Health mergers can be valuable if structured correctly

Friday July 29th, 2011

A report by KPMG finds that healthcare mergers can be a valuable tool to drive sustainable clinical and financial outcomes but need to be performed in a structured and professional way to reap real benefits.

The study Taking the Pulse: A global study of mergers and acquisitions in Healthcare surveyed senior healthcare executives who all had participated in one or more healthcare mergers. It reveals that less than half of them felt that their organisation was fully prepared for the merger or acquisition.  

Mark Britnell, KPMG’s global head of health comments: “Healthcare mergers around the world face a number of key challenges that impact on their success. Defining and enhancing value; managing stakeholder relationships; insufficient planning and due diligence; and difficulties maintaining momentum are all obstacles along the way”  

The survey also highlights the significant impact of the market in which the mergers were conducted. For example, mergers that are widely viewed as being mandated by a higher power (such as governments, regional system managers or large payers) are at least 10% less likely to achieve success.  

Respondents that had participated in a mandated merger reported that they were almost 50% less likely to have conducted due diligence before the merger. More than half of mandated merger respondents suggested that significant change took over five years to achieve. Those who had participated in non-mandated mergers tended to see success in two years or less.

Managers implementing mandated mergers also tend to have a more difficult time identifying and quantifying the indicators of success. For non-mandated mergers, the objectives tend to be fairly clear, which in turn allows healthcare managers to focus their attention on achieving their key indicators and executing a highly-strategic plan.

To view the full report click here.

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