Healthcare providers are under pressure on a variety of fronts. Patients demand extensive care regardless of cost. Payers both public and private are struggling to reduce costs, and the resulting billing struggles result in high administrative overhead. Staffing is in short supply, resulting in high overtime and temporary staffing costs. New technology and equipment require large capital expenditures that many facilities cannot afford. Pharma and medical device manufacturers get a much bigger share of the healthcare profit pie.
The situation is even worse for hospitals in particular. They’re overwhelmingly complex organizations, and as a result they’re difficult to manage. They also have high fixed costs, and there is often over-capacity in specific geographical markets, leading to intense competition. From a Porter’s Five Forces perspective, most of the puzzle pieces look pretty bad. Continue reading Who Will Survive Hospital Consolidation?