The world of Connected Health is in constant motion. It is good fun for me to watch the data churn that then helps us predict the Connected Health trends across the next 10 years. If you are curious about what that brave new world looks like, then you can see in “Creepy or Cool? A View of Connected Health in 2025“.
There is much in store in the world of Connected Health over the course of the next year. Over the next two weeks I will publish this year’s Top 10 Trends for Connected Health in 2015, and then we can all celebrate everything Connected Health together at the 2015 HIMSS conference. I’m looking forward to it! Without further ado, I present trend #10:
Slowing M&A Causes “Preserve & Extend” Mentality
Until recently, hospitals across the country have been swept up in an avalanche of mergers unlike any we have seen in the past two decades. In 2013, hospitals and health systems announced 98 new combinations, which was a 3% increase from the previous year and a 51% increase from 2010. The acquired organizations’ total operating revenue was $32.3 billion.
However, the volume of hospital mergers and acquisitions declined in 2014 according to industry analysts. Irving Levin and Associates reported that there were 72 hospital M&A transactions in 2014 through Dec. 19, 2014, which represents a 27% drop compared to 2013. Slower M&A activity was also seen in home health and hospice deals, which dropped by 11% in 2014, as well as physician groups, which fell by 12% in 2014. This mentality is being driven by a two-fold concern:
- Healthcare markets have been historically local, which makes sense given the great diversity in patient populations across the country. Some are concerned that acquisitions by large national conglomerates will silence this local market voice.
- Hospital system arguments that acquisitions improve patient outcomes and healthcare delivery within a population are losing court battles against the argument that these large health systems would not hurt local competition.
It is now expected that that the general slowdown witnessed in the latter half of 2014 will extend into 2015 as hospitals search for joint ventures and partnerships agreements over mergers and acquisitions.
What impact will this have on Connected Health?
Hospital systems will shift away from the “rip and replace” mentality of the past few years and move towards a “preserve and extend” mentality. According to Chilmark Research, this will lead to the layering of health IT functionality on top of legacy systems rather than a complete replacement of those legacy systems.
While this measure would seemingly reduce costs, health systems must now factor in the increased costs associated with the integration of complex data systems that feed Connected Health technologies. This is most often witnessed in the, oftentimes, hundreds of data systems that need to be integrated to make both enterprise or patient focused portal or mobile technology function properly. One recent example for me is found in the world of portals that help physicians collaborate across the care continuum. To make this collaboration system thrive, the portal must integrate with 9 different EHR that the health system acquired over the past few years due to the growth in M&A activities. These EHRs now need to be integrated, along with a host of other applications, so that these solutions can be extended across the enterprise.
Stay tuned for trend #9 that will be released tomorrow!