This past year was another challenging one for hospitals and health systems across the U.S. Staff shortages, relentless inflation, falling reimbursements, the continuing interruption of COVID-19 and the escalating costs of essential supplies continue to plague the healthcare industry.
However, there are “green shoots” of hope amid these headwinds: Patient volumes are returning, staffing and contract labor costs are normalizing, and the slower-than-expected M&A environment is starting to rebound. These positive shifts are breathing new life into the healthcare sector, Middle Market Growth reports.
The industry’s resilience in the face of unprecedented adversity has been partially sustained by the federal government’s allocation of more than $700 billion in spending related to the COVID pandemic, according to the Committee for a Responsible Federal Budget. While this fiscal lifeline helped to shore up the beleaguered healthcare sector, more will need to be done. Many financial experts expect mergers and acquisitions to play a pivotal role in reshaping the battered healthcare landscape. Healthcare organizations, biotechnology companies and hospitals are well-positioned for increased M&A activity in 2024 and 2025.
“The larger companies have stronger balance sheets and have been able to weather the storm quite well,” says Ross Nelson, principal and national healthcare strategy leader at KPMG. “There are several smaller companies that need capital. If they are publicly traded, they don’t have a constructive enough stock price to raise equity. So, we are expecting a lot of M&A activity to happen in the middle market.” Read more.
