Healthcare’s Post-Growth Reset
For much of the last decade, rapid revenue growth was the predominant business imperative in the healthcare industry and the broader U.S. economy. Technology and retail-focused companies from Amazon to the startup health insurer Oscar Health to Aetna and its parent CVS Health, just to name a few, have taken ambitious steps into healthcare with offerings for everything from primary care to ambulatory clinics to new, consumer- focused insurance plans.
At the same time, many health systems scaled up their services and market presence through partnerships and mergers with other systems and health plans, or through the development of their own digital-first services or insurance products. In just the last three years, the proportion of hospital and health system M&A transactions where the smaller party’s annual revenue exceeded $1 billion grew from 3.3% in 2019 to 15.4% in 2022, according to Kaufman Hall’s 2022 M&A Year in Review.
But as the operational and inflationary aftershocks of the COVID-19 pandemic and its aftermath continue to reverberate, a very different healthcare macroeconomic climate, where capital is no longer readily available and inexpensive, is taking shape.
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