The Big Story: JPM 2026 – Five takeaways on AI, M&A and outpatient growth
“At last year’s event, several nonprofit health systems mapped out a series of acquisitions in an effort to reach $30 billion in annual revenue. While some inpatient and outpatient growth is in the works, hospital operators this year made frequent use of words such as ‘rigor’ and ‘discipline.’”
(Are you) gonna need a bigger boat
By Tim Stewart and Isaac Squyres
3-minute read
Rigor and discipline are not the most exciting combination of words, but we can look all around us and see where those traits are in short supply. In the case of hospital operators, the need for hyperfocus on both is being driven by the arrow on current and future reimbursement projections careening wildly depending on the latest from Capitol Hill.
It’s understandable that health system captains looking at choppy seas ahead are weighing whether to retrofit their boats to be bigger or smaller – or even building a flotilla – to be best positioned for a rough voyage. In that context, rigor and discipline get a little more exciting when they’re powering big strategic swings like, buying, selling and merging.
Over here at Jarrard, we were glad to see this conversation taking place. We’ve been swimming in the deep end of healthcare M&A for 20 years now. We know a thing or two because we’ve seen a thing or two, to borrow a phrase.
Being able to articulate a clear “why” is central to the success of healthcare partnerships, particularly as systems grow larger and larger. $30 billion has become a sort of magic threshold for health system expansion, but as Modern Healthcare notes, “The $30 billion annual revenue target has been echoed by health system executives over the years, but it isn’t clear why that specific number has repeatedly been systems’ goal.”
Bottom line: It’s never been more critical to lean into the clear value proposition of a deal. Executives and board members of health systems across the country are convinced that the middle is the worst place to be when it comes to health system size. Not small and nimble enough to flex strategy to meet changing needs. And not big enough to lower costs or build truly integrated care pathways.
But do your caregivers understand that? Or believe it? Does your community? Do they know “the why?”
The Why of the Why
You may have noticed trust is at a premium today. People are skeptical – of hospitals, of the fundamental structure of healthcare, of just about everything. Making Big Changes without explaining why and addressing real concerns is a shortcut to erode whatever trust remains.
Due diligence is a complex process that comes down to saying, “We need to be able to answer why it’s a good idea, why it will help achieve our goals, why it will help our community.”
Something else we’ve been saying for 20 years is that healthcare is deeply personal and deeply local. A $30 billion health system is only going to be truly successful if it feels like “my hospital” to the people who work and receive care there. When everything else feels big or remote, the ability for leaders to focus close to home is powerful and builds trust with those who are affected by the change. It creates an answer for the obvious question, “What does this mean for me?”
Trust us. People are receptive to this conversation. We’ve heard directly from healthcare consumers whose local hospital has been acquired. Their perspective is often a blend of what we’d call optimistic skepticism. What we find resonates most is the message that their local hospital will still be their local hospital – but now with greater resources thanks to a larger, coordinated structure. But – and it’s a big caveat – don’t say that unless you’re prepared to deliver on that promise.
The reality is that the incentive structure in place today is driving towards greater consolidation of hospitals and health systems. For many systems, then, it’s a matter of when rather than if another round of M&A is necessary. Whatever that looks like, it’s wise to approach these questions from a perspective of local trust and local strength.
Today’s environment is massively chaotic, and people are questioning the motives of healthcare organizations more than ever. (We’ll unpack that more next Sunday’s when we release our annual State of Play survey results). Skepticism and loss of trust comes from lack of clarity. So, take the time to be clear. Have the rigor and discipline not just to ensure a decision is the right one for the organization, but that it will give your community what it needs.
Contributor: David Shifrin, Emme Nelson Baxter
Image Credit: Shannon Threadgill
