According to a recent study, the majority of hospital and health system merger and acquisition transactions are not financially successful. Booz & Company, a global management and strategy consulting firm, analyzed a sample of 220 hospitals with pre- and post-transaction performance data over a 10-year period (1998-2008) and found that less than half (41 percent) of all acquired hospitals outperformed their market.
The target with M&A deals is to accomplish a strategic goal as well as obtain a financially stronger position post-transaction. Below are three steps that may help a hospital or health system develop a deal with positive financial margins:
Overall, post-transaction financial success is possible if an M&A transaction is a step toward an already established goal, is followed by due diligence and is implemented in accordance with an integration plan. For more information about steps to take for financially successful transactions please contact one of the authors.