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Advantages of Medical Industry Mergers and Acquisitions

By CME Corp Staff | September 9, 2015

Large healthcare systems buying smaller, stand-alone, hospitals and physician providers merging together or being bought by hospitals has become a big trend within the healthcare industry. That same trend is being seen on the commercial side of the healthcare industry as well as the clinical side. The healthcare industry has become very competitive and the benefits of larger group models provides many attractive benefits for both the product/service providers and their clients/customers, even including the patients. The following are just a few of the best of those advantages:

Resources and Economies of Scale

Smaller companies, generally, don't have all the resources necessary to keep pace with the increasing size and complexity of the growing multi-facility healthcare systems. Larger companies have more resources and can usually take advantage of the economy of larger scale for the purchasing of goods and services as well as of production, delivery and customer service/satisfaction. This economy of scale may also be reflected in more streamlined workflow, more efficient processes and a wider reach to serve more clients, customers and patients, which should serve to decrease individual item costs.

Higher Quality Service and Ability to Thrive

Sometimes smaller entities, whether they are small hospitals or other healthcare companies, have difficulty to both provide quality products/services and remain financially sound. Merging with a larger established entity is a prime way to help the smaller organization continue to provide quality products/services and successfully compete in the increasingly complex healthcare market.

For instance, St. Luke's Hospital and Health Network recently unveiled their acquisition of Phillipsburg's Warren Hospital and with it their plans to revive their maternity services and pump six million dollars in the hospital's intensive care unit, thus making such a merge beneficial both to the staff on hand and the patients seeking care.

Reducing Costs while Obtaining Wider Customer Base  

Many merged facilities/companies are able to achieve cost reductions by reducing administrative and other overhead, or indirect, costs.  Such overheads like marketing, purchasing, finance and maintenance become merged with the healthcare entities for increased purchasing power and lower, consolidated costs.  Each company may also enjoy a wider consumer base thus increasing market share, distribution channels and improved systems for more streamlined service. All of these cost-effective advantages for the companies being merged or acquired lead directly to savings for the consumer and/or patient.  Lower costs at the top should result in lower costs at the bottom.

These are all some of the benefits that are expected of the recent merger of Hospital Associates, a California based medical equipment distributor, RSI based in New York and Claflin Medical Equipment  based in Warwick, RI. Now rebranded as CME, CME serves thousands of hospitals, clinics, physicians, doctors, and other healthcare professionals throughout the United States as one of the most nationally recognized and renowned medical equipment and logistics companies.

This merger of Claflin Medical Equipment, Hospital Associates and RSI has resulted in the group becoming the first nationwide medical equipment-focused distributor with over 2,000,000 products from more than 2,000 manufacturers. It's an excellent move that has increased all of the companies geographic reach and scope of services that will result in increased customer satisfaction.

Visit our website to see how we can help support your new construction, expansion, or remodeling plans, and provide the medical equipment you need in a streamlined, efficient and cost-effective manner anywhere in the country.

About CME: CME Corp is the nation’s premier source for healthcare equipment, turnkey logistics, and biomedical services, representing 2 million+ products from more than 2,000 manufacturers.

With two corporate offices and 35+ service centers, our mission is to help healthcare facilities nationwide reduce the cost of the equipment they purchase, make their equipment specification, delivery, installation, and maintenance processes more efficient, and help them seamlessly launch, renovate and expand on schedule.