Healthcare mergers can be a valuable tool to drive sustainable clinical and financial outcomes but need to be performed in a structured and professional way to reap real benefits, a global KPMG report says.
The study Taking the Pulse: A global study of mergers and acquisitions in Healthcare surveyed senior healthcare executives who all had participated in one or more healthcare mergers. It reveals that less than half of them felt that their organisation was fully prepared for the merger or acquisition.
Mark Britnell, KPMG’s global head of health comments:
“Healthcare mergers around the world face a number of key challenges that impact on their success. Defining and enhancing value; managing stakeholder relationships; insufficient planning and due diligence; and difficulties maintaining momentum are all obstacles along the way.”
“Proper pre-merger planning, robust clinical, cultural and financial due diligence and constant communication are all key ingredients to successful mergers in the sector. “
The survey also highlights the significant impact of the market in which the mergers were conducted. For example, mergers that are widely viewed as being mandated by a higher power (such as governments, regional system managers or large payers) are at least 10 percent less likely to achieve success.
Respondents that had participated in a mandated merger reported that they were almost 50 percent less likely to have conducted due diligence before the merger. More than half of mandated merger respondents suggested that significant change took over five years to achieve. Those who had participated in non-mandated mergers tended to see success in two years or less.
Managers implementing mandated mergers also tend to have a more difficult time identifying and quantifying the indicators of success. For non-mandated mergers, the objectives tend to be fairly clear, which in turn allows healthcare managers to focus their attention on achieving their key indicators and executing a highly-strategic plan.
Mark Britnell comments:
“There are a number of key lessons that can be learned from the mergers we analyzed in the study and that were cited by healthcare executives over and over again: focus on value, work with stakeholders, pay attention to planning, and plan for long-term success.
These are key market and organizational imperatives that have a significant influence on the progress, pace and success of healthcare mergers. Understanding how these characteristics will impact a merger, and being able to mitigate and respond to them, are critically important if healthcare mergers are to achieve their full potential.”
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About the research
“Taking the Pulse: A global study of mergers and acquisitions in Healthcare” provides high level findings and analysis of the study and can be downloaded at www.kpmg.com.
Between late 2010 and early 2011, the Manchester Business School’s Healthcare and Public Sector Management team carried out 29 in-depth interviews with senior executives from private and public healthcare providers in 12 countries across the globe. The respondents and their organizations had all been involved in at least one merger and the discussions focused on their experiences before, during and post-integration.
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