There were numerous headlines last year, and predictions as we head into 2013 about the volume, diversity, and revenue associated with Mergers & Acquisitions within the Healthcare space. For the Payer space alone, the estimate is upwards of $10-$12 billion in the next four years. That is a lot of activity.
The “Franken-Healthcare” Pandemic?
With Healthcare reform(s) being the primary driver, there are various types of transactions that are occurring as players in the healthcare industry look to hedge their bets against a changing environment and to diversify their capabilities. Over the past couple of weeks, there have been a number of articles about physicians practices merging with hospitals or with each other. And, there seems to be an ongoing series of announcements of Payers partnering with providers or acquiring Medicare and Medicaid lines of business, or consulting firms spinning off health information and analytics companies, or disease management and mobile device companies being be acquired by payers, private equity firms or pharmaceutical companies.
With all of this activity going on, I keep wondering if the hospitals, payers, HIT companies, and yes – consultancies, are going to get the payoff, synergies, and diversified portfolios they are aiming for? Or, are we in the midst of a “Franken-Healthcare” pandemic? And if this is a pandemic, what is the remedy or the vaccine to prevent these ventures from flat-lining once the ink dries?
I think the answer is thinking beyond the transaction, and making sure these deals are as transformative as they promise to be. If the promise of a transaction is to have a more streamlined and efficient delivery network, then are the processes and incentives truly realigned to realize this vision? If there are promises of synergies, are those tracked and realized once the deal closes? If the promise of an acquisition is to capitalize on a new technology, is the innovative team that built the product tucked away from the rest of the company to go dormant once the deal closes?
Transactions are hard, no doubt, but they are also relatively short in duration when compared with a lifetime of a company. The real work begins when the deal closes, and, for entities that forget this, I’m sure there’s a bit part for them in the next episode of AMC’s Walking Dead – the Healthcare episode.
Learn more about West Monroe’s take on Healthcare Payer M&A by clicking here.