Healthcare mergers and acquisitions during the past six months have moved further away from traditional deals. Instead, organizations are using M&A to create new business models that have the potential to significantly disrupt the industry, according to a recent PricewaterhouseCoopers report released in April.
The arrival of new players and combinations between new entrants and traditional players should prompt all players to reconsider their roles, business models and strategies to remain competitive in the market, analysts at PwC's Health Research Institute noted.
Here are five takeaways from the report, titled "The New Health Economy in the age of disruption: Novel combinations attempt to remake the health system."
1. Analysts noted the following four new archetypes in terms of healthcare M&A:
- Vertical integrators, or companies looking to control the costs of their supply chain by owning more of it
- Employer activists, or employers seeking to limit the growth of their healthcare costs
- Technology invaders, or tech companies seeking to grab a greater foothold in healthcare
- Health retailers, or companies seeking to gain market share by better understanding consumers' behavior and providing corresponding healthcare services
2. Fifty-eight percent of executives surveyed by PwC in 2017 who identified as engaging in healthcare M&A as vertical integrators said integrations were more difficult than expected. Forty-two percent said their staff and organizations were still not fully integrated following completion of the deal.
3. Employer activists, such as the leaders behind the Amazon, JPMorgan Chase and Berkshire Hathaway healthcare deal, aim to significantly upend the industry by rethinking how healthcare is purchased and delivered. However, being a large company isn't enough; companies must have effective purchasing power focused in a particular area to successfully drive down costs, analysts said.
4. More than half of 1,501 consumers surveyed by PwC in March 2017 said they believe tech companies can make progress on some of healthcare's largest issues. Fifty-two percent of respondents said they are "very or somewhat confident" tech companies could improve patient satisfaction and experience, while 58 percent said they were "very or somewhat confident" tech companies could aggregate personal health information and make it more accessible to patients.
5. Consumers are generally comfortable seeking routine care at a nontraditional healthcare facility if it costs less, analysts found during the March 2017 survey. Analysts said the trend indicates health retailers may use their consumer financial savvy to bring in and keep patients using consumer incentives or other reward programs and strategies.
To access the full PwC report, click here.