EDGEMONT CAPITAL BLOG

How Does Healthcare M&A Affect Patients?

The medical industry is engaged in a long and ongoing debate about healthcare mergers and acquisitions. As industry professionals continue to evaluate the business effects of M&A, they must also assess how these changes affect patients. With 13% more mergers in 2017 than 2016, it’s likely a healthcare M&A surge will continue. So how will this affect patients?

Some factors that may change:

Out-of-Pocket Costs
One of the biggest ongoing debates about healthcare mergers involves costs. Supporters of healthcare M&A say that structure changes can decrease costs and expenses. Mergers do increase access to capital and other resources. They also reduce competition, thereby reducing patient options and potentially creating local monopolies. The good news, however, is that this offers healthcare organizations more bargaining power when negotiating with payers. This can lower consumer’s out of pocket costs. It can also do the opposite. When health entities negotiate higher prices, consumer copays and premiums may also increase.

Patient Care Quality and Access
Healthcare is increasingly consumer driven, with an emphasis on satisfaction and quality outcomes. Many consumers love small, local hospitals. But these entities are the ones that are most frequently eaten by large mergers. Greater power and resources make it easier to face the many challenges of the current healthcare landscape.

New contracting methods, such as Accountable Care Organizations (ACOs) can benefit patients, but also require greater scale. The system is facing a challenging transition. Electronic records require special expertise, but also serve patients more effectively. Larger organizations can transition more easily.

Of course, healthcare M&A comes with some patient care barriers, too. Patients are forced to access care on the terms of a giant that may feel faceless. It’s important that the industry be appropriately regulated to protect patient access and ensure patient rights are respected.

Patient Safety
Healthcare is increasingly results-driven, and bad outcomes can negatively impact an entire organization. Some analysts argue that healthcare M&A improves patient safety by streamlining protocols, modernizing systems, and recruiting the best doctors.

Teams with little to no knowledge of patient safety issues are often charged with implementing policy changes and overseeing mergers. Their primary motivator is financial, and that can undercut patient well-being. The specific safety goals a team must meet are often left unstated or unclear.

The debate over healthcare mergers rages on. No matter who is right, one thing is certain: the current healthcare landscape makes clear that these mergers will not slow. Health executives continue their M&A activity in a very specific cultural climate. That means they must continually weigh the impact of their choice on patients, and obey the first mandate of quality healthcare: do no harm.

About Edgemont Capital Partners
Edgemont Capital Partners is a specialist healthcare investment banking firm providing the highest level of mergers and acquisitions advisory services to founder-owned and entrepreneur-run healthcare and life sciences companies in the lower middle and middle markets. Our world class transaction expertise is a result of our extensive and proven track record of success. We have advised on over 150 transactions representing more than $60 billion in combined value.