Will Turbulent Hospital-Physician Relations Hamper This Healthcare Powerhouse?
In December 2020, consulting and audit firm Deloitte published an update of findings from an analysis of recent mergers and acquisitions (M&A) in the healthcare industry. One conclusion was that the rate of consolidation would increase at a rapid pace, which it did. From 2014 to 2018, the revenue of the top 10 healthcare systems grew by 82%; for the rest of the market, that number was only 47%. Today, those top 10 healthcare systems own 24% of market share, supported by revenue growth that's double that of the smaller systems.
One of the companies playing its part in the consolidation is HCA Healthcare (NYSE: HCA). HCA is the top-ranked healthcare system by total annual net patient revenue ($44 billion), and it has made 10 acquisitions in the last five years. But those acquisitions have not been without challenges -- most recently, multiple physician departures from hospital systems acquired by HCA. Are they enough to offset the stock price's recent stellar growth?
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