Consolidation is enabling healthcare companies to further scale and remain competitive
A recent study by West Monroe and Mergermarket, Reshaping Healthcare M&A, provides an in-depth look at how mergers and acquisitions (M&As) are continuing to transform the industry in the face of mounting complexities.
From aging populations to disruptive technologies, we take a look at the key findings of the US based study, undertaken by 100 senior executives, split between corporate (33%) and private equity (67%). All involved have completed at least one healthcare detail over the last 24 months.
Whilst the US is continuing to witness exponential growth across the healthcare sector, its aging population is driving demands for home healthcare tools and pharmaceutical solutions.
Competition is also mounting as non-traditional players seek to enter the market, such as Best Buy and Amazon, making it imperative for traditional providers to cater to this rapidly changing landscape.
Consolidation is enabling healthcare companies to further scale and retain positions in the market, with 58% claiming this to be the overriding driver. Others involve disrupting incumbents using technology (48%), as well as expanding into new markets (37%).
“Businesses that have matured over time have also accumulated assets that have increased in value. With affordable valuations being key criteria of attractive targets, the number has fallen considerably,” an operating partner at a private equity firm on the East Coast noted.
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A number of healthcare companies are consequently entering non-traditional acquisitions, such as Roche’s $1.9bn acquisition of Flatiron Health, in order to harness essential digital tools and remain ahead of the curve.
“Many multi-site healthcare providers do not have that Amazon-like customer experience,” explained Brad Haller, director of West Monroe’s M&A.
“We’re used to that in the consumer space now, but healthcare is still far behind. They often use the excuse of needing to manage patient-protected data, which is valid. But there’s also a real opportunity to improve.”
Popular technologies across the industry include mobile technology – the Samsung and Babylon Health being a recent example. Others factors include enhancing the use of data and analytics (37%), utilising blockchain (30%), telehealth and health wearables, which will all work to reduce escalating healthcare costs and drive the development of patient-led care models.
Through vertically integrated healthcare deals, insurers are also looking to further partner with distributors to deliver a multitude of advantages. CVS Health’s $69bn deal to acquire health insurance giant Aetna is a case in point.
Nonetheless, a dominant focal area is the growing interest in joint ventures, where up to 79% of respondents stated that they will likely go down this avenue within the next 12-19 months.
The mega partnership between Amazon, JPMorgan and Berkshire Hathaway created shockwaves within the industry and caused stocks across healthcare providers to nosedive. Main advantages the study has found will be the access to external expertise and technological capabilities, a reduction in risk profile and will enable businesses to grow top-line revenue more quickly (42%).
London NHS trust cuts admin time with DrDoctor platform
Chelsea and Westminster Hospital NHS Foundation Trust in London has adopted a new digital pathway for its endoscopy diagnostic service. The trust says the new patient-facing digital technology, developed by DrDoctor, cutting the time taken to gather pre-operative information by more than a quarter.
DrDoctor is a software company that creates patient engagement platforms. The new system makes it possible for patients to complete assessments ahead of endoscopy procedures.
It also allows the trust to send reminder messages, digital letters and assessments to patients ahead of their operations. Digital letters allow patients to view and download their correspondence instantly, helping to prevent paper letters from arriving in the wrong order, and reducing confusion from them being lost in the post.
The DrDoctor Quick Question functionality is also being used to send email and text notifications to check with patients if they still need or want to be seen, which is helping to reduce waiting lists and cut the chance of cancellations. Broadcast messaging alerts patients to changes to clinics electronically, which saves the time of a phone call for staff.
Chelsea and Westminster NHS Foundation Trust is home to two of London’s busiest acute hospitals. Since deploying DrDoctor's system, it has seen the average time taken fall from 26 minutes to just under 19 minutes – a 29% decrease. At West Middlesex Hospital, the same time spent has reduced from 32 minutes to 12 minutes – a 63% decrease in time spent.
Bruno Botelho, Director of Digital Operations at the Chelsea and Westminster NHS Trust, said: “Thanks to DrDoctor, we have established an infrastructure to address the evolving needs of our patients and staff. By digitally engaging with patients we’re helping to release the capacity pressures our staff face. I’m really pleased that we can now provide a more efficient service to patients and provide more personalised care.”
Staff reactions have been positive too, with 80% of staff finding the pre-op assessment questionnaire useful. One specialty lead said: “With standard pre-assessment data gathered via the DrDoctor link, nursing staff have more time to focus on individual care plans and patient-centred care. From a service point of view, it's great to see patients more engaged in the pre-procedure process.”