Report: Investment Portfolio Mindset Needed for Healthcare M&A Deals | Healthcare Informatics Magazine | Health IT | Information Technology Skip to content Skip to navigation

Report: Investment Portfolio Mindset Needed for Healthcare M&A Deals

September 17, 2015
by Rajiv Leventhal
| Reprints

Record levels of mergers and acquisitions (M&A) are changing the U.S. healthcare landscape, but if healthcare providers don’t oversee these transactions with an investment portfolio manager mindset, they could be leaving money at the table, according to a new report from Accenture.

Accenture’s report, which analyzed more than 1,500 healthcare provider acquisitions between 2006 and 2015, identified a surge in deal-making over that time, which is being driven by the need to gain economies of scale, shift from volume to value-based care, compete in local markets and expand digital health and healthcare IT capabilities. Accenture estimates that in the first five months of this year, healthcare providers set a year-to-date record in acquisition volume of $241 billion.

What’s more, large U.S. health systems are buying clinics, physician practices and digital resources in search of growth opportunities in lieu of traditional acquisition of other hospitals, the report found. As providers are seeking to diversify and differentiate, Accenture’s research found the shift toward vertical and digital acquisitions in healthcare will continue gaining momentum. The share of “vertical” acquisitions—in which health providers buy non-acute-care facilities, such as clinics or physician practices—will reach 84 percent of the total provider acquisition volume by 2018, up from 74 percent today. The share of “digital” acquisitions—purchases of health companies that focus on sensors, mobility, analytics or cloud (SMAC) capabilities, such as remote monitoring or telehealth–will expand by a multiple of eight, from 1 percent of overall acquisition volume in 2014 to 8 percent by 2018, according to the report.

At the same time, Accenture found traditional acquisitions of hospitals by providers decreased from 32 percent to 21 percent between 2006 and 2014. The share of traditional horizontal acquisitions will shrink even more dramatically, from 21 percent in 2014 to 6 percent by 2018.

“To deal effectively with greater complexity, higher volumes and other changes resulting from increased acquisitions, industry providers will need to manage their businesses with the mindset of a portfolio manager,” Kristin Ficery, managing director of health provider consulting at Accenture, said in a statement. “Rather than viewing deals as one-off opportunities, the best-prepared executives will systematically manage a potential deal as a product of the whole.”

Topics

News

NewYork-Presbyterian, Walgreens Partner on Telemedicine Initiative

NewYork-Presbyterian and Walgreens are collaborating to bring expanded access to NewYork-Presbyterian’s healthcare through new telemedicine services, the two organizations announced this week.

ONC Releases Patient Demographic Data Quality Framework

The Office of the National Coordinator for Health IT (ONC) developed a framework to help health systems, large practices, health information exchanges and payers to improve their patient demographic data quality.

AMIA, Pew Urge Congress to Ensure ONC has Funding to Implement Cures Provisions

The Pew Charitable Trusts and the American Medical Informatics Association (AMIA) have sent a letter to congressional appropriators urging them to ensure that ONC has adequate funding to implement certain 21st Century Cures Act provisions.

Former Michigan Governor to Serve as Chair of DRIVE Health

Former Michigan Governor John Engler will serve as chair of the DRIVE Health Initiative, a campaign aimed at accelerating the U.S. health system's transition to value-based care.

NJ Medical Group Launches Statewide HIE, OneHealth New Jersey

The Medical Society of New Jersey (MSNJ) recently launched OneHealth New Jersey, a statewide health information exchange (HIE) that is now live.

Survey: 70% of Providers Using Off-Premises Computing for Some Applications

A survey conducted by KLAS Research found that 70 percent of healthcare organizations have moved at least some applications or IT infrastructure off-premises.