The Drive to Merge, Acquire, or Partner

Jonathan Bees, April 12, 2016

The individual reasons are varied, as are the models, but healthcare leaders continue to look beyond their own organizations to survive and thrive.

This article first appeared in the April 2016 issue of HealthLeaders magazine.

Intelligence ReportWhile healthcare reform and the transition to delivering value-based care are pushing merger, acquisition, and partnership (MAP) activity to ever-higher levels, these are not the only factors responsible for driving this growing phenomenon. In fact, increasing momentum for MAP activity is noteworthy both for the range of influences playing a role in its acceleration, as well as the absence of mitigating factors slowing its proliferation.

According to the 2016 HealthLeaders Media Mergers, Acquisitions, and Partnerships Survey, for example, the top financial objective for MAP activity is to increase market share within our geography (70%). However, there is ample support for a range of objectives and the remainder of the top five—improve financial stability (60%), improve operational cost efficiencies (58%), improve position for payer negotiations (57%), and expand geographic coverage (57%)—all have response levels above 50%, indicating that no single objective is responsible for driving MAP activity.

Likewise, the top five care delivery objectives follow a similar pattern: to improve position for population health management (70%) receives the highest response, followed by improve position for care delivery efficiencies (63%), improve clinical integration (61%), gain care delivery cost efficiencies through scale (54%), and expand into new care delivery areas (51%). Note, however, that a reform-related care delivery objective occupies the top spot, so its influence cannot be understated.

"I would say that in every conversation that I have about this, somebody asks me how much did the Affordable Care Act have to do with driving the decisions that this particular group of people made, that this is all in response to healthcare reform and the implications that that poses for people. My observation is that it's possible to make an argument or connect a lot of things back to that, but in our case and in others that I'm hearing, it's not necessarily any one of the elements, but it's all of them together," says Greg Devine, former senior vice president of provider strategies at ThedaCare, an Appleton, Wisconsin–based nonprofit health system, and current president and CEO at AboutHealth, a Wisconsin-based clinically integrated network.

Jonathan Bees

Jonathan Bees is the senior research analyst at HealthLeaders Media.

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