Mergers and acquisitions are dominating the healthcare industry headlines. PWC reported that Q3 2017 was the 12th quarter in a row that the U.S. has seen over 200 healthcare M&A deals. The recent December announcements of Advocate Health Care and Aurora Health Care's plans to merge, UnitedHealth's plan to buy DaVita, and CVS's plan to buy Aetna (just to name a few!) demonstrate that M&A strategies have been widely adopted by healthcare providers like hospitals and clinics, as well as health insurance providers and pharmacies.
But what's driving the massive surge in healthcare M&A? And what tools and approaches can help make these mergers and acquisitions successful for all parties involved?
Bigger Means Better...Patient Outcomes and Experiences
In recent years, the percentage of people who buy insurance directly (rather than through employers) has risen, meaning that individuals have more choices and can be more selective in markets where insurance premiums are rapidly increasing. If the value of the care provided is inadequate with one plan or with a particular hospital, they can more easily switch to another. In turn, insurance companies have become more selective regarding which healthcare providers they choose to work with. At the same time, value-based care is on the rise, incentivizing providers to coordinate care to avoid redundant services, prevent medical errors and keep their patients in good health.
One way that hospital groups, acute care clinics and specialty providers are addressing these heightened expectations is by purchasing or merging with other healthcare entities and together implementing higher standards of care. This results in better patient outcomes and experiences with more comprehensive care, as well as economies of scale that lower costs for patients. Insurance companies have joined in the M&A activities for many of the same reasons, expanding the quality and type of services they can offer their customers.
Population health management is another trend driving the healthcare industry and contributing to the rise in M&A activity. It refers to the aggregation of patient data across multiple healthcare providers into a shared patient record. That's why we see many companies consolidating in regional areas, rather than scattered geographically. The goal is to provide better healthcare by sharing information, diagnoses and offering consistent medical advice, ultimately making it less likely that patients will switch providers.
Turning M&A Risk into Reward with IAM
Despite the benefits, embarking on a merger or acquisition can be risky. In fact, around 70%-90% of acquisitions are deemed failures. Companies may face clashes of culture, issues with transparency and employee engagement, errors in negotiation and valuation, and even legal and compliance risks. On the technical side, the success of IT integration is a crucial factor contributing to the overall success of the venture.
Healthcare IT professionals need a well thought out integration plan and the right solutions to help them bring together all the complexities of infrastructure, applications, data and security policies. The alternative is a lengthy onboarding process, systems that don't work together properly, unexpected extra costs, downtime and dangerous security vulnerabilities.
This is where identity and access management (IAM) can be a big advantage. IAM can help you quickly give new providers, administrators, patients and members access to all the applications and resources they need, centralize security policies and privileges, integrate all siloed identity data into a single source of truth and keep your systems and applications running securely through it all.
In my next blog, I'll dive a bit deeper into four common M&A challenges and discuss how Ping's IAM solutions can help you address them.
To learn more, visit https://www.pingidentity.com/en/platform/industry/healthcare.html