Latest / Becker’s Healthcare Podcast / Hospital M&A, AI Strategy, & Revenue Cycle Innovation Trends with Laura Dyrda

Transcript

Hospital M&A, AI Strategy, & Revenue Cycle Innovation Trends with Laura Dyrda · Becker’s Healthcare Podcast

• 0:02
  - There's a small circle of people who truly
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  - understand what it takes to lead a health
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  - system right now. The decisions are enormous.
• 0:08
  - The variables are constantly shifting, and the stakes
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  - of getting a call wrong don't stay contained.
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  - That's not a complaint. It's a structural reality.
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  - And it's why the most effective c suite
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  - leaders are deliberate about where they go to
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  - pressure test their thinking.
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  - Becker's fourteenth annual CEO and CFO roundtable
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  - brings together more than 1,500
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  - executive level attendees
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  - and nearly 400 speakers for four days built
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  - around growth, financial sustainability,
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  - workforce strategy, and the leadership questions that don't
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  - have easy answers.
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  - Join us November second through the fifth in
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  - Chicago.
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  - For the agenda and event details,
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  - visit beckershospitalreview.com
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  - and click on the events tab in the
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  - upper right.
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  - This is Scott Becker with the Becker's Healthcare
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  - podcast.
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  - Today's discussion is with Laura Dierda, editor in
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  - chief of Becker's Healthcare.
• 0:59
  - And just as background,
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  - I was having a discussion
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  - with somebody today about Laura,
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  - and and Laura is the quintessential
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  - leader.
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  - I follow Becker's Healthcare and report on what's
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  - going on at Becker's Healthcare regularly and post
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  - different articles and so forth. Laura is senior
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  - leader in the company, editor in chief, and
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  - exemplifies
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  - everything that we look for in people.
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  - And this came up today because I was
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  - reading and following some of the stories,
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  - and one of the first stories I saw
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  - was about the return of m and a
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  - in health care and the amount of hospital
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  - deals. And the story was written by Gloria
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  - Dirda, editor in chief. And this exemplifies
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  - to me
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  - exactly the kind of leaders that we want,
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  - that are both great at providing leadership and
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  - guidance in mentoring others, but also aren't so
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  - high in themselves that they don't actually get
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  - their hands dirty and do real work.
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  - Laura to me is the quintessential
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  - doer manager.
• 2:00
  - And with that introduction,
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  - and hopefully with Laura blushing just one bit,
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  - let me turn today's podcast. We we talked
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  - to Laura weekly about what are a couple
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  - of the key stories she's watching in health
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  - care.
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  - You know, I'll I'll give a footnote about
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  - Laura also being an avid Chicago White Sox
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  - fan, and they've returned to first place, which
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  - many of us thought was never possible.
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  - But, Laura, let me turn to health care.
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  - What are a couple of stories that you're
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  - watching currently?
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  - Oh, well, thank you so much, Scott. And,
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  - you know, it's a good thing we don't
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  - have video on this podcast because I didn't
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  - think my face could get any redder from
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  - the sunburn I got over the weekend, but
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  - you certainly found a way. So I appreciate
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  - that very much. And,
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  - you know, such a a fascinating time in
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  - health care right now, truly, to look at
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  - what's happening out in the the space,
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  - how leaders are thinking about what the strategy
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  - is gonna be going forward, and really managing
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  - to your point, not only, the big picture
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  - items, but needing to get their hands dirty
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  - and dig into some of the things that
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  - are happening across the organization, whether it's thinking
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  - about workforce, thinking about pharmacy,
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  - digging more into what's actually the return on
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  - AI and the technologies they're investing in,
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  - right infrastructures,
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  - and and what really makes the most sense
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  - in terms of the skill sets they'll need
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  - on the clinical as well as administrative
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  - side. So I think it it all makes
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  - a ton of sense and is really,
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  - really fascinating time. And and to your point
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  - on the m and a deals, I I
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  - think it's,
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  - so instructive to see how the deal volume
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  - is, increasing. We saw 18
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  - transactions
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  - announced,
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  - in the second quarter, which was one of
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  - the highest second quarters that we've recorded since
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  - 2019,
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  - and continues momentum that began in the second
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  - half of twenty twenty five. So, this is
• 3:45
  - based on data from Kaufman Hall and Visiente.
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  - And, basically, they put together the reporting to
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  - look at some of the different,
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  - indicators of what's happening within that deal space,
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  - and it was fascinating. There were six mega
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  - mergers that were announced so far in 2026,
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  - which already surpasses
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  - the tool number of twenty twenty five mega
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  - mergers, which are defined by those mergers where,
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  - you know,
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  - have large revenues attached to them. The smaller
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  - party generates more than $1,000,000,000
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  - in annual revenue.
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  - And so when you think about that, we're
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  - definitely seeing more of these mergers that are
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  - taking place not necessarily where one party is
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  - struggling,
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  - but more or less because, both parties see
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  - a strategic advantage of having that merger or
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  - acquisition going forward,
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  - and and thinking about the future. I think
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  - in the past, there's been a lot of
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  - that type of activity because
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  - a hospital was struggling or or needed to
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  - join a larger system in order to have
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  - the finances to survive and,
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  - purchase the things they needed to in order
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  - to modernize. But really now, health systems are
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  - thinking through, you know, what's coming down the
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  - pipeline in the future,
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  - possibly
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  - different policies that are are gonna be challenging
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  - or trying to modernize their technology infrastructure
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  - and really,
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  - having some more proactive approach to strategically looking
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  - at mergers and acquisitions versus the reactive approach.
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  - So when you think about the numbers, we
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  - had the total transacted revenue in the second
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  - quarter hit 7,700,000,000,
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  - which was a sharp rebound from last year's
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  - all time low, basically. However, it was still
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  - well below the 10,800,000,000
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  - for the second quarter of twenty twenty four
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  - and,
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  - 13,300,000,000
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  - for the second quarter of twenty twenty three.
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  - And so, you know, there's still possibility of
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  - continued growth in that space, and the experts
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  - at Kaufman Hall certainly think that that's likely,
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  - especially in in moving forward into the second
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  - half of twenty twenty six ahead of 2027
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  - knowing that much of, HR one and some
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  - of the Medicaid,
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  - changes will take effect in 2027.
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  - So, really, hospitals and health systems, we expect
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  - to see more of these types of partnerships,
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  - more acquisitions and transactions,
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  - not only from a a sense of survival,
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  - but also looking at how are organizations
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  - trying to be proactive about the future and
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  - thinking through what's gonna make the most sense
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  - for them to be in the best position
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  - to grow moving forward.
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  - Thank you very, very much. And and what
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  - are you hearing from hospital leaders about what's
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  - driving
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  - acquisitions,
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  - alignments,
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  - and so forth? Are you
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  - starting to have some discussions? You know, I
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  - know some are driven by a small health
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  - system has to do it, but what's driving
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  - the bigger systems to want to do this?
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  - What are you hearing?
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  - For sure. So I think especially for the
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  - bigger systems as they're thinking through what is,
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  - growth look like for them, how are they,
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  - going to be in the best position possible,
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  - to continue to, you know, serve the organization
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  - and their patient population as well. Of course,
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  - larger systems that are in a position to
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  - grow and acquire or merge, I think,
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  - there's certainly a sense that if they're doing
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  - it proactively, if they're bringing on,
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  - a system, you know, in a space where
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  - it's not struggling, where it's, you know, able
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  - to combine and provide almost as much,
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  - expertise,
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  - as they were in the past, it it's
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  - makes a lot of sense because then
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  - the larger system is able to expand their
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  - footprint,
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  - doesn't have to really go into
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  - a market as new entrant, but, can expand
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  - and grow as a larger organization. There are
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  - certainly learnings, I think, especially from some of
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  - those smaller communities that can be,
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  - scaled out,
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  - from the health system perspective to different regions
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  - if they're acquiring
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  - an organization that's been particularly successful or effective,
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  - within their own region and thinking through how
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  - do we, you know, move some of these
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  - ideas into a broader organization,
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  - and some of this talent as well. I
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  - I think it's definitely been interesting to see
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  - as,
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  - the health systems come together, how they're
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  - merging and managing their executive leadership teams, and
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  - and what really
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  - you know, how they can move forward some
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  - of this knowledge, this expertise, this ability to
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  - work with,
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  - different companies that are coming in through that
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  - acquisition. You know, I think especially thinking about
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  - technology, a lot of
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  - AI and tech companies will partner with the
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  - smaller organizations
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  - to test out and try out things. And
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  - if, you know, those technologies are going well,
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  - if if some of those trials and and
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  - pilots are going well, it could be a
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  - really strong way to continue to partner and
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  - and grow and advance what's happening,
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  - in those more successful spaces. So I think
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  - there's certainly an impetus, certainly
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  - a, certainly a drive to do that moving
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  - forward. And and so making that right decision
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  - of which organizations they want to bring in
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  - and partner with and acquire,
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  - will be, obviously, extremely critical in the future.
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  - Thank you very, very much. And and, Laura,
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  - besides this huge
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  - advance and acceleration of mergers and acquisitions,
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  - anything else that you're following closely currently?
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  - Absolutely. So in preparation for a health IT
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  - and revenue cycle event coming up in,
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  - September. I've been connecting with
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  - a fair amount of CIOs as well as
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  - revenue cycle leaders from hospitals and health systems,
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  - large and small, across the country. And it's
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  - been interesting to hear about where their focus
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  - is right now and some of the things
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  - that they're
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  - really trying to move towards in the future.
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  - And so one of the the, more interesting
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  - trend lines that we've been pulling through is
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  - just, you know,
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  - c suites, whether it's a CIO or other
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  - leaders have certainly been looking at what it
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  - will take in order to,
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  - smartly organize their text bag stack and, think
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  - through how do I derive value from a
• 9:29
  - a variety of things that we're doing. And
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  - so for some folks, of course, it's putting,
• 9:33
  - you know, everything underneath one platform.
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  - But for others,
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  - you know, they really want to find a
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  - space in in place where they can pull
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  - together,
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  - a good variety of partners and and, still
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  - be able to work with the right companies,
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  - but but also, you know,
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  - figuring out what the process and governance is
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  - for them so they can quickly,
• 9:54
  - move past, you know, the pilot phase and
• 9:57
  - into adoption phase with the right
• 9:59
  - technologies, with the right companies that will then
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  - provide a high amount of value for what
• 10:04
  - they're trying to do. And so we've seen
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  - some,
• 10:08
  - hospitals and and systems
• 10:10
  - actually needing to go back and do mid
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  - cycle renegotiation
• 10:13
  - because of the pricing structures or they see,
• 10:16
  - hey. You know, we're getting a ton of
• 10:18
  - value out of this, and so those conversations
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  - are coming up more quickly than they had
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  - been in the past. And it's just been
• 10:23
  - really interesting to,
• 10:25
  - kind of get a glimpse into a lot
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  - of that,
• 10:28
  - conversation
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  - going forward. I I think, as quickly as
• 10:32
  - things are changing, growing, and developing, it seems
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  - like, you know, a lot of those leaders
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  - are trying to have, potentially smaller contracts to
• 10:40
  - start off with and then really, truly figure
• 10:42
  - out what they're going to be able to
• 10:44
  - do and how it's gonna be most beneficial
• 10:46
  - for them. So I think that's something that's
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  - been coming up. And on the revenue cycle
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  - side, we also heard from a variety of
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  - large and and top systems that the revenue
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  - cycle leaders are,
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  - scaling out the idea that revenue cycle isn't
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  - just a finance function, but it's actually an
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  - operational strategic function, something that everyone within the
• 11:04
  - organization needs to think about and understand and
• 11:08
  - under know their role within it, basically, so
• 11:10
  - that they're able to
• 11:11
  - have an optimized revenue cycle, not just from
• 11:14
  - the technology perspective, but also, you know, every
• 11:17
  - single person understands
• 11:19
  - what's happening with it and and how they
• 11:20
  - can impact for a more efficient, effective, and,
• 11:24
  - broader revenue cycle moving forward. So I just
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  - thought that was really interesting to see that
• 11:28
  - elevation,
• 11:29
  - across multiple
• 11:30
  - health systems, academic as well as, independent and
• 11:34
  - seeing it elevated in a space where it's
• 11:36
  - not just finance, but across the board, something
• 11:39
  - that's so impactful for hospitals and systems moving
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  - forward.
• 11:43
  - Thank you very, very much. Laura, it's always
• 11:45
  - fantastic to to to speak to you. I
• 11:48
  - I can't even tell you. I was literally
• 11:49
  - raving about you this morning and your leadership
• 11:52
  - and this ability to both lead and do.
• 11:54
  - Have such great respect to these people that
• 11:57
  - do and manage, that lead and still do.
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  - And you are the quintessential example of it.
• 12:03
  - Laura Dirda, thank you for joining us today,
• 12:05
  - on the Becker's Healthcare podcast. Great to visit
• 12:07
  - with you. Thank you so much, Scott. I
• 12:09
  - really appreciate it.