The Healthcare Hub

The Healthcare Hub blog focuses on how greater collaboration and visibility across the supply chain can improve both clinical and financial performance in healthcare. Working with hospitals, manufacturers, distributors and group purchasing organizations (GPOs) in North America and Europe, GHX provides a global perspective on issues such as healthcare reform, standards adoption, automation, e-commerce and demand planning, among others.

Bill Brewer

Manager, Product Manager
Tuesday, December 6, 2016

Hospital M&A -- Top Three To-Do's

Healthcare mergers and acquisitions caught fire in 2015 and are predicted to continue the trend. As noted in the recent article Hospital M&A is Heating Up co-authored by myself and Mike Gillespie, global management consulting firm Accenture forecasts acquisitions of non-acute providers to reach 84 percent of total acquisition volume by 2018. The M&A activity is fueled by efforts to cut cost, increase quality and gain economies of scale needed to survive in a value-based reimbursement environment. However, these goals may be compromised when provider organizations aren’t preparing adequately for the integration of technology systems and data that will impact clinical, business and financial performance.

There are many challenges and opportunities for supply chain to address during a merger. Addressing these three areas are key to operational, clinical and financial success.

  1. Data accuracy- Establishing a source of truth for vendor and product data is critical in controlling supply costs and is compounded through a merger. Improve master data by enriching with Healthcare Common Procedure Coding System (CPCS) codes and implement technology and processes to maintain item master integrity.
  2. Contract alignment- Know exactly who you are purchasing products from and at what price. Use technology to align contract to products during purchasing and to maintain pricing within your systems.
  3. Integration and data sharing- Upgrade your ERP or MMIS to your vendor’s latest version to help support future data integration and consolidation.

There is value – both for targets of acquisition and for those in a position to acquire – in addressing these three areas. As a target, an accurate presentation of the supply chain is more attractive and as an acquiring organization solidifying its financial position can potentially ease the funding process. You can read the entire article here.

Want more on healthcare M&A? Read how Mt. Sinai Health System tackled technology challenges during a time of significant growth due to M&A.

Supply Chain Optimization