospitals, or psychiatric hospitals.

Survey respondents have a generally positive impression of the effect mergers and acquisitions have had on the quality of healthcare as well as the cost of care. Some 51% responded that M&A had a positive or strongly positive impact on the cost of care, while 49% said it had a positive or strongly positive impact on the quality of care. Only 16% responded that M&A had a negative or strongly negative impact on quality; 24% said M&A had a similar effect on costs.

Gross says the results reflect the ability of larger organizations to standardize protocols across an extended platform to ensure that "quality is baked into the policies and procedures at each facility, and there's more opportunity to standardize the cost of materials and supplies."

This article appears in the January 2012 issue of HealthLeaders magazine.

View All Comments Make a Comment

Comments are moderated. Please be patient.