Healthcare mergers and acquisitions have been heating up in recent years, as result of policies adopted by Medicare and under the Patient Protection and Affordable Care Act (“PPACA”). Larger hospitals and health systems are gobbling up their smaller competitors, including physicians and other small providers. This consolidation has also led to the rise of the for-profit hospital and for-profit health system. As a result of these changes within the healthcare sphere, the increased web of integrated entities requires parties to resolve their inevitable disputes with care in order to avoid any disruption to the delivery of their product, healthcare services.
I. WHAT’S TRENDING? CONSOLIDATION IN THE HEALTHCARE MARKET AND WHERE THE UNITED STATES HEALTHCARE SYSTEM IS HEADED
Healthcare in the United States continues to trend toward greater and greater consolidation. This consolidation is not limited solely to providers, as 2016 has seen the proposed mergers of four of the largest health insurance companies, Aetna with Humana and Cigna with Anthem. The increase in healthcare consolidation is due to a number of market drivers, including, but not limited to, the requirements and incentives of the PPACA and Medicare Shared Savings Program (and the subsequent rise in Accountable Care Organizations (“ACOs”) and ACO activity), credit unavailability and other financial constraints, the high cost of information technology, specifically electronic medical record systems, the high cost of monitoring and compliance with state and federal reimbursement and regulatory requirements, consumer insensitivity on price and the ability of larger hospital systems to receive better reimbursement from third party payors.