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The great consolidation
The potential for rapid consolidation of health systems
Deloitte models estimate that after consolidation in the next decade, only 50 percent of current health systems will likely remain. Executives should consider defining how their hospitals will survive: Should they acquire? Differentiate? Seek other relationship types? Staying the course is no longer an option.
Health systems are on the verge of rapid consolidation, driven by significant regulatory changes, technological innovations, financial pressures and market dynamics.
How far might health system consolidation go? Using three approaches, Deloitte modeled an estimate of the potential. All three estimates independently converged at a similar outcome: 50 percent of current health systems will likely remain in 10 years.
Similar waves of consolidation have occurred in other industries (banking, airlines and retail) where market, regulatory and financial pressures led participants to seek new capabilities via mergers and acquisitions (M&A) and other partnering arrangements.
In the face of potentially rapid consolidation, hospital executives should consider a number of strategies and potential paths: Should they differentiate in a clinical or geographic niche? Are they going to acquire? Should they seek other relationship types? Staying the course is no longer an option.
This report examines:
- Drivers of rapid health system consolidation and how it may happen
- Projections for how many health systems may consolidate
- How consolidation has occurred in other industries
- What the future consolidated world may look like