by
Gus Iversen, Editor in Chief | August 07, 2015
From the August 2015 issue of HealthCare Business News magazine
Will this consolidation trend ever end?
While ISO acquisitions have shown no signs of slowing down, the size of the companies being bought is starting to decline.
Just as the number of independent hospitals has declined, Fall says there will be fewer and fewer small third-party providers. For Sloan, although larger ISOs are emerging, the process of consolidation is here to stay. Successful small companies will distinguish themselves by purchasing even smaller successful companies, and in that sense the ISO food chain will perpetuate itself — even if there are fewer big fish for the taking.
Alvarez says that while there will always be a few niche ISOs specializing in certain equipment in certain regions, those companies will not grow. “An ACO is not going to sign on with a guy in California who only does GE CT scanners, because what if they have a couple of Philips or Siemens systems, too? You’re not going to have two suppliers.” That trend is happening among OEMs, too, according to Alvarez.
“That’s why they love us — they use us so they don’t need 20 different agreements with high-risk, low-capital, small, singular focus companies.” XR-29, the MITA dose standard that will cost hospitals a percentage of Medicare reimbursement if their CT systems do not meet certain standards, is likely to accelerate that cycling process. Biddle says that a stronger ISO may be able to help customers using slightly outdated scanners make them compliant without doing a complete upgrade.
As for the guy who got into the industry as an independent and is working on those 10- or 20-year-old systems, he won’t have the infrastructure or time to learn or buy the new equipment to keep those modalities viable, according to Biddle.
“In the old days people would leave the OEMs and go out on their own, and they would start their own organizations, and you will continue to see that into the future,” said Biddle. “You’ll continue to have individuals coming out and starting their own companies. Some will figure out how to grow those companies, and it’s just a cycle that our industry goes through.”
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