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Mergers and acquisitions benefit providers and patients

The number of independent small health care practices and organizations is dwindling as health care mergers and acquisitions increase. Why is this happening?

According to Xtelligent Healthcare Media, the trend improves care for patients and lowers costs for organizations.

Seamless care

With small practices becoming absorbed into larger organizations such as hospitals, everyone involved in the care of a patient can access his or her health care records and other data and coordinate with other providers in the system. This allows providers to avoid replication and duplication of unnecessary tests, as well as discerning other ways patients can experience added value with lower expense. However, integration is key to this process.

One way to promote the likelihood that a merger leads to improved care is by creating an integration team to plan and execute the process of merging institutions. Experts recommend that organizations establish best practices for managing the project and a system for tracking goals that continues for two years following the closing of the deal.

Expanded options

When patients visit a clinic run by an individual or an independent hospital, they may have limited options for referral based on their insurance coverage. However, when they check in to a coordinated system, they may be transferred to the appropriate specialist without the added costs of becoming part of a new system. In fact, when it comes to hospital acquisitions, one study shows these deals can save millions in operating costs on new admissions.

Delayed benefits

Although the numbers look good for health care mergers and acquisitions, experts warn the savings to hospitals and other health care organizations may not be readily apparent. It could take two years or more for benefits to manifest, as the revenue declines quickly at the start of the deal while operating expenses take longer to decrease.

Health care monopolies

Just as the Federal Trade Commission regulates business mergers and acquisitions to enforce antitrust laws, that agency also has a hand in health care deals. The FTC monitors these aggressively, even though agency representatives note most health care mergers successfully benefit patients. Still, without oversight, there is the potential for one organization to take over the market. The lack of competition could lead to increased costs and restricted services.

Financial and clinical decisions

Often, the people who drive organizations toward deals are not the people concerned with providing care. It is, therefore, essential for these teams to work together for the benefit of patients, rather than solely seeking profit for the organization. By creating a strategic vision and establishing explicit goals for both financial and nonfinancial aspects of the deal, organizations have a better chance of seeing success and value added for the entity and patients.