The Looming Impact of Healthcare Service Consolidation

St. James' and Murray Hospitals, Butte (1915) — Image by Butte-Silver Bow Public Library via Flickr

Last week, the Boston Globe reported that Lahey Clinic and Beth Israel Deaconess Medical Center held early discussions on a possible merger.

Last November, Cereberus Capital, a private equity firm, bought Caritas Christi, a group of six hospitals in the Boston area. In December the newly named Steward Health Care System bought two more hospitals in the region. This April, Steward added its ninth local hospital. In June, Steward offered to purchase Landmark Medical Center in Rhode Island. More acquisitions are planned.

In January, Northeast Hospital Corp (owner of Beverly Hospital, Addison Gilbert Hospital in Gloucester, BayRidge psychiatric hospital in Lynn, and a Danvers outpatient clinic) began exploring a merger or sale to a larger regional player. By June, Lahey Clinic, Beth Israel Deaconess, Steward Health Care System, and Vanguard Health Systems had all made offers to buy.

In April, Beth Israel Deaconess Medical Center and Milton Hospital announced plans to merge in six months.

Provider consolidation isn’t just a Boston phenomenon. Healthcare services M&A is heating up all across the US. What’s going on, and what does consolidation mean for medical device companies?

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Medical Device Entrepreneur Readings

Over the weekend, a friend asked what one book I would recommend to guide a first-time entrepreneur. I replied that just one book was not sufficient. My friend suggested Michael Porter‘s Competitive Strategy, which I agreed was an excellent choice. I also told him I’d address the question more fully on my blog, so that’s today’s post.

The Launching Tech Ventures Reading List

Fortunately, local entrepreneur and investor Ty Danco recently pointed out an amazing reading list for first time entrepreneurs. Harvard B-School Professor Tom Eisenmann is developing an MBA class called Launching Tech Ventures, and he posted his well-curated course reading list on his blog Platforms and Networks. As Ty says, the list makes me wish I was back in school. While you’re working through the list, don’t skip Eisenmann’s earlier compendium of the web’s best advice for entrepreneurs. For tech start-ups, Eisenmann’s recommendations are unsurpassed.

For medical device entrepreneurs, Eisenmann’s list isn’t quite enough, so I’ve put together a few suggestions from my own experience. Leave me a comment telling me what I missed or if you disagree with my choices.

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The AMA, CMS, and Physician Payment Levels

On Tuesday, two news articles provided an inside look at a critical, but little-known, part of the process by which Medicare (CMS) determines physician payment levels for new procedures. A small American Medical Association (AMA) committee wields an unusually large influence.

If you are concerned with physician payment levels for your new procedure, check out the articles here:

The Center for Public Integrity reports on the AMA RUC committee.

WSJ reports on the AMA RUC committee.

Physician Panel Tilts Medicare Fees (online.wsj.com)

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