Key Factors That Promote M & A In Health Care Service.

In 1997 University of California, San Francisco (UCSF) merged its two public hospitals with Stanford’s two private hospitals. The two separate entities merged together to create a not-for-profit organization titled UCSF Stanford Health Care. The merger between the health systems at UCSF and Stanford seemed like a good idea due to the similar missions, proximity of institutions, increased financial pressure with cutbacks in Medicare reimbursements followed by a dramatic increase in managed care organizations. The first year UCSF Stanford Health Care produced a profit of $22 million, however three years later the health system had lost a total of $176 million (“UCSF-Stanford Merger,” n.d.). The first part of this paper will address reasons

Healthcare organization is constantly making changes to operate at their optimal functional level and budget. There are different ways it can be determined what and where adjustments are needed to be made within the organization. A common technique or strategic plan involved is the SWOT analysis. This technique involves a discussion about the strengths, weakness, opportunities and threats in an

In fact, in a recent survey of health care leaders, 90% indicated they have intentions to pursue a population health strategy (Gamble & Sachs, 2015). While there is evidence that ACO’s are saving money, most of the cost savings are coming from physician run ACO’s (Steckler, Feldman, & Watts, 2015). In comparison, ACO’s run by integrated health systems are saving relatively little money (Williams, 2016). Even the Federal Trade Commission (FTC) is wary of the intentions of healthcare leaders who claim the pursuit of population health management as a goal of consolidation. The FTC’s skepticism of population health management was demonstrated when they blocked an acquisition of a 43-physician practice by St. Luke’s Health System in Boise, Idaho. Regulators stated that the acquisition was anticompetitive and would lead to higher prices (Galewltz,

Mergers and acquisitions have become a growing trend for companies to inorganically grow a business within its particular industry. There are many goals that companies may be looking to achieve by doing this, but the main reason is to guarantee long-term and profitable growth for their business. Companies have to keep up with a rapidly increasing global market and increased competition. With the struggle for competitive advantage becoming stronger and stronger, it is almost essential to achieve these mergers. Through research I will attempt to dissect the best practices for achieving merger success.

A merger is a partial or total combination of two separate business firms and forming of a new one. There are predominantly two kinds of mergers: partial and complete. Partial merger usually involves the combination of joint ventures and inter-corporate stock purchases. Complete mergers are results in blending of identities and the creation of a single succeeding firm. (Hicks, 2012, p 491). Mergers in the healthcare sector, particularly horizontal hospital mergers wherein two or more hospitals merge into a single corporation, are increasing both in frequency and importance. (Gaughan, 2002). This paper is an attempt to study the impact of the merger of two competing healthcare organization and will also attempt to propose appropriate

Therefore, this could be a major problem with staff’s seniority. What happens if John Doe has 15 years at King Memorial Hospital and Jane Doe has 15 years at Johnson Pike Hospital and they perform the same job? Johnson Pike Hospital has a contract for 5 years with King Memorial to provide quality of care without duplication. This scenario will cause dissension to occur between staff members which will affect the quality of care being provided. Consequently, the only option is for layoffs to occur to correct the overstaffing that resulted in the merger. However, if the two hospitals merge for profit only and maintain both hospitals, each hospital would maintain their staff. Consequently, the plan to increase the profits may take a little longer and could be risky financially of the viability of the two facility co-existing separately. Consequently, for all of these possible scenarios of the effects of mergers, it is so important to analyze all the parameters thoroughly before undertaking a business

One of the key financial drivers which help to cause health care organizations the desire to merge or the action of actually merging is this need for financial stability as a result of a struggle to survive in the modern healthcare climate. Thus the greatest factor behind hospital mergers is instability. "One belief is that by engaging in mergers hospitals can take advantage of synergistic impacts; by becoming larger forces in the market, hospitals can take advantage of quantity discounts on larger purchases, more effectively use advertising, and further lower costs through reducing duplication of facilities. Also, they have more leverage with managed care organizations" (Harris et al., 2000).

From the passage of the Patient Protection and Affordable Care Act in 2010 through the end of last year, merger and acquisition transactions involving acute-care hospitals increased 55% from 66 announced deals to 102 (Barlas, 2014). This movement is increasing for reasons that are evident. For providers, it is becoming a challenging environment to be a small medical practice. The system is going through a difficult switch to electronic medical records, which is expensive and requires specialized experience to avoid downsides. These challenges push physicians to pursue employment in large organizations rather than solo ownerships or partnerships in small

Healthcare systems in the United States function in an increasingly competitive and complex industry due to the nation’s ever-changing healthcare policies. The community-based and public service oriented not-for-profit hospitals are continually navigating these burdensome regulatory requirements and finding ways to align their strategies with the need to survive. With the goal to preserve and strengthen community services, augment financial sustainability, improve operational effectiveness, and expand sources of capital growth; one such strategy considered in this case study is the merger of two independent not-for-profit entities into a single, consolidated health system.

For several decades, economists, policymakers, and healthcare experts have argued on the inefficiency of the healthcare industry has been insulated from the competitive market forces operating in the midst of the economy. On the contrary, the healthcare receivers continued to be uninformed of the quality of healthcare they deserve and the government policies and programs that are responsible for the maintaining the quality. In fact, there are multiple ways of improving the quality of the healthcare and decrease the cost. The competition in the market is one of the important force responsible for improving the quality of the healthcare services while reducing its cost. On the other hand, competition is unhealthy for hospital economy

Second, a health system formation can raise the market power of the member hospitals. A merger with another hospital can increase the market power of affiliated hospitals, thus giving advantages in negotiating the price of care with insurers (Department of Justice and Federal Trade Commission, 2004). In the opinion of Karen Ignagni, the president of America’s Health Insurance Plans (AHIP), the goal of hospital consolidations is not the efficiency of care but the price of care (Creswell & Abelson, 2013).

There are many different forms of competition among health care organizations. Some of them are the prices of services, different co-pays someone will have to pay out of pocket, lower premiums, they have to be competitive in the quality of the service in which they perform daily. The health care competition is being advertised every day. The competitive nature of business cause them to reach out to the community. The health care industry has to fight for the approval of the community, the government, the insurance companies, the pharmaceutical companies and of course the stake holders as well as future investors.

There are several key financial drivers that most likely cause health care organizations to merge. According to Caramencio, health care organizations continue to team up with other facilities, insurers, and for-profit companies for a variety of reasons to include financial problems, and sometimes because of collaboration mandated under the Affordable Care Act and changing reimbursement models. On a positive note, these mergers are forcing assimilations and

Cost is the driver that will most likely cause healthcare organizations to merge. Most healthcare organizations have issues with spending. Most industries today are faced with a variety of obstacles in achieving or remaining profitable. The healthcare industry is no exception. Profitability is enough of a challenge under normal circumstances, but especially so during fragile economic times. Uncertain revenue streams and rising costs have many healthcare organizations understandably apprehensive.

Total 244 horizontally merged hospitals were analyzed and compared to more than 3500 short term general hospitals which were the basic data in 1986. The basic data, which were two/third of all U.S. short-term general hospitals before the merging period. Merging hospitals showed that they tended to merge in the areas with market concentration and higher HMO acceptance. Mergers were more likely to be owned private owners and wanted to be one member of the system, and they became bigger after merging in terms of a number of beds and high rate of acceptance. Generally, the results of the study were very positive. In the merged hospitals, both mean service price and cost of the organization were about 7% less than non-merged organizations during