- Improving the integration of care across the continuum is the top driver of healthcare mergers and acquisitions, according to a recent Premier Inc. survey.
The survey of 45 healthcare C-suite leaders found that almost one-quarter (24 percent) of healthcare organizations are engaging in a healthcare merger or acquisition for increased integration. The organizations intend for integration of care across the continuum to provide efficient, effective patient care.
Delivering more efficient, higher value care will also help the healthcare organizations improve their performance in value-based reimbursement models.
“Healthcare providers are increasingly feeling pressure to form coordinated, high-value networks with aligned payment models, care delivery practices and financing capabilities,” stated Joe Damore, Vice President of Population Health Management Consulting at Premier.
“As they work to establish connections with providers outside the hospital to eliminate duplicative services and improve care for patients, some health systems are merging and acquiring other providers.”
Healthcare merger and acquisition activity is continuing at a rapid pace. The Premier survey alone found that 48 percent of healthcare C-suite leaders have completed a merger or acquisition in the past 24 months, and 77 percent plan to complete a deal in the next 24 months.
The survey findings align with recent research. A recent report from Kaufman Hall found that healthcare organizations announced the highest number of healthcare merger and acquisitions deals in 2017. Organizations announced 115 healthcare M&A transactions that year.
As the rate of healthcare merger and acquisition activity accelerates, the healthcare improvement company Premier Inc. set out to find out why.
While healthcare executives pointed to the need to integrate care across the care continuum, they also indicated that consumerism is driving healthcare merger and acquisition deals. Following integration, “keeping up with the increasing prevalence of consumerism” was the second most cited driver of healthcare M&A activity with 16 percent of respondents.
In response to the rise of healthcare consumerism, survey participants said their organizations are investing in more convenient, non-traditional care settings and staff members.
About 79 percent of healthcare C-suite leaders reported investing in clinics for ambulatory, urgent care, and retail. Another 77 percent said they employed additional patient navigators and care coordinators.
Healthcare organizations hope for greater access to convenient care options, such as retail clinics and outpatient care centers, to give them the competitive edge as patients engage in more consumer-like behaviors.
Retail clinics, urgent care centers, and other convenient care settings give patients more access to healthcare services, especially outside of normal physician office business hours.
Patient navigators and care coordinators are also key to improving the patient experience and responding to healthcare consumerism These staff members help patients move through the healthcare delivery system, and organizations employing the staff have seen reduced costs and higher care quality.
One 2017 study in JAMA Oncology found that non-clinician patient navigators reduced average costs by $781.29 per patient per quarter and the navigators helped lower emergency department utilization and hospitalization rates.
Additionally, healthcare executives are seeing several other drivers of healthcare mergers and acquisitions. The Premier survey found the following drivers:
- The need to manage capital and financial pressures, with 13 percent
- Response to increasing consolidation among payers, with 11 percent
- Success in alternative payment models, with 9 percent
As the healthcare industry continues to transition to value-based care and payment, the need to integrate care, respond to consumerism, and manage financial pressures is unlikely to subside. Healthcare merger and acquisition activity may move forward at a similar pace as organizations look for strategic ways to fulfill their needs.
“These insights prove that competition in healthcare is becoming much more dynamic and robust. Given the need for total, end-to-end services, clinical integration isn’t just nice to have, it’s essential for the future,” stated Steve Valentine, Vice President of Strategy and Advisory Consulting at Premier.
“Insurers, retailers and physician groups have rapidly created a new playing field with their own high-value networks that provide a range of choices and a focus on integrated, evidence-based care delivery,” he added. “To stay abreast of this trend, health systems are evolving to meet consumers where they want to be seen, while enhancing the care experience. For some, M&A initiatives are being pursued to spread the significant costs of this work, such as data management and the infrastructure needed to achieve economies of scale.”