5 Opportunities In Healthcare Consolidation

Most of us cringe when we hear the word “consolidation” unless we see ourselves as the consolidator.  We imagine behemoth companies taking over smaller operations for pennies on the dollar or nothing, stealing dreams and destroying service quality.  While these are possibilities, they have infrequently occurred during periods of consolidation in most healthcare markets in the past 50 years.

Most change is good though today we see so acceleration with increased opportunities for today’s healthcare owner.  Here are some opportunities to consider:

  1. Become a strategic buyer – This means you decide to acquire a competitor whether it’s horizontal (same business) or vertical (synergistic) in nature.  Even if the acquisition is modest it can strengthen your position for the future.
  2. Create you own network – It’s always a good idea to talk with you customers, vendors, and competitors to discuss opportunities to help each other grow their business (yes, competitors!).  As you meet people you may find great possibilities for cross referral, cost sharing, or creating new products/services together whether formal or informal. Networks are living relationship that expand your options.
  3. Consolidate your niche – One of the best ways to strengthen your business model is to grow in a niche where you are strong already.  Highly specialized services will always have a place, especially when the cost of replication is very high.
  4. Diversifying your revenue streams – Typically this requires bringing your core strength into new markets and/or servicing new payers.  One of the most dramatic examples of this recently has been the durable medical equipment (DME) marketplace where some smaller companies moved entirely away from Medicare reimbursement toward cash and private insurer reimbursement.
  5. Sell or merge with another company  – The timing may be good for you to consider selling your business outright or merging into a partnership with another owner.  This has many positive aspects and has become increasingly attractive to nonprofit healthcare providers.

Consolidation and healthcare reform together can seem overwhelming.  But if you’re willing to be entrepreneurial and venture out into your marketplace to find options you may find more possibilities than you could imagine.