Healthcare Consolidations: Do they foster increased efficiency and improved care?

As healthcare systems continue to become more complex, they face intense cost pressures.

As healthcare systems continue to become more complex, they face intense cost pressures.


They need to remain financially viable while continuing to provide high-quality care to patients and achieving operational efficiency. 

When the Affordable Care Act (ACA) passed in 2010, there was a shift in the volume of patient care from inpatient to outpatient facilities. Hospitals saw a great decrease in inpatient admission and occupancy rates, reducing the reimbursement amounts received for inpatient services and leading to significant financial loss. In recent years, this has provoked hospitals and health systems to consolidate. 

Consolidation includes mergers, acquisitions, affiliation agreements, and facility closures. In 2018 alone, more than 800 merger and acquisition (M&A) activities took place in the healthcare industry. The logic behind consolidation is that it allows healthcare organizations to increase their efficiency and the quality of patient care while reducing operational costs and sustaining capital needed to expand their service offerings. By consolidating, hospitals can gain greater control over the direction of patient care and better manage their cost structures.  

But as large health systems continue to grow, they do not automatically become more efficient. Growth can make an organization more difficult to manage, and reducing costs must be done strategically to achieve efficiency.  

Consolidation becomes valuable when the health system can successfully scale its growth and put practical strategies in place to leverage cost structures while still meeting patient needs. When consolidating, it is important for an organization to have clear insight into its services and contracts, to enhance coordination of care, and to standardize existing processes to eliminate overlaps. All of these can lead to a reduction in costs. 

As the rate of consolidation continues to grow, it is important for health systems to have clear visibility into their contracts. TractManager’s MediTract CLM solution supports the contract management lifecycle by incorporating advanced analytics to help reduce the complexities of creating, managing, and auditing enterprise contracts. MediTract CLM provides visibility across the organization to help standardize and eliminate variabilities, ultimately optimizing processes so that an organization can operate at the top of its abilities while significantly improving its bottom line.  

In addition, TractManager experts can serve as system administrators on an organization’s behalf to effectively manage and renegotiate contracts, increasing purchasing power and lowering overall cost structures. 



Hanna Lee

Senior Learning & Development Specialist

Hanna Lee joined TractManager in 2018 as a Senior Learning & Development Specialist.


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