2018 Fall issue of Horizons

INDUSTRY UPDATE HEALTHCARE

Desire for Cost Savings and Changing Patient Preferences Drive Consolidation in Healthcare by Tom Zetlmeisl, CPA, CFE, CFF, CGMA & Zach Goers

O ver the past decade the healthcare industry has gone through a period of noteworthy consolidation. The increase in deal activity that has taken place in the wake of the Great Recession and the implementation of the Affordable Care Act (ACA) in 2010, is largely in response to healthcare providers looking to lower costs, as well as meet the shifting demands of patient care preferences. The ACA, also commonly referred to as Obamacare, was enacted to expand healthcare coverage and also improve and reduce the costs of healthcare services. With more patients having the ability to obtain

health insurance, hospitals are expected to reduce the amount of free or un-reimbursable services provided to patients. Reimbursements from Medicaid, Medicare or other healthcare insurers are, to some extent, based on the hospitals’ care quality, as determined by certain metrics, such as readmission rate. These new outcome-based reimbursements are meant to improve the overall quality of care. Economies of Scale In order to combat some of the challenges imposed by the ACA, hospitals have been consolidating to create economies of scale.

Fall 2018

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