Healthcare organizations are looking for M & A to create operational, strategic, and financial value. Healthcare Consulting Perspective

Hospital mergers and acquisitions are increasing at a rapid rate, globally and nationally. They range in all shapes and sizes – horizontal, vertical, regional, national, large/small-scale, and allow health systems to tighten operations, streamline services, and increase access to capital. Horizontal health care mergers happen when two or more hospitals merge into a single entity, bringing all hospital activities under the full control of the merged entity. While on research Healthcare Consulting, India on M & A, we found it to be vertical acquisitions as well, in which hospitals combine with clinics, physician practices, and other facilities in the health care delivery system.

Earlier this year Fortis Healthcare Ltd. (FHL) said its board has approved demerger of its hospitals business, which will be acquired by Manipal Hospitals and TPG Capital. The coming together of Manipal and Fortis Hospitals will be transformational for the Indian healthcare landscape. The combination of two giants in Indian healthcare is expected to result in the creation of the largest provider of healthcare services in India by revenue, with 41 hospitals in India and 4 hospitals overseas.

Last year, Bengaluru-based healthcare services provider Narayana Hrudayalaya Ltd struck a deal to buy NewRise Healthcare Private Ltd from Panacea Biotec Ltd. Narayana Hrudayalaya hopes that the acquisition will upgrade its East Delhi based Dharamshila Narayana Super specialty Hospital to a multi-specialty tertiary care unit. Narayana Hrudayalaya, whose main existing market is in Karnataka, considers this development a step to reinforcing their market in the northern region of the country.

While the above two are stake acquisitions, in an operational tie-up, CitiusTech is in an agreement with Tata Memorial Hospital for the use of Percutaneous Intravenous Central Catheters (PICC lines) amongst children suffering from cancer. CitiusTech, as a part of its part of its Corporate Social Responsibility (CSR) initiatives, will also offer Healthcare Consulting, India, technology consulting to build a robust hospital information system for the hospital.

Joint ventures are assuming a larger role in healthcare in meeting strategic needs of organizations in today’s value-based healthcare & Healthcare Consulting, India . In a joint venture, Apollo Hospitals and Italy’s KOS group jointly launched a medical rehabilitation hospital in Hyderabad in 2016. The 64-bed rehab hospital provides complete care for patients suffering from cancer, neurological, orthopedic, cardiopulmonary, pediatric and geriatric diseases, besides trauma care.

Be it a horizontal/ vertical merger, joint venture or an operational/ marketing tie up, M & A between organizations in healthcare have buyers and sellers looking to create operational, strategic, and financial value. Hospital consolidation improves efficiency, access to care and quality of care. Merging hospitals also help patients to move towards more robust options in accessing care.

Some of the main drivers of M&A are –
• increased revenues,
• access to capital,
• offer additional care services,
• create a larger footprint in the local market,
• the ability to decrease unit costs,
• to improve productivity and outcomes through increased volumes,
• increasing market share,
• moving into another product category,
• acquiring talent,
• global expansion.

The current trends point to the fact that hospital mergers and acquisitions are reshaping Indian healthcare market, and this is expected to continue in the coming years. With due diligence in integration planning and execution, many hospitals experience higher operating margins following consolidation. Choosing the right strategies which is dependent on the circumstances of a particular situation, can significantly impact the success of a hospital merger ventures. At Sarathy advisory, a Healthcare Consulting, India, we help our clients in developing the optimal partnership structure, execute the transaction, and advise on the consolidation strategies to ensure goals are met.



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