While providing medical services to the public has traditionally been seen as a domestic business, recent acquisitions of British healthcare concerns by Tenet Healthcare and Acadia Healthcare suggest that more U.S. healthcare providers are looking overseas for growth.
Dallas-based Tenet has made 10 British acquisitions, while Franklin, Tennessee-based behavioral health chain Acadia obtained 23 inpatient facilities through its acquisition of U.K.-based Partnerships in Care.
Roy Moore, principal director of Global Market Access for Nashville-based Decision Resources Group says this could just be the beginning.
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"We're seeing a movement toward foreign acquisitions and it's not surprising because the U.S. system is oversaturated with hospitals," he said. "There is a lot of opportunity in the developing part of the world, in places where they don't have national insurance."
The timing seems right for American providers looking to build their enterprises on a global scale, Moore said, because some top foreign organizations are willing to partner with American interests and economic conditions in certain countries, such as Russia, favor non-governmental healthcare.
DRG research associate Yazan Saleh adds that American organizations can find opportunities overseas where long underserved populations need more access to medical services.
"There are regions where there is strong potential for growth," Saleh said. "Companies find they can grow at high rates in places where high levels of care are not provided for citizens."
Purchasing established facilities makes more fiscal sense than buying land and building from scratch, Saleh said, pointing out that it takes roughly $150,000 per bed to build a new facility as opposed to approximately $60,000 per bed for an existing structure.
In offering advice to U.S. systems considering branching out into another country, Moore said there are several factors to consider: whether the country has a government-run health program or private insurers; how demographics are stratified between rich and poor; and how receptive the government is to an American corporation investing in local properties.
Scott Schoeffel, special counsel at the law firm Buchalter Nemer in Orange County, California, thinks it makes perfect economic sense for U.S. healthcare interests to expand internationally.
"It's a way to enhance the brand and pick up more market share," he said. "Deploying American know-how and exploiting new revenue streams in countries where economies are picking up could be good business. If that wasn't the case, I don't think they'd be doing it."
Cultural, political concerns
Just about anywhere outside the United States are cultural, economic and political differences to that provider organizations must adjust to. Without careful examination and diligence, these factors could present pitfalls, Saleh said.
"There must be clarity and familiarity with all the policies – some countries don't have transparency in their environments, which can make it difficult and risky," he said.
Schoeffel agreed that entering a foreign country is bound to create various challenges, depending on its location.
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"It's not that you can't adjust, you just need to be aware and manage it," he said.
One often-overlooked aspect of doing business abroad is the need to adhere to the Foreign Corrupt Practices Act, a federally enforced statute forged in the late 1970s in conjunction with a number of other countries. The aim of the law is to prevent bribery and kickbacks in order to gain business on foreign soil.
"It is easy to enforce and it is vigorously enforced," Schoeffel said. "Invest in compliance, make sure you have a program to track your people and anything of value that passes hands. Get it buttoned down."