Mergers and acquisitions are showing no signs of reducing their momentum. On the other hand, this rapidity is expected to rise in the coming years, as per experts. According, to research analyst’s merger and acquisition activity is because of an opportunity to move towards value-based care that providers need for great scale as well as more geographic coverage.
If you are planning to join the trend then first consult the healthcare business brokers. If you stay around Texas then consult Stoneridge Partners, an experienced merger, acquisition, and partnership team. Now, let’s get to know the top three merger trends in detail.
It has led to optimistic financial and clinical outcomes
When healthcare administrators commit to M&A activity then they are focused totally on fulfilling care delivery and financial goals. They have several financial reasons for adapting the M&A activity including to enhance –
- Operational cost
- Financial stability
- Market share
- Payer negotiation situation
The survey reveals that large organizations are interested more in expanding their geographic reach. Small entities are focused in fulfilling their financial objectives. Up till now nearly 46% mergers gave increased net patient revenue. 73% expect to increase their total cumulative dollar value in coming three years.
New M&A transactions are emerging
Recent M&A activities technically don’t fall under the merger and acquisition category. They are actually contractual relationships. This new type of non-M&A partnership is anticipated to grow as it is less expensive. Moreover, there is no exchange of assets and no change of local governance.
Most deals fail? Why?
As merger occurs, due diligence phase starts and so does probable derailment conditions. Cultural problems and financial liabilities are the main cause M&A deal collapse.
Three financial reasons M&A’s get abandoned during or before due diligence phase are –
- Concerns about assumed liabilities
- High support costs
- Worries about price
Operational reasons to withdraw from M&A’s include –
- Incompatible cultures
- Apprehension about governance
- Distresses about operating transition plan
Tips to make healthcare merger successful
If M&A transaction is on your radar then here are tips to make it successful.
- Make a list of what the involved organizations need to achieve form this merger.
- Leaders need to operate efficiently.
- Be open to embrace the new culture and change.
- Both sides lose something during the merger. So, understand staff’s emotions, make no promise [as you cannot predict the future, tell staff that you will be ready for any challenges coming your way] and indulge in relaxation to eliminate the toil of M&A.
- Highlight leadership responsibilities because they are the ones that engage, encourage and set hopes to build a new culture.
- There may be members in the team, who will say they have never done anything like this before but the leader will need to strategies and make the change happen.
- Digital culture needs to be evaluated. It needs to progress from a beginner stage [cultural changes] to intermediate [focus on patient care] and finally advanced. The final stage is the new culture leaders worked in getting through the merger successfully.