Nov 02 2022

5 Takeaways for Healthcare CIOs on IT Integration During a Merger or Acquisition

Hospital IT environments are complex, requiring careful planning and collaboration throughout the M&A process to achieve a successful integration.

The healthcare industry has one of the most active merger and acquisition environments, and while healthcare merger and acquisition activity is down in Q3 2022, it’s improved from the same time last year. According to a survey from KPMG, 70 percent of respondents in healthcare and life sciences said they expected to increase their M&A activity in 2022, with more than half of healthcare and life sciences private equity investors saying they plan to do at least 10 percent more deals compared with 2021.

When undergoing a merger or acquisition, combining two IT environments can be a complicated process, especially in healthcare, where interoperability and integration can be a challenge. Here are some major takeaways from healthcare leaders on how to approach an M&A to achieve a successful IT integration.

1. Creating an Early IT Integration Vision Leads to M&A Success

Healthcare IT ecosystems are complex, with a growing number of Internet of Medical Things devices being deployed and data collection and processing pushing organizations to the cloud. As a result, healthcare leaders say an early evaluation of current and potential technology infrastructure within both organizations is essential to a successful M&A.

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 expensive to manage, change, merge, adapt or totally get rid of, and that is definitely part of the equation,” she 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.”

Having IT leaders involved in the M&A process from the beginning allows them to identify any potential issues early, making the integration smoother down the line.

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2. Data Integration Should Be an Early Consideration

Patient data could unlock the potential of early diagnostics and preventive care using artificial intelligence. However, healthcare data often is siloed and data entry in the electronic health record is inconsistent. In healthcare, inaccurate data can put lives at risk.

“It has become a big challenge for the healthcare industry,” says Venkataraman Chittoor, chief product and technology officer at Marathon Health. “When migrating two systems, we need to plan how it is used and mapped, and how to recognize data issues.”

Healthcare IT leaders should consider the impacts and details of data integration early in the M&A process.

“It’s not just moving data between columns. It needs to be a comprehensive migration. Data exchanges and storage have been a big challenge for healthcare companies, but they are making a lot of progress in catching up,” says Chittoor.

3. Partnerships Are Important to Navigating IT Integrations 

Healthcare and IT leaders are experts in their fields, but every merger or acquisition comes with its unique challenges. Expert guidance from a partner that has healthcare M&A experience can make the integration process easier and smoother.

Involving an IT partner with knowledge and experience specific to healthcare mergers and acquisitions can help organizations meet the demand for scale, especially with larger integrations. An expert partner, for instance, understands that thousands of endpoints are involved in clinical operations.

It’s important to involve a partner as early in the M&A process as possible, ideally before a public announcement has been made, so the partner understands the organizations’ business and IT integration objectives from the beginning. A partner that is in place before day zero can perform unbiased assessments sooner and make sure security is central.

4. Cybersecurity Shouldn’t Be an Afterthought in a Healthcare M&A

Cybersecurity is the top IT pain point for 38 percent of health IT leaders surveyed in a recent HealthTech Twitter poll. With cyberattacks growing more sophisticated and healthcare organizations remaining a primary target for bad actors, cybersecurity should be top of mind throughout the entire merger and acquisition process.

It’s important for IT leaders to understand the security infrastructure and gaps of both organizations so they can navigate the integration process without putting either organization at risk from increased vulnerabilities.

“We do a cybersecurity review, assess everything and fix concerns before we connect the acquired network to ours,” says Lehigh Valley Health Network CIO Mike Minear.

5. Due Diligence Is an Opportunity for IT Information Gathering

During due diligence, the buyer conducts a thorough process of investigation, verification and auditing of the target healthcare organization to identify risks and confirm information. While much of the focus may be on finances, it’s also important for organizations to consider IT environments.

Three things healthcare CIOs and IT leaders should keep in mind during the M&A due diligence phase are:

  1. IT leaders need a thorough understanding of both healthcare organizations’ IT environments, including security gaps and technical debt.
  2. Stakeholders should align on the IT integration strategy early, as integrations will move quickly once the deal is closed.
  3. Organizations should foster collaboration between IT teams and healthcare leadership to ensure that everyone is aligned and able to make decisions with future efficiencies in mind.

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Illustration by David Vogin

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