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However, the main drivers of the M&A movement have been multihospital systems that sought to acquire freestanding, private hospitals for strategic reasons. over the past several decades has fueled a wave of mergers and acquisitions (M&A) among hospitals, giving rise to so-called “mega” integrated healthcare systems, such as Kaiser Permanente in California.But like it or hate it, it’s probably coming to your health care provider in one of many shape-shifting forms.

The enhanced clout of a larger, regional hospital system increases bargaining power with payors as well as with suppliers, including drug and device manufacturers, which can also boost margins.Systems are striking deals that deliver larger scale, more leverage and more diverse business lines that executives contend are needed to manage increased insurance risk and reduce wasteful fragmentation.Dealmakers say they hope to improve quality and reduce costs through greater standardization of care, more negotiating leverage with suppliers, and bigger investments to bolster providers' ability to communicate and coordinate care.The importance of realigning healthcare systems is underscored by the 2011 report by the Advisory Board Company, “Running on Medicare Margins: Restructuring Costs and Building the Care Management Enterprise to Prosper on Radically Lower Pricing,” which indicated that business-as-usual would result in a net margin of 15.8% by 2021 – very troublesome for hospitals indeed.The opportunities for hospitals to increase revenue through M&A activity are manifold.




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