Nearly three-quarters of 291 senior executives from pharmaceutical, healthcare IT, medical technology, hospital and health system organizations said they expect better business performance in 2019, according to a new Capital One poll.
Mergers and acquisitions are the preferred growth plan for 44% of executives, down from 50% last year. That strategy mirrors the last three year’s polling results.
Health systems are also building regional hubs within and across state lines. Scale can help them negotiate better rates with suppliers and payers and expand patient access through boosting investment in outpatient facilities and telemedicine. Crunching data on regional populations can also reveal the most profitable service lines, clinical quality performance, their current position with payers and the strength of their physician network.
But mergers and acquisitions can fall short when far-flung organizations can’t unify their operations. Redundant executive roles may slow decision-making and inflate expenses. Standardizing electronic health records and enterprise resource planning platforms can throttle efficiency.
Mergers and acquisitions can be productive and powerful tools when the overarching mission and vision aligns, Shields said. But integrating electronic medical records and aligning medical staffs and corporate cultures can be very expensive and challenging endeavors, he said.
“M&A is not a magic bullet,” Shields said.
That being said, hospital executives continue to see growth through M&A as one of most effective ways to improve quality, efficiency and access to capital, he said.
“Regional systems that provide a full range of acute care and ambulatory services are getting stronger,” Shields said. “This puts more pressure on organizations that are more limited in their geography or limited in scope of service.”