Around the nation in recent years there has been a rash of mergers of healthcare organizations hoping that additional scale will help them realize efficiencies and lower costs.
"System integration is viewed as a central strategy for improving clinical outcomes, market growth and financial performance while mitigating the effects of increasing labor costs and inflation," noted a summary of a CBRE Healthcare Forum on the topic of mergers.
The problem is clear. Operating margins in March 2023 fell 27% compared to the same period in 2020. Healthcare systems are facing rising labor costs because of labor shortages, which are also driving declining clinical volumes. The shift to outpatient procedures from inpatient care is another complication. These and other factors "require significant structural improvements that result in sustainable and systemic solutions," CBRE stated.
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