Another Perspective on Healthcare M&A

I have read and have often written quite a bit about healthcare mergers and acquisitions from the industry perspective. I, for one, happen to believe that done correctly, they are good for the industry as scale can enable more efficiency and productivity.

A new national survey, albeit from the Large Urology Group Practice Association (LUGPA) with a potential vested interest, provides the patient perspective, which is not as optimistic.

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No Small Thing – The Growth of the HealthCare System

Mergers and acquisitions are all over the healthcare news, and have been for a while now. As described in a recent article in Modern Healthcare, hospitals and other healthcare facilities are coming together to form “sometimes behemoth” systems with the ultimate goal to achieve scale to create operational efficiencies.

The article gives examples of failures and successes and highlights many of the challenges that come with rapid growth. Overall, Modern Healthcare concluded that “hospital system executives continue to pursue size and scale through mergers despite the evidence from some recent deals that problems undiscovered during due diligence—or from culture clashes—may make the marriage hard to consummate.”

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Logistic Toxicity

Like the author of a post on Forbes titled “Logistic Toxicity, An Unmeasured Burden Of Healthcare,” I too had never heard of the term “logistic toxicity.” As described, it refers to the difficulty patients who are being treated for cancer encounter when trying to deal with their treatments and the morass of separate bills they receive from separate providers over a long period of time, not to mention coordinating frequent medical appointments, arranging for time off of work, for childcare or caregiving.

All of these logistical requirements can compound the physical and financial toll of this terrible disease and the term “logistic toxicity” really got me thinking about the level of logistic toxicity that exists in our healthcare systems themselves – in addition to the emotional challenges faced by patients and their loved ones.

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Connecting the Dots – Integrating Health Systems Post-Acquisition/Merger

Hospital and health system consolidations have been on the rise. The most recent statistics available indicated that there were 90 deals targeting 156 hospitals in 2011, according to “The Health Care Services Acquisition Report”, 18th Edition, by Irving Levin Associates. When the statistics for 2012 are finally tallied, an even higher number is expected.

This surge in consolidation is partially driven by provider responses to both the challenges and opportunities created by national and state healthcare reform. But mergers and consolidation also bring complex business considerations. If you add state and federal laws that can further complicate a transaction, healthcare leaders can find themselves facing even more potential obstacles.

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