Healthcare mergers and acquisitions (M&As) continue at a rise following a trend that began in 2009 with 50 M&A deals. 2017 recorded the highest number in recent history with 115 deals, and 2018 could be even higher. The scope and scale of M&A activity is changing as organizations seek to align for growth and access, and position for new competitive value-based markets. Hospitals now expand and capture market share, not only by building a larger footprint, but by focusing on more consumer-friendly means to deliver care. This focus means care is distributed through both virtual and physical access points. In those entities, enriched data can be used to deliver care outreach that actually makes a difference for patients. And that is where the new margins are.
Historically, technology and talent were primary assets used to weigh the value of M&A activity, but data is an equal pillar. Early and regular due diligence cycles that fairly attribute value to an organization's data are essential to seeing the full value of the M&A. The ultimate goal, of course, is data integration across the organization. Often the approach has been to rip and replace the EHR of at least one of the organizations. But this approach is costly and culturally disruptive.
Integrating data through a digital platform like the Health Catalyst® Data Operating System (DOS™) allows organizations to use their current systems and manage core financial and other KPIs in the first six months of a merger. Organizations can never be fully integrated until the data is integrated, and with a rip-and-replace strategy, that integration will take years and cost tens—if not hundreds—of millions of dollars.
Aggregating data and connecting with patients are survival strategies for managing population health, reducing costs, and improving outcomes. These gaps are often filled by adding services, clinicians, patients, or technology. An M&A process, using data as the means of integration through a DOS-like platform, can be an effective way to acquire these assets.
Buyers (the acquiring organizations) face enormous responsibility and risk with M&A transactions. C-suite leaders have a lot to consider—enterprise-wide technology, finances, operations, facilities, talent, processes, workflows, etc.—during the due diligence process. Information technology (IT) is yet another huge investment and potential risk for healthcare systems, and the CIOs who manage it. Effectively bringing together and rationalizing the IT organization, systems, and data is a prerequisite for organizations to achieve desired scale advantages for cost and quality.
But attention is often heavily weighted toward time-honored balance sheet and facility assets rather than next-generation assets with the long-term strategic value in the M&A process: data. The tangible nature of data makes it relatively easy to organize in advance and use for strategic planning, benchmarking, measuring, and reporting. A data-first approach also positions organizations well for population health, chronic disease management and value-based contracting: all synergetic goals of expanding in size and scale as a result of the M&A process. Data is easier to merge than IT systems that require everyone to have the same technology. Focusing on data is a faster way to gain strategic results.
To learn more about maximizing the value of M&A through a data-first approach, visit HealthCatalyst.com.
