International expansion.docx - U.S Hospital Firms Hungry to...

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U.S. Hospital Firms, Hungry to Expand, Look to China With deals in Asia and elsewhere, operators aim to hedge exposure to domestic pressures and diversify revenue By Melanie Evans April 22, 2018 Wall Street Journal ProMedica , a nonprofit operating more than a dozen hospitals across Rust Belt communities in Ohio and Michigan, is looking to a new market to bolster its anemic growth: China. Executives and staff from the Toledo-based nonprofit have been touring hospitals in Shanghai, Shenzhen and Chengdu, exploring possible deals in the world’s second-largest economy that they hope will help offset weak revenue growth at home. “We have to look outside our traditional world if we’re going to survive,” said Randy Oostra, president and chief executive of the hospital group. “The economic model is tough” in ProMedica’s domestic markets, where populations are stagnant or declining and where cost pressures and competition are shifting medical care outside of hospitals , he said. The hospital industry has been slower to globalize than many other U.S. sectors, daunted by the investment required and content with what was for many years a robust domestic market. Some prestigious U.S. medical centers and HCA Healthcare Corp. entered overseas markets years ago, but most American hospital systems have stayed home. Now, more are seeking cross-border deals for the first time, while others are expanding their overseas reach. Deals range from consulting and management contracts to acquisitions. Markets attracting U.S. interest are diverse: from posh London neighborhoods to booming Chinese cities and other investments scattered across Europe and Latin America.
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The push is an effort to diversify revenue as pressure intensifies from U.S. consumers and policy makers to cut medical spending , some executives said. Others said new markets abroad offer more attractive margins or more favorable payment models. A more global reach can also help in the development of ties with international researchers, a potential benefit to U.S. academic
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