Healthcare executives expect M&A to boost business in 2019

16 Jan


Healthcare executives expect M&A to boost business in 2019

By: Alex Kacik with contributions from Eb LeMaster
(Modern Healthcare online)

Healthcare executives expect their businesses to exceed 2018’s benchmarks and will largely use mergers and acquisitions to reach those expectations, according to a new survey.

Nearly three-quarters of 291 senior executives from pharmaceutical, healthcare IT, medical technology, hospital and health system organizations said they expect better business performance in 2019, according to a new Capital One poll.

Mergers and acquisitions are the preferred growth plan for 44% of executives, down from 50% last year. That strategy mirrors the last three year’s polling results.

A quarter indicated that organic growth would be their primary approach while 21% look to add new business lines and 11% aim to open a new facility. More than a third anticipate needing more capital than they did in 2018 to fuel these endeavors.

A sweeping wave of for-profit divestitures[1] completed over the past three years and additional announced but not yet closed transactions may slightly drag the pace of M&A activity in 2019, although it will not stop, said Eb LeMaster, a managing director at Ponder & Co. specializing in M&A.

“Small to midsized healthcare systems will continue to juggle the three prongs of organic growth, acquisition growth and search for creative partnerships with larger systems using a variety of structures,” he said. “How aggressive these systems are in terms of the third prong will likely be driven by the speed of changes in reimbursement and their success with the first two strategies.”