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HIDA 2018 Hospitals And Health Systems Market Report (Formerly Acute Care)

HIDA 2018 Hospitals And Health Systems Market Report (Formerly Acute Care)

Market-At-A-Glance
National spending on healthcare increased to $3.6 trillion by 2018, representing 18% of U.S. total gross domestic product (GDP). Growth in hospital spending increased 4.1%, 0.8% lower than the growth in overall healthcare spending.

As of 2017, 30% of hospitals were losing money. Hospital executives cite government and payer constraints allowing costs to rise faster than revenues, and increased labor costs due to shortages.

In 2017, the ratio of hospital credit downgrades to credit upgrades exceeded that of the 2008 financial crisis.

One-Third Of 2017 Healthcare M&A Activity Involved
Health Systems
In a 2018 survey, 71% of healthcare executives reported an expected increase in M&A activities. The survey, based on 2017 activity, reported 33% of recorded deals involved health systems, and 19% involved hospitals. Each year, there are an average of 88 merger and acquisition (M&A) deals involving hospitals and health systems.

Both acquiring and acquired entities cited the top reasons for pursuing M&A as: improving access to capital, increasing market share, and delivering care more efficiently. Executives report it takes two years to reach these goals. Despite the lag in desired outcomes, executives largely agreed that M&A activity had an overall positive effect on their organizations.


Executive Summary
Healthcare Spending Projected To Reach $5.5 Trillion By 2025
Hospital Price Growth Outpaces Other Settings
Medicare Margins Drive Down All-Payer Margins
One-Third Of Hospitals Are Losing Money
Financial Outlook Negative For Half Of U.S. Hospitals
Not-For-Profit Hospital Credit Downgrades Increase In 2017
Hospitals Turn To Investments To Improve Financial Outlook
Hospital Profit As a Percent Of Revenue Down 2.5% From 2014 – 2017
Number Of Hospitals Continues To Decline
Hospitals Struggle To Find Employees
Inpatient, Outpatient Volumes Up In 2016
Projected Volumes Vary By Service
Acuity Continues To Increase
ER Volumes Unchanged By ACA
Medicare, Medicaid Cover 75% Of ER Visits
ER Spending Doubles In 7 Years
Uncompensated Care Costs Down 17.5%, 2013 – 2016
Individual Mandate Repeal Shifts Projected Costs, Coverage
More Hospitals Close Than Open 2010 – 2016
Average Of 88 Hospital M&A Deals Annually
One-Third Of M&A Activity Involves Health Systems
Financial Goals Top Of Mind During M&A
M&A Benefits Take Two Years To Realize
One-Third Of Systems Report Improved Patient Outcomes After M&A . 21
Most Executives Find M&A Outcome Positive
Hospitals And Health Systems Value Distribution
Health System, Hospital Affiliation Seen As A Positive By Consumers
Nearly All Hospitals Use EHRs
Healthcare Data Breaches Projected To Increase
Medical Devices Vulnerable To Cyber Attacks
Population Health Important To Hospitals But
Investment Lags
Provider-Owned Plans Largely Unprofitable
Payer-Provider Partnerships Focus On Value-Based Compensation
Value-Based Purchasing Bonuses Increase In 2018
HAC Penalties Down In 2018
More Hospitals Penalized Under HRRP In 2018
6% Of Hospitals Receive 5-Star Ratings In 2018
Free-Standing ERs Eyed For Cuts
Future Uncertain For Micro-Hospitals
GHX Reports $27.2 Billion In Hospital Sales Through Distribution In 2017
GHX Lists Top Acute Care Products Sold Through Distribution

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