Challenge
Over the past five years, the volume of healthcare acquisitions has more than doubled, increasing competition for prized acquisition targets and increasing pressure for efficient integration of those targets1. However, the efficient capture of the promised synergies of those transactions, while managing the increasingly complex regulatory environment, eludes acquirers. Indeed, a 2019 study found that healthcare cost-saving synergies from healthcare transactions significantly trailed those of other industries, achieving only 1% savings compared to an average of 7% from all other industries combined.2
Great planning with focused resources can improve the chances of successful integration. In 2021, Ankura worked with a multi-billion dollar, publicly held healthcare services company to plan the acquisition and integration of five hospitals and more than 50 physician practices. The client approached the Ankura M&A team to create this rapid integration plan as well as help navigate the Federal Trade Commission (FTC) review process.
Solution
Our initial work supported our client’s corporate integration management office (IMO), creating the narrative materials that ensured executives quickly aligned on the big-picture goals of the acquisition. This early effort also established the key measures to track progress toward the key objectives of the transaction. Our decades of experience with large healthcare organizations give us a unique perspective regarding the importance of tracking specific progress milestones during a complex acquisition. Working as a conduit between the seller and buyer, we identified several integration planning areas and began setting success targets.
Inventory and integration of IT equipment and systems, as well as associated training on the use of the same, can significantly slow down acquisitions, especially in the healthcare space. Ankura prioritized IT, visiting 41 separate locations in two weeks. Our teams assessed IT equipment, networks and connectivity, clinical applications and interfaces, physical security, and more. In doing so, we empowered the client to make strategic decisions rapidly on what IT changes had to be made sooner for this large, multifaceted transaction.
During these same visits, we also collected operational due diligence data on the staff for each practice. To speed analysis, we created a unified and centralized process for gathering and tracking data using standard processes and templates. This effort reduced data duplication, increased data reliability, and ensured that partners across departments could easily access the information they needed without the need for custom reports. Having updated, accurate data at their fingertips enabled our client to strategically plan their integration approach across all practices and providers, for over a dozen separate workstreams.
Key Workstream Activities & Deliverables
3 Key Deliverables:
Onboarding new staff can be a major hurdle for large acquisitions, especially in the healthcare space where physician contracts can be extremely complex. Ankura assisted our client by designing and driving the process to aggregate all physician contracts with the legal department, ensuring that all contracts met client standards and readying offer letters for 115 physicians and 47 advanced practice providers.
Electronic health record (EHR) integration was a significant challenge in this acquisition, given the time constraints and the unique needs of both the buyer and seller. Ankura facilitated both parties’ agreement on the integration path forward by preparing multiple EHR rollout plans as different systems were proposed, denied, and reintroduced during buyer/seller discussions. We developed plans for a new EHR, professional practice management system (PPMS), and billing environment for physician practices, leading a combined seller, buyer, and vendor team through requirements, workflows, contracts, migration, build, and test planning. Additionally, Ankura prepared the client with detailed fallback plans for paper record processing in case an EHR system was not ready in time.
Ankura also helped with preparations for the FTC review, working with client data teams to provide the required information and analysis for timely submission to the FTC. Ankura ensured initial submissions as well as responses to follow-up requests were complete and met deadlines. The process we implemented to keep our client teams focused on all elements of the acquisition reduced stress around the regulatory hurdles because they were always ready to address FTC requirements and deadlines.
Outcome
Although this acquisition did not proceed due to regulatory concerns, the Ankura team’s efforts produced long-term value for the client. Our work illuminated areas of improvement for the acquisition team creating lasting efficiencies in the client’s many workstreams and data collection efforts, and – perhaps most importantly – put the organization in a strong position for future acquisitions. Ankura helped develop and improve the client’s strategic integration capabilities, equipping them with all the necessary materials needed for growth. With integration strategies and rollout plans in hand, and no foreseeable let-up on the competitive pressures driving acquisition strategies for growth, our client is poised for future success.
2 Accenture Analysis: Insight Driven Health: Healthcare M&A: Mastering the 3D chessboard, 2019.
© Copyright 2023. The views expressed herein are those of the author(s) and not necessarily the views of Ankura Consulting Group, LLC., its management, its subsidiaries, its affiliates, or its other professionals. Ankura is not a law firm and cannot provide legal advice.
