The Future of Healthcare Mergers and Acquisitions

There’s nothing new in healthcare mergers and acquisitions. It’s a major way that corporations in the industry have grown in size and profits.

But Collier’s National Director, Healthcare for the USA Shawn Janus recently wrote that there are three factors driving M&A to a higher degree. They are market dynamics and challenges; the “consumerization” of healthcare; and digital solutions and emerging technologies.

According to Janus, while M&A activity has declined in other industries, healthcare M&A reached $341 billion, which was a 22% increase. But executives worry about economic conditions making it difficult raised capital. Also, a study showed that 68% of people in the industry don’t think that initial public offerings will drive transactions. For smaller companies, investors, particularly venture capital, want an eventual exit strategy. IPOs are preferred for the amount of cash they can generate for returns. But if conditions don’t favor going public, then acquisitions are a fallback option.

Consumerization is in general the use of consumer-oriented technologies and focus on products and services. “This shift is not only evident in the healthcare sector but is also influencing the retail, technology, and consumer packaged goods spaces, where health-related products and services are emerging to cater to individual consumer health needs,” Janus wrote.

He pointed to Amazon’s acquisition of One Medical. “The One Medical membership covers unlimited access to 24/7 on-demand virtual care, including video chats with licensed providers within minutes and an easy in-app ‘Treat Me Now’ feature that lets members get fast care for common concerns like cold and flu, skin issues, allergies, urinary tract infections, and more,” is how Amazon describes the extension of the offering to Prime members. The emphasis on virtual care makes sense for Amazon because it is a more cost-effective method of delivery. The annual fee doesn’t cover clinical services.

A GlobeSt.com examination of the One Medical site and in-person locations shows that the service works with major hospital and healthcare services as partners, reducing Amazon’s need to hire and support providers. Essentially, Amazon becomes a consumer front end for healthcare services.

Finally, there are digital solutions and emerging technologies. The development of new tech offers the potential to expand how companies approach the products and services they offer customers. He pointed to a collaboration between Google and Mayo Clinic. The latter will use a generative AI search product from Google. “This technology streamlines the analysis of healthcare data, including patient medical history, imaging records, genomics, or labs, through simplified queries, ultimately boosting efficiency for healthcare workers,” he wrote.