Factors that Put Healthcare Companies at Risk

June 29, 2017
| Articles

Industry Snapshot with Partner, Marc Pfefferle, and Managing Director, Jonathan Killion


The healthcare industry continues to evolve and many sub-sectors are experiencing disruptive forces that have challenged management teams to maintain and preserve financial performance.  Through our healthcare engagements, Carl Marks Advisors has identified three key factors that put healthcare companies at risk.

1. Care providers and suppliers are experiencing downward pressure on reimbursement rates which can mitigate or even offset growth in overall demand.  Management teams must continue to focus on managing margins, driving efficiencies and finding new creative ways to adapt to changing reimbursement models.

2. Suppliers in the healthcare industry are being affected by a contracting supply chain. Size and scale continue to be critical in offsetting downward pricing pressure, maximizing operational efficiencies and successfully executing on the trend toward population health management.  Care providers and suppliers that lack effective market positioning are at risk as a result.

3. Disruption caused by payor/compliance audits, government investigations and/or related to non-compliance can all have a material impact on the financial performance, liquidity and options available to a company.  For companies with payor exposure, documentation is critical and poor documentation can result in significant denials/resubmissions and subsequent delayed or lost receivables.  Government investigations (i.e. False Claims Act, Stark Law, etc.) can seemingly come out of left field to cause millions in legal bills and years of uncertainty before an outcome or settlement can be reached.

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