In recent years, we have seen a number of healthcare consolidation trends, specifically within the senior living industry. Larger providers are strategically splitting off parts of their portfolio, allowing organizations with historically smaller operations to expand their portfolios through acquisitions. In fact, there were over 350 changes of ownership among the Skilled Nursing sector in 2022 alone (CMS).
In many cases, this is leading smaller providers to rapidly double or triple in scale. These changes create opportunities for these healthcare organizations to establish efficiencies through technology, specifically in their procurement process. Here’s what you need to know about mergers and acquisitions in 2023, and how Direct Supply® DSSI™ can support your organization through the process.
Why are Mergers & Acquisitions becoming so common?
According to the McKnight 2023 Outlook, nearly 40% of Skilled Nursing owners and executives believe they will sell some or all of their senior living portfolio in 2023. There are a number of reasons leading to these healthcare mergers and acquisitions within Skilled Nursing:
- High inflation
- Unstable Medicare and Medicaid reimbursements
- Increased labor costs
- Stagnant incoming revenue
- High interest rate pressure
M&A trends continue to emerge as the senior living industry recovers from the COVID-19 pandemic and navigates the unknown of the future. DSSI is here to help your organization establish procurement efficiencies.
What struggles may organizations encounter during the M&A process that DSSI can help with?
One large struggle is figuring out how to handle procurement when your team hasn’t had a designated procurement professional in the past. For most mid-sized organizations, managing vendors and establishing a procurement strategy are tasks that fall by the wayside.
As your organization gets larger, these questions within procurement become necessary to answer to establish financial viability as you continue to grow. Getting your arms around what strategic procurement looks like in healthcare and senior living is priority one. And luckily, DSSI has a wealth of experience helping folks navigate that transition.
When should DSSI get involved in the building acquisition process?
Early communication is key. One benefit of working with DSSI is the industry expertise established over the last 30+ years . The DSSI team is here to support your growth and success, and we can add significant value throughout the M&A process and beyond.
The DSSI procurement strategy is built on supporting your relationships with your suppliers. We will support your communication with your supply chain throughout the process and implement a procurement system to give you the operational control that you’re looking for.
The DSSI procurement solution will also support your expanding internal procurement team. The system establishes standardized purchasing processes and provides an opportunity for your organization to instill confidence in the employees you have also acquired through the acquisition.
How can healthcare providers leverage DSSI when acquiring new buildings?
As buildings are shuffled like cards in a hand of poker and they’re changing owners rapidly, there’s an opportunity to leverage the DSSI technology and the Direct Supply® industry expertise to establish a healthcare procurement strategy and reduce the time needed to manage your procurement. Whether that’s relationships with vendors or analyzing your spend to find opportunity for savings, or just less time managing the requests and approvals that are necessary for large purchases, all of those burdens can be lessened with a system like DSSI.
What are the benefits of partnering with DSSI?
There is a large list of benefits to the DSSI procurement solution in general, but with respect to customers undergoing mergers and acquisitions in particular, one really stands out: Real-time visibility into the spend-down that’s happening in your buildings. As a new owner, one challenge is the lack of long-standing personal relationships with your new employees. You’re trusting that they’re acting in your best interests, but you may be operating on blind faith.
Enter a system like DSSI. You can see everything from the orders that are being placed, including your approvals on those orders. You can see how well your new buildings are complying to your existing contracts or whether they’re ordering off contract with vendors you have not approved. It allows you to be an active manager because it gives you visibility into data you would need, rather than being reactive based on the financial reporting that you would otherwise produce at the end of the month or the quarter.