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Mergers and Acquisitions of Healthcare Companies Assignment
Mergers and Acquisitions of Healthcare Companies Paper
Mergers and acquisitions in the healthcare industry have increased immensely over the past decade, with sellers and buyers striving to develop strategic, operational, and economic value. The main motivations for the mergers are the pursuit of economies of scales, improving outcomes and productivity using increased volumes, and decreasing the growing healthcare expenses. The assumption is that acquisitions and mergers allow healthcare companies to spread their investments in ancillary services, technologies, shared services, and quality improvement.
Mergers and acquisitions refer to the integration of assets and companies through various financial transactions, such as tender offers, management acquisitions, consolidations, and the purchase of assets. They are instrumental in sharing assets and liabilities to assist the involved parties to weather economic troubles. Other benefits of mergers include an increased market share, risk diversification, product diversification, tax considerations, strategic alignment, and financial synergy (Fulton, 2017). The companies should maintain open and clear channels of communication to share information concerning their financial transactions. They also have to formulate a plan that will enable them to achieve their shared organizational goals.
Many medical facilities have resorted to mergers and acquisitions to mitigate record-high healthcare spending, shrinking hospital margins, and value-based reimbursement caused by policy and financial pressures. The strategic alliances facilitate robust due diligence, long-term operation and strategic improvements, improved portfolio management and pipeline development, and quick wins. The general assumption is that by consolidating management and financial practices, the access and quality of care will be enhanced among consumers. The consumers will have a wide array of healthcare technologies funded by joint forces, better treatment procedures, and many other resources necessary for improving the quality of care given to patients. According to Heath (2018), between 2009 and 2014, the mergers and acquisitions in the healthcare companies led to a cost reduction of $5.8 million or 2.5 percent. The mergers enabled hospitals to combine both back-office and clinical functions and gain access to a larger capital pool to provide patients with better care. However, there is the possibility of reducing competition with larger medical institutions, which possess a significant market share, resulting in lower bargaining power for both consumers and insurance firms that can translate to higher premiums and costs respectively......................GET A PLAGIARISM FREE COPY