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Merger on Your Mind? Go Ahead, Take the Plunge

Philip Betbeze, for HealthLeaders Media, May 31, 2013

Though Deloitte is far from the last word on the prospects of hospital mergers, its findings are that the financial and operational performance for recently acquired hospitals improved more post-deal than their non-acquired peers. This discovery flies in the face of evidence over a longer time period than the Deloitte study, that in using the same metric, less than half of mergers overall are successful. Why I even wrote about that very topic here in this space several months ago, based on another study that looked at hospital and health system mergers and acquisitions.

So two well-respected organizations, with reams of research to back them up have come to two seemingly opposite conclusions. What's the truth?

Likely, both are true, from a certain point of view. The Booz study (PDF) I cited in October looked over a much longer time period than Deloitte's more recent study. While Deloitte examined only mergers that occurred in 2007 and 2008, with information on the success of the mergers until 2010, the Booz study covered 1998–2008.

Assuming better performance in later years, as Deloitte's report suggests, shows that clearly, something has changed in that 10-year time period, skewing Booz's statistics negatively.

What is it? Unfortunately, the answer is not black and white. My best educated guess is that mergers lately seem more strategic—and more necessary, even if they fall through before completion. Systems are taking more chances in order to better prepare for an uncertain future.

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