Over a year ago, we predicted that 2019 would be the era of health IT M&A, with the transition to value-based care as a primary driver. The M&A activity in the first half of 2018 is proof of this momentum – healthcare-related M&A increased 23% compared to the second half of 2017.
Over the past couple of years, there have been around 200 merger and acquisition (M&A) deals in the healthcare IT space, driven by high enterprise value and the sheer size of the industry. 49 deals came together in the first quarter of this year alone. These numbers make health IT the highest performing industry in terms of M&A activity in the consumer and retail space, and the second highest in the infrastructure/industrial space.
Between 2018 and 2019, we will see an insatiable need for increased health IT interoperability, with providers putting increased pressure on health IT vendors to deliver. This pressure – combined with the shift brought on by new regulations like MACRA around performance, measurement and outcomes – will drive one of the biggest M&A pushes we’ve seen in the health IT industry.
Over the last few years, the healthcare industry has undergone an incredible revolution. Mobility solutions deployed across the care continuum are providing higher quality patient care. The shift from fee-for-service to fee-for-value – no matter how the political environment affects the market – is prevailing. Beyond that, innovation and digital tools are supporting this shift. In the U.S. alone, there are more than 6,000 medical device companies. Around 80 percent of them have fewer than 50 employees. Creative solutions to longstanding problems abound.
When growing a startup, there are typically three main areas of focus: sales, operations and the back office. By nature, the DNA of most entrepreneurs – including but not limited to those in healthcare – leads them to focus most of their attention on sales. This often results in a common challenge for entrepreneurs: the fixation on sales means they are not looking at the whole picture. Entrepreneurs all share the passion and vision regarding their company’s key audiences, particularly who will buy their products and how much they will sell. However, the operations and back office teams are needed as well to help drive an entrepreneur’s product to that world-changing next level. Continue reading
Any market that experiences a boom of innovation and creates transformative start-ups has a typical lifecycle. It often starts with deregulation, followed by start-ups popping up and creating a market of many competitors with novel but often similar products who find short-term success. At some point, however, the competition becomes too fierce, and not everyone can survive. Some business strategies, products, and operations will find long-term success, while others will not.