Providers discuss the impact of consolidation on the healthcare industry and healthcare real estate
By Erin E. Porter
Perhaps Greek philosopher Aristotle had the best explanation of why consolidation is all the rage in healthcare today. Aristotle once declared: The whole is greater than the sum of its parts. As his theory goes, individual components have some value, but when those components are strategically lumped together the overall value can rise exponentially.
Certainly, the reasons for the rampant consolidation that we’re all witnessing in healthcare today can vary. But for the most part, those reasons include helping a health system: achieve or maintain geographic or clinical strength of position; fortify a financial position, purchasing or lobbying power; and, perhaps, gain a coveted asset (“if you can’t beat ‘em, buy ‘em”).
Yet, it comes as no surprise that the primary motivation is typically financial in origin. In the “eat or be eaten” world of healthcare, deals are getting bigger and more prevalent even as heavy industry regulation makes them more complicated and difficult to close.
So, how does all of this affect healthcare real estate (HRE)?
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