Healthcare M&A may change in the upcoming year due to changes in funding, modifications to Medicare, and advancements in technology, according to Samantha Prokop of Gunster, Yoakley & Stewart.
Healthcare M&A trends point to a change from the pre-COVID-19 dynamics in 2024, namely a move away from the dominance of private equity and toward greater provider-to-provider consolidation. Rising administrative costs, consumer demand for telehealth and convenience, falling payer rates, challenges obtaining payer contracts, and an emphasis on talent retention are some of the motivators. The aforementioned factors are influencing the healthcare sector, leading providers to investigate strategic alliances and mergers as a means of resolving issues and adjusting to changing market demands.
Healthcare providers will face difficulties in 2024 as a result of rising labor and supply costs and declining reimbursements. Numerous providers will have to make large paybacks as a result of the increase in government audits pertaining to pandemic relief funds, which increases the administrative burden.
Shift in funding sources
Patient expectations and preferences have significantly changed as a consequence. Many people are used to the efficiency and flexibility that telehealth services provide. Telemedicine’s proven ability to provide high-quality care during difficult times has cleared the path for its ongoing acceptance and integration into standard medical procedures.
The trend of telehealth, in particular, becoming a permanent and essential component of the healthcare delivery system is largely due to the loosening of regulations and the positive experiences of both patients and providers. This change improves patient accessibility while also enabling healthcare providers to provide a wider range of services in a more adaptable and patient-focused way.Sellers, willing to facilitate the financing through holding a note, may find this approach more advantageous in navigating the changing financial landscape of healthcare transactions
Hospital consolidation
Hospitals appear to be at the top of the list of struggling providers as the post-pandemic dust settles. In 2023, a number of hospitals have declared bankruptcy. The COVID relief funds have run out. The salaries and payment streams for hospitals that were paying travel nurses and other providers at a premium with those funds need to be adjusted.
Issues with the supply chain persist, as do rising expenses for supplies and other overhead. These factors, in our opinion, will prompt hospitals to look for ways to combine. We also anticipate seeing more transactions that include debt payoff in place of cash purchases as part of this consolidation.
Technology
Regulations were loosened during the COVID-19 pandemic to allow for the growth of telehealth services. By utilizing digital communication technologies, this modification enabled healthcare providers to provide medical consultations, diagnosis, and treatment from a distance. Patients are using telehealth visits more frequently as a means of receiving healthcare because they find them to be convenient and accessible.
The pandemic experience showed that telemedicine could minimize the risk of virus transmission while effectively addressing a variety of healthcare needs. Using digital platforms, healthcare providers adjusted to the new environment by conducting consultations, keeping an eye on patients, and managing chronic conditions from a distance.
Patient expectations and preferences have significantly changed as a consequence. Many people are used to the efficiency and flexibility that telehealth services provide. Telemedicine’s proven ability to provide high-quality care during difficult times has cleared the path for its ongoing acceptance and integration into standard medical procedures.
The trend of telehealth, in particular, becoming a permanent and essential component of the healthcare delivery system is largely due to the loosening of regulations and the positive experiences of both patients and providers. This change improves patient accessibility while also enabling healthcare providers to provide a wider range of services in a more adaptable and patient-focused way.
