Key Considerations for Hospital Mergers and Acquisitions

Kaufman Rossin | South Florida Hospital News & Healthcare Report | April 7, 2016

With the unprecedented consolidation in the current healthcare market, you may be considering whether a merger or acquisition makes sense for your hospital. While a provider-to-provider acquisition may help you increase scalability of your organization and expand geographic reach, there are a lot of important considerations to keep in mind.

Before making any moves, hospital management should reflect on their overall goals and strategic vision for the organization’s future and how an M&A transaction might help them achieve that vision.

A lot of planning goes into successful mergers and acquisitions. You should conduct an industry analysis, identify a target, perform adequate due diligence, and plan for business integration. Proper planning can help you retain control of the revenue cycle post-acquisition.

If you do decide to pursue M&A activity as part of your growth strategy, you will want to identify a target that provides long-term value and results in your hospital being better positioned to succeed in this competitive, dynamic market.

Questions to ask yourself may include:

  • How will this merger or acquisition help us accomplish our strategic objectives?
  • Is there a sustainable competitive advantage?
  • How much will we be able to increase our market share?
  • Will we be able to offer additional services?
  • Does this move align with our culture and values?
  • What is our financial risk tolerance?
  • Are the target group’s physicians credentialed at our hospital?
  • Do we have a transition and integration plan for technology (EMR, practice management, billing systems, etc.)?
  • Does our transition and integration plan include change management for culture?
  • How does our fee structure compare to the target group’s structure?
  • Have we designed a compensation structure for the physicians (based on RVU, performance, etc.)?

If you’re thinking about expanding your healthcare organization, contact an accounting and consulting firm with industry expertise for assistance with financial projections, M&A strategy, due diligence and the ability to help you seize future opportunities.

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Kevin N. Fine, MHA, is a director of healthcare advisory services in the Miami office of Kaufman Rossin, one of the Top 50 CPA and advisory firms in the U.S.  He can be reached at kfine@kaufmanrossin.com.