Small hospitals, town clinics to benefit from mergers, consolidations — FCCM

Small independent hospitals and community clinics will have a stronger footing if they consolidate their operations through mergers and acquisitions, according to Fortman Cline Capital Markets (FCCM).

FCCM, a corporate finance advisory and consulting firm, said that the country’s healthcare industry is "highly fragmented," with multiple brand leaders across various sectors such as hospitals, clinics, pharmaceuticals, medical supplies, diagnostic centers, and health maintenance organizations (HMOs).

With such a landscape, FCCM managing director Francis Del Val said it presents opportunities for mergers and acquisitions to create an integrated ecosystem among industry players, especially for small hospitals and community clinics.

He said that independent hospitals are "feeling the squeeze" since "they don’t have enough allied healthcare professionals."

"It is something that we need to collectively focus on; those in the middle, such as the independent hospitals, are the ones feeling the squeeze… they are those experiencing financial challenges and unavailable to grow their utilization," Del Val said.

"Before we have community clinics in poblacion, in the center of the town, if they fail, it means our patients would need to travel further. They are the ones at most risk," he said.

"Consolidations and alliances are seen to emerge to allow the industry to become more efficient, respond faster to emerging trends in the healthcare industry as well as to the impact of Universal Health Care (UHC), which was signed into law in 2019," he added.

According to the Department of Health (DOH), there are 1,071 private hospitals and 721 public hospitals. Among the public hospitals, 70 are operated by the DOH.

Meanwhile, the Philippines’ private hospital owners are led by Metro Pacific Health (3,895 beds), United Laboratories’ Mount Grace Hospitals (1,700 beds), St. Luke’s Medical Center (1,250 beds), The Medical City (1,040 beds), and AC Health (531 beds and over 100 clinics).

"There will be opportunities for the private sector to be seen as the trusted partners of local government units (LGUs) who will primarily be implementing the UHC, as they may not always have the expertise nor the trained staff to succeed.  Collaboration between the private and public sectors is key to [moving] the UHC agenda forward,'' Del Val said. — VBL, GMA Integrated News