Because technology is foundational in all healthcare organizations, having IT teams at the table before, during and after the merger or acquisition process is essential to its success, says Isabelle Bibet-Kalinyak, an attorney with the law firm Brach Eichler.
“Technology is so expensive to manage, change, merge, adapt or totally get rid of, and that is definitely part of the equation,” Bibet-Kalinyak says. “If the electronic health record systems are not compatible, or if you don’t have a plan on how to transition them, then there could be interruptions of care. There could be breaches under HIPAA where patient records are not safe. So, a buyer will want to know a lot about the IT infrastructure of a practice, as well as the history.”
Preparing for IT Integration Before a Healthcare Merger or Acquisition
The health of an organization’s IT infrastructure is an important part of its value.
During the merger or acquisition process, buyers will likely evaluate a healthcare organization’s IT infrastructure based on how it was built (either in house or by a third-party vendor) and maintained, and will also consider claims history and security policies, including cyber liability, says Bibet-Kalinyak.
“The more disconnected and difficult it is to transition the IT, the greater the impact on the purchase price,” says Bibet-Kalinyak. “The buyer will try to put the cost of a transition on the seller by reducing the purchase price.”
Eisenberg notes that legacy systems for patient care or billing may have been operated by third parties, so data may not be as accurate. He adds that smaller healthcare organizations can be less sophisticated when it comes to tracking patient outcomes and other data. As recently as 2019, more than 10 percent of physician-led practices were not using EHR systems, according to the Centers for Disease Control and Prevention.
“It’s key to have IT systems that are scalable, flexible and accessible to make them more attractive to the market,” Eisenberg says.