Mergers and Acquisitions

Although hospital merger activity seemed to peak in the mid-to-late 1990s, one of the expected outcomes of current health reform legislation is an increase in merger activity throughout the country. The Insight team has already worked with many organizations contemplating a merger or change of control. Our services include:

Pre-Merger Assessment

Typically, this is an exploratory project in which one or more of the interested parties seek an objective business case analysis to see if it makes sense to proceed. We help boards and management teams identify the pros and cons of a projected merger by analyzing:

• What advantages each side brings to the transaction
• What obstacles each side brings to the transaction
• What issues need to be addressed before the transaction can proceed
• The operational and financial cases for the transaction (e.g., what operational improvements would result from a merger)
• The clinical case for the transaction (e.g., what program volume and combined skills are needed to improve quality and allow better access; what is needed to improve the new organization’s competitive position in order to retain, recruit and train physicians, clinical staff, etc.)

Community Benefit/Efficiency Study

In this engagement, our objective is to help clients in two ways:

• To assess whether a pro-competitive transaction provides improved access, quality of care and lower costs if the parties were to merge into one organization, and
• To provide the respective parties with sufficient information about the merits of proceeding so they can take the next step (e.g., letter of intent, developing a more detailed business plan, etc.)

A Community Benefit/Efficiency Study may be required to determine the expected savings and benefits to the community. In this type of engagement, we examine:

• Capital Avoidance Savings
• Cost Savings
• Access Improvements
• Quality Improvements

Merger Business Plan

If the business case warrants moving forward, we help clients develop a true strategic merger business plan that defines the essential components of the combined organization and how it will operate. 

Clients often ask us – when is the right time to develop a merger business plan – before or after the deal is closed?  We believe that a business plan developed before the close of the deal will likely cause difficult issues and even hidden agendas to surface.  Organizations that work through the difficult issues prior to closing and come up with a well-debated and well-thought out game plan are on their way to a successful merger.

This business plan includes a detailed description of the new organization’s future direction and addresses such issues as:

• What will be the organizational structure of the new organization?
• Will services be consolidated and if so, where?
• How will capital priorities and allocation be established?
• Are there new services to invest in?
• How and when will merger efficiencies be implemented?
• What is the plan for the next 3-5 years?

These initiatives often challenge participants, many of whom have likely never been part of a merger or acquisition process before. Our consultants have assisted dozens of organizations through this complex process, so you can be sure we have the knowledge, understanding, objectivity and sensitivity to guide you. Experience counts.