Healthcare Consolidation: A Changing Healthcare Landscape
As the strain on the healthcare sector rises and costs escalate, hospitals are increasingly under pressure to improve efficiencies without compromising patient outcomes. The onset of a global pandemic only served to amplify the normal pressures faced by healthcare providers; staff shortages, limited access to resources, and increasing costs all place significant strain on hospital organizations. With a growing backlog of patients waiting to be diagnosed and treated, in addition to COVID-19 patients, hospitals are increasingly finding new and innovative ways to alleviate the burden of backlogs and improve patient outcomes, increase efficiencies, and relieve economic pressure. To address the need for improved operational and strategic efficiencies, hospital organizations across the globe are looking to consolidate key service pathways or entire hospital networks to maximize resources and minimize costs. But what is healthcare consolidation? What are the benefits? And, how can adopting a collaborative approach, with a MedTech company like Olympus, help to streamline and support the consolidation process?
A growing need for consolidation in healthcare
Hospitals are consistently under the spotlight when it comes to improving efficiencies to decrease healthcare costs and improve patient care. With increasingly ageing populations, demographic shifts, and rising care costs, the pressure on hospital organizations has become overwhelming.
As the COVID-19 pandemic took hold of the world and the number of patients requiring imminent help increased, hospitals understandably struggled to continue regular patient services such as elective cancer screening appointments and referrals for cancer diagnostics. As a result, many patients that would likely have been diagnosed previously at stage 1 or stage 2, are now being diagnosed at more advanced stages of the disease. For example, delays of up to 12 months have caused a 7% increase in advanced stage colorectal cancer in Italy alone 1 . This is a huge concern around the world that places significant stress on patients, as well as an additional financial burden on healthcare systems.
In Europe, up to 1 in every 2 people with cancer symptoms has not been referred for diagnosis 2 , while in the UK alone, it is estimated that there will be a 15.3–16.6 % increase in colorectal cancer deaths in the next five years 3 due to suspended cancer screenings and a growing backlog of referrals. Evidently, there is an urgent need for global healthcare systems to find new ways to deal with existing and future demands. Could healthcare consolidation, combined with alternative strategies, be part of the answer?
Benefits of healthcare consolidation
While the trend for multi-hospital networks has been growing over the last several years, an ever-increasing number of hospital organizations are looking to consolidate operationally to provide greater access and expertise to patients, and strategically to improve overall costs by combining finances and focusing expenditure.
Consolidating healthcare services and a trusted partner such as Olympus, offer several benefits to hospital organizations that are focused on increasing quality and reducing expenses. The potential benefits, summarized in figure 1, typically include increased purchasing power, largely due to integrated budgets that are part of the consolidation process. In addition, operational redundancies may be significantly reduced, as a result of the decreased need for duplicated clinical services. The positive consequence of these benefits is that they offer substantial operating cost-savings to the newly consolidated healthcare network, in addition to improving quality and care for patients and clinical staff.
The case of Olympus and Greater Manchester – collaborating for consolidation
While in France, Germany and the United States, over 60 per cent of hospitals are now part of a wider privatized healthcare network to help concentrate services, improve patient care, and leverage greater negotiating power 4 , in the UK, Greater Manchester has seen significant success with the operational merger of several NHS trusts.
In 2015, Greater Manchester (GM) signed a historic devolution deal to give local healthcare organisations the freedom to prioritise and allocate government funding based on the needs and requirements of the local population
. As part of this deal, and to tackle health inequalities in the area, a strategic and operational merger formed the Greater Manchester Health and Social Care Partnership (GMHSC) – consolidating primary and secondary care for seven NHS trusts:
- Northern Care Alliance NHS Group
- Tameside and Glossop Integrated Care NHS Foundation Trust
- Stockport NHS Foundation Trust
- The Christie NHS Foundation Trust
- Manchester University NHS Foundation Trust
- Wrightington, Wigan and Leigh NHS Foundation Trust
- Bolton NHS Foundation Trust
Olympus collaborated with GMHSC throughout, offering expert advice and solutions to help streamline the consolidation process. In 2020, Olympus partnered with GM and Fairfield General Hospital, Bury, as part of the Greater Manchester Elective Recovery and Reform Programme, to provide a complete solution for a new endoscopy unit, helping to strengthen and recover endoscopy backlogs following the disruption caused by the pandemic. From initial preliminary discussions about design to the opening of the endoscopy unit, Olympus has worked hard collaborating with the GMHSC to ensure greater access to category one patients waiting for urgent endoscopy and to help facilitate the transition to a post-pandemic world for healthcare staff.
Examples of healthcare consolidation in EMEA
The trend for healthcare consolidation is not limited to the UK. Globally, mergers and acquisitions are on the rise as countries attempt to navigate the ever-growing challenges faced by hospital organizations.
In France, consolidation has grown in popularity with around 60% of private hospital beds now owned by the top four medicine, surgery and obstetrics (MSO) hospitals, compared to 48% in 2014 6 . Likewise, throughout the Middle East and Africa, there has been considerable growth in the rate of mergers and acquisitions (M&A) since 2015, with a notable surge in the United Arab Emirates (UAE) and Saudi Arabia. In fact, in the UAE alone there have been more than twelve healthcare mergers since 2015 as a result of large demographic shifts and a rising population 7 .
While the goal of many M&As is to consolidate finances, there are other benefits and results. For example, the merger of two large hospitals in Amsterdam saw the amalgamation of administrative services for the Academic Medical Center and the VU University Medical Center, forming the Amsterdam University Medical Center, with the goal of strengthened patient services, and more efficient, better-funded scientific research 8 .
The future of healthcare consolidation
With the growing success of consolidation, the healthcare landscape looks set to change considerably. While the rate of strategic M&As in Europe has slowed considerably as a result of COVID-19, the pace will gain momentum with smaller hospital organizations more likely to consider consolidation for financial reasons.
In the UK, thanks to the success of Greater Manchester’s operational consolidation, NHS trusts across the country are looking to follow suit to tackle mounting waiting lists and the increasing cost of healthcare.
The consolidation process can be lengthy and complex with hefty administrative tasks and significant pressures placed on healthcare workers. Collaborating with an established MedTech company, like Olympus, may alleviate many of the pressures faced by healthcare organizations. With its diverse experience in many important industry trends and challenges such as crisis management, digitalization, or value-based healthcare, Olympus offers support and solutions to help healthcare organizations undergoing consolidation.
- 1.Impact of SARS-CoV-2 Pandemic on Colorectal Cancer Screening Delay: Effect on Stage Shift and Increased Mortality.
- 2.One million cancer cases undiagnosed in Europe due to pandemic, new study shows.
- 3.The impact of the COVID-19 pandemic on cancer deaths due to delays in diagnosis in England, UK: a national, population-based, modelling study.
- 4.The Changing Hospital Landscape - An Exploration of International Experiences.
- 5.About Devolution, Greater Manchester Health and Social Care Partnership
- 6.Consolidation and Optimization: Still a Strategic Play in French Healthcare Services?
- 7.Merger and Acquisition in Healthcare.
- 8.AMC and VUmc join forces as Amsterdam UMC.