Healthcare Provider M&A: Don’t Forget the Supply Chain

 

 

Healthcare provider M&A activity continues at a record pace as IDNs pursue improved margins through economies of scale and smaller hospitals struggle to survive in this era of declining revenues.

Yesterday, I attended a workshop hosted by Eric O’Daffer from Gartner at the IDN Summit. The topic was “What Industry Consolidation in the Healthcare Supply Chain Means to You,” and I wanted to share some of Eric’s observations specific to healthcare providers.

Eric talks with a lot of healthcare executives and senior leaders in the industry and does a nice job of summarizing his findings. So nice, that I’m lifting these observations directly from one of Eric’s slides:

  • Supply chain’s role and impact in M&A is not well understood by senior management in many IDNs.
  • M&A has range – Acute to Non-Acute and by Structure.
  • Improved merger and acquisition (M&A) capabilities are a growing area of need for healthcare providers.
  • Supply chain maturity in managing M&A varies greatly from reactive to strategic in upfront due diligence and implementation.
  • Successful M&A execution takes a dedicated team and typically 12-30 months to complete and yields savings of 3-8%.

Clearly, there is a growing requirement for devoted supply chain M&A integration resources and expertise in the healthcare provider industry. And, deploying those resources will accelerate the supply chain benefits associated with M&A activity, pulling millions of dollars in cost savings forward.

That’s why Pensiamo has established a dedicated team to support M&A integrations. Our team has integrated more than 20 academic and specialty hospitals over the last two decades. In addition to hospital supply chain integrations, our experience includes physician practices, rehabilitation services, behavioral health, visiting nursing, pharmacy, long-term care and hospice/palliative care.

That experience has enabled Pensiamo to develop and refine proven integration methodologies to rapidly streamline operations and unlock millions of dollars in annual supply chain benefits. Faster.

Are you contemplating an M&A transaction? Or have you put off the integration of some acquired hospitals for far too long? Pensiamo can provide a dedicated team to help you get the job done. Please contact us to learn more.

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