The nation’s healthcare system is undergoing serious change, so it should come as no surprise that many healthcare providers are also experiencing their own form of evolution. M&A activity is becoming more common, but many executives are viewing it as an opportunity for their business to grow.
Dr. Glenn Steele, Jr. is the president and chief executive officer for Geisenger Health System in Pennsylvania. Steele recently explained to the Times Leader how Holy Spirit Health System has signed an agreement with Geisinger Health System to become one of its affiliates. According to the CEO, the move is an important step forward for both organizations.
“As the health care delivery system in the United States moves toward a value-based model, we look forward to working together to implement evidence-based medicine programs, enhance capabilities, facilities and clinical services, and improve population health in the Harrisburg community,” Steel said.
Additionally, financial need is no longer the major driver for healthcare M&A activity. According to a survey by the Healthcare Financial Management Association (HFMA), the most important driver of affiliations and deal making was efficiencies and economies of sale – cited by 58 percent of respondents. The HFMA announced the survey results at its annual institute conference in Las Vegas.
The second most popular reasoning for M&A activity was organizations wanting to have an improved and sustained competitive position (51 percent).
Kit Kamholz, a managing director for consulting firm Kaufman Hall, explained in the HFMA report that the rationale for acquisition and affiliation activity began to change back in 2009.
“Organizations became more interested in bolstering their physician platforms, driving quality initiatives, lowering costs, improving IT foundations and enhancing their brand,” Kamholz said in the report.
HFMA President and CEO Joseph J. Fifer agreed, saying in a company statement that when affiliations are likely to be well-received when they improve value for patients and other care purchasers.
“When a merger or acquisition happens for the right reasons, everybody wins,” Fifer said.