Healthcare M&A takes post-reform spotlight

The health reform ruling has been a big driver for mergers and acquisitions, and the increased focus on deal-making will likely obscure the weak earnings forecast for healthcare organizations, The Street reported.

With healthcare earnings season getting underway, executives will turn much of their attention to M&A activity, despite bleak earnings expected with Affordable Care Act provisions, including the medical-loss ratio and individual mandate, the article noted.

According to Moody's Investors Service, any outcome of the U.S. Supreme Court ruling will hurt nonprofit hospitals. So Ohio's Summa Health System has started looking into partnerships to prepare for the reimbursement changes under health reform, reported The Plain Dealer.  

Health system officials acknowledged that hospitals nationwide are exploring M&A initiatives to shrink "back-office" expenses and to better position themselves for the new payment models.

"We have what we need to survive the future but [the future] will be challenged by heathcare reform," Summa President and CEO Thomas Strauss told the newspaper.

Meanwhile, deal-making in the health IT sector is off to a strong start this year, jumping 28 percent to 196 deals in the first half of 2012, up from 153 deals in second half of last year, according to a new report by investment bank Berkery Noyes. Health IT deals are growing amid calls to reduce costs and improve outcomes by digitizing medical records and enhancing revenue-cycle management and billing operations, noted a Wall Street Journal blog post.

To learn more:
- read The Street article
- here's the article
- check out the Berkery Noyes report
- read the WSJ blog post