M and A + Divestitures

M & A + Divestitures Lessons from the Field

The recent Modern Healthcare article, Healthcare executives expect M&A to boost business in 2019, suggests M & A activity is the primary strategic lever for growth, and possibly survival, for many healthcare business entities in the coming year.  Down from 50% to 44%, acquisition remains the preferred growth method for many executives according to recent polling cited in this article. Whether vertical integration, as in the case of CVS and Aetna, or horizontal integration with unique service lines - caution is urged as market size alone is not a predictor of success. 

A dramatic rise in for profit hospital divestitures signals new opportunities and issues that must be considered.  Certainly, a multi factorial phenomenon that is not easily summed up, all healthcare divestitures have at least one critical common element – information technology.  

Industry experts posit successful business strategy is largely driven by investment in a comprehensive information technology strategy. Personally, I am firmly in that camp believing that every aspect of any modern-day healthcare business depends on information technology for its existence - namely internal and external communication, finance, throughput, regulatory requirements, business development, employee satisfaction, clinician and physician alignment, productivity, and customer affinity. 

Poorly devised, funded, and executed IT strategies are likely at the heart of many failed acquisitions and divestitures.  My recent exposure to hospitals divested by large investor-owned, for profit entities illuminates the critical need for comprehensive information technology due diligence by the purchasing entity.  In a new blog series focused on lessons learned from my work with divested hospitals we will discuss areas such as:

  •  More than a list of assets - details please!

  • Assignment of existing versus starting over with new solutions - the impact on the future!Assignment

  • Data stewardship - what to do with all that legacy data?

  • Managing from the rear-view mirror - why can't I get timely and comprehensive reports?

  • We must transition what by when!!

My singular goal in this blog series is to raise awareness of the critical role IT plays in a successful transition - whether you are acquiring or divesting a healthcare entity.

Don’t go it alone!

Becky