Transactions on the hospital market are currently determined by three defining factors - economic constraints intensified by the Covid-19 pandemic, cultural homogeneity among providers and regional proximity are currently important drivers for consolidation.
Pandemic increases economic pressure
Extensive public funding to cope with the Covid-19 pandemic has temporarily relieved the economic burden on many - especially smaller - hospitals in the past year. However, the repeated increase in the number of Covid-19 cases puts additional stress on hospitals, which are often already strained in terms of personnel, organisation and finances. The creation of new treatment capacities for Covid-19 patients brings additional costs in patient care, postponements of scheduled treatments, costs for additional hygiene measures and shortages of nursing staff.
While the successful pandemic response has helped hospital operations to return to normal, the economic constraints will not diminish in the future. In particular:
- underfunding of investments by the German federal states
- increasing patient autonomy due to diverse information sources and the related increasing competitive pressure
- demographic change, reflected in an ageing population with a corresponding increase in internal or age-related illnesses
- and a shortage of skilled workers
will lead hospitals to optimise their economic situation through transactions and partnerships and to play an active role in shaping the hospital sector. In the past, the need for consolidation was often either not recognised or recognised too late to be able to effectively use transactions to shape care. Consequently, in the past few years an increasing number of divestments resulting from insolvencies have had an impact on transaction activities.
Networks create trust
As an example, non-profit organisations with religious affiliations often have close personal networks and similar corporate cultures. These "soft" factors go beyond economic parameters and provide a strong basis of trust, especially in strategic decision-making concerning transactions and cooperation between different institutions. Accordingly, increased transaction activity can be observed across non-profit, public and private providers respectively.
Synergy in regional proximity
Transactions can contribute to improving the quality and quantity of regional healthcare provision and offer municipal providers the opportunity to actively tackle the key challenges of healthcare. Providers can implement particularly effectively the synergy effects of transactions at the regional level in order to ensure an attractive range of healthcare provision for patients, and at the same time fulfil the task of ensuring healthcare provision.