Mergers and acquisitions in the healthcare space have reached a record high in recent years. A recent survey by Definitive Healthcare cites industry consolidation as the top trend for 2019.
According to a study by Deloitte and the Healthcare Financial Management Association, the primary motivation of acquiring parties is to gain market share. But for those being acquired, greater access to capital — primarily for healthcare IT and facilities improvement — was cited as a top driver.
What’s notable here is that the biggest objectives of each side are not exactly aligned. That can make achieving successful outcomes more challenging.
An often overlooked component of these scenarios is healthcare IT. Now more than ever, this function is at the center of nearly all aspects of medicine, which is why IT leaders representing both parties should be in close contact every step of the way through a merger or acquisition.
Achieving desired outcomes can be difficult at best, and it usually takes about 24 months after a deal is inked to do so, the study notes. Failing to address IT throughout the process could lead to unmet expectations, excess costs or failure to achieve operational efficiencies and strong patient care.
Here’s how healthcare IT leaders can successfully navigate the mergers and acquisitions process:
MORE FROM HEALTHTECH: Learn how enterprise resource planning systems can help organizations navigate a merger.
Take a High-Level View
First, make sure you understand the strategic objective of the deal for both organizations. By considering all angles, you can successfully create an IT merger plan that will deliver required outcomes for the venture.
Conduct an IT Audit
Carefully review each party’s business impact analysis, its business continuity and disaster recovery plan, and HIPAA security risk assessments. These documents, if current, will provide a wealth of information about the state of an IT environment — including an inventory of all applications and systems, an organization’s preparedness for downtime, and any weaknesses or gaps in the cybersecurity infrastructure.
$409 million
The average revenue for sellers in hospital mergers and acquisitions deals in 2018
Source: mnareview.kaufmanhall.com, “2018 M&A in Review: The Year in Numbers,” Sept. 20, 2019
These are key elements to know before two IT teams merge. If you’re unable to get this information from a potential business partner, notify executives of a potential red flag. Lack of diligence and transparency on either side can cause a deal to go off the rails and inject unacceptable risk into the equation.
Focus on Data
It’s easy to focus on big-picture plans such as replacing an EHR system or transporting equipment. That shouldn’t be the first step: IT leaders must create a data map for both organizations that includes data from applications such as EHR systems, as well as from human resources, finance and other areas. In most cases, data will need to be combined; in some cases, it will be archived or deleted.
Understanding the mountain of patient-related data — not only from EHRs but from imaging, labs, pharmacy, billing and more — is critical. In some cases, it can be abstracted to a layer independent of the system (as is often done in the analytics arena) to be useful for multiple purposes. This marks a fairly advanced approach to data during mergers and acquisitions, but it could allow both IT teams to assess which systems should be used and why and make a data migration more effective.
Create Governance Structures
Many healthcare organizations struggle to develop governance structures for data and IT. During mergers and acquisitions, however, there is often such a strong need for structure that implementing a governance framework is crucial. Determining how data will be managed — both during and after the merger — can help dictate the priority and order of data management.
Define Future Roles and Rosters
Develop a map of current roles and responsibilities in each party’s IT department. Although it may be challenging to discuss, counterparts should have an honest discussion about what efforts will be needed to support the new organization now and in the future. Don’t talk about people at this point, concentrate on roles. This will help keep teams focused on outcomes.
Once roles are defined, work on slotting current staff into those roles. If there are overlaps or gaps, discuss how to shift employees accordingly. Combining two IT departments may result in reduction of some staff but it can also re-energize a combined workforce by offering new roles and opportunities to learn.
Create a Plan
Follow a standard project plan and be meticulous in your planning. People, processes and technology will need to be addressed as you merge two disparate organizations. Ensure that the strategic vision is formulated into operational objectives and a tactical roadmap. That becomes the basis of your plan, which should work its way back up the chain to be reviewed and approved by leadership. This will help maintain strategic alignment.
Planning ahead and encouraging collaboration between teams can make even a complicated merger less stressful. Likewise, putting IT needs at the center of the conversation ensures that no disruption affects hospital employees and patients.
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