The Benefit of Being Bigger
Once you have virtual medicine practices and patient flows figured out, it’s very easy to scale up, because that front end of the business is highly digital. While it’s not quite Netflix, which could go live in 130 new countries on the same day, or Uber, which could launch in 22 countries in the same year, the scalability of digital systems is remarkable. So if your virtual medicine practice works for 500,000 patients, it’ll work for 5 million.
The organizations that get a leg up on virtual medicine will be in a great position to acquire the laggards. M&A activity will increase significantly, and then skyrocket as interoperability improves. Right now, consolidation continues despite the fact that the lack of interoperability creates enormous friction for acquisitions. Similarly, the health networks that get significant efficiencies out of their artificial intelligence, whether it’s their own system or that of an AI specialist like Qventus, will be buyers.
I think we will have a few mega-brands, like Johns Hopkins and Mayo, across many states and internationally. Other brands will be successful by focusing on their specialty expertise, such as cancer care. It will be a mistake to confine any healthcare organization to just the US market.
—Geoffrey Clapp
Healthcare entrepreneur and advisor
NONPROFITS IN PERIL
The traditional advantages of a nonprofit—borrowing at a lower rate, not having to pay taxes—will deteriorate as credit agencies continue to downgrade the outlook on community health nonprofits in the face of so much change. Around the country, the trend of taking on private equity partners will pick up steam. Ten years from now, when these equity partners can cash out, a wave of hospital exits will pronounce the verdict on who really added value and who has to conduct a fire sale.