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Within the healthcare sector, mergers and acquisitions continue to change the competitive landscape at an incredible pace. However, when it comes to horizontal consolidations involving hospitals, there's a number of issues with the potential to derail even the most promising of mergers or acquisitions. And while every healthcare consolidation comes with its own unique challenges and benefits, success often depends on meaningful and sustained improvements in patient care, delivered at a lower cost. A merger or acquisition should also support a greater investment in technology to support electronic medical records as well as help in the pursuit of value-based care.

With these goals in mind, what steps should hospital executives take to ensure a successful merger or acquisition? Here's some guidance to help your executive team navigate the process.

Assess Your Current Situation

While the pressure to improve your hospital's competitive positioning may inevitably lead to a merger or acquisition, conduct an unvarnished assessment of your current operations and your ability to meet the challenges on the horizon. This would include the delivery of value-based care, the adoption of electronic medical records and the likelihood of securing access to the investment capital needed to support your strategic initiatives. As part of this analysis, consider your hospital's immediate and long-term needs to scale its operations and whether it makes sense to have deep expertise in a specialty such as oncology or coronary care as a means of differentiating your hospital's services and creating a competitive advantage.

Weigh the Potential Benefits of Consolidating

Identify the type and extent of the benefits your hospital would acquire from a potential merger. In order to do so, it often makes sense to bring in an impartial third party, such as a consulting firm with experience helping organizations in the healthcare sector, to evaluate your organization's strategic options. In addition to quantifying the implications of a merger or acquisition, the analysis should evaluate the pros and cons of a strategic alliance with a competing hospital system.

Delivering Value-based Care

The introduction of value-based care, which rewards healthcare providers for delivering a high quality of care at a competitive cost, continues to drive changes throughout the healthcare industry. Care coordination, which ensures efficient and effective delivery of healthcare from admission to discharge, plays an important role in the delivery of value-based care. So while it might go without saying, the delivery of efficient and effective healthcare plays a critical role in a hospital's ability to compete. Therefore, a merger or acquisition must improve the quality of patient care, while doing so at a sustainable cost.

Noticing the Benefits of Healthcare Consolidation

Despite a compelling case on paper, untold mergers and acquisitions fall far short of their promise. Realizing the benefits depends on your executive team.

Who within your leadership team can help ensure a successful merger or acquisition? If your team lacks the experience to drive the process, can you hire suitably qualified executives, or engage a consulting team with experience supporting hospitals post-merger or acquisition.

Maintaining Patient Care as a Priority

In the midst of the change that comes with a merger or acquisition, healthcare practitioners must have access to the services and support they need to ensure the best patient outcome. Therefore, post-transaction, the executive team must maintain a laser-like focus on minimizing the adverse impact of change on the hospital's staff and patients. Open, frequent communication from the leadership team can help to dispel rumors and half-truths that appear in the midst of change. If left unchecked, gossip and speculation can sap morale which would ultimately impact the level of patient care.

While the healthcare sector undergoes seismic changes in how it operates, many hospitals find themselves at a crossroads when it comes to going it alone or joining forces with a competitor. Yet the decision to merge or acquire a competitor requires extensive analysis as well as an unwavering commitment from executive management and employees to ensure that patients remain a priority, regardless of the path chosen.


To learn more contact shibani.faehnle@key.com or visit key.com/healthcare.