Financial Factors that Make Healthcare Organisations Merge

There are varied strategic financial considerations that make healthcare organisations keen on merging with others. The considerations include allowing financial growth in the organisations, bolstering market shares, gaining a foothold in new markets, and getting new products. Notably, all these considerations are geared towards the bolstering of the organizations’ financial standings (Dunham-Taylor & Pinczuk, 2004). Commonly, the organisations envision opportunities for growing their financial leverage and scope by growing. That often bolsters liquidity and increases capital access. The growth of the organisations enhances the organizations’ financial performance and prospects via leveraging elementary economies of scale (Healthcare Financial Management Association, 1982; Gale Group, 1999). Even then, when integrated with other synergies, which are strategic, the healthcare organizations’ sizes serve them as the means and basis for improved market share, product enlargement, and penetrating new markets. As well, by and large, the sizes occasion a clear competitive advantage.

Many healthcare organisations merge to enhance their financial prospects and performances owing to the resulting growth in their market shares. They merge when they establish that their competitions for clients are unviable as client bases keep move moving and the related product loyalty weakens or strengthens. Organisations grow their market shares by capturing their competitors’ customer loyalty and building in it to build their share more. Even then, it is noteworthy that growth in the organizations’ sizes does not necessary lead to enhanced financial performances and competitiveness (Banerjee, 1987; Sherman & Sherman, 2011). (Healthcare Financial Management Association, 1982; Gale Group, 1999). (Banerjee, 1987; Sherman & Sherman, 2011).

Some healthcare organisations ready themselves for it while many others do not. Commonly, as new products go past their beta phases, cheaper brand or knockoff developers and competitors are before now distributing competing offerings, injuring the products’ prices thus affecting the financial returns of the organisations dealing with them. Notably, varied technological advances have assisted in shortening the durations taken in promoting and delivering given products to particular marketplaces (Dunham-Taylor & Pinczuk, 2004; Sherman & Sherman, 2011). That is why many healthcare organisations are opting to buy out established producers rather than creating the products to avoid prolonged durations of marketing, as well as procuring, the products. That is especially so in cases of products which are oddly costly and unlikely to yield the anticipated outcomes.

 

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