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

1285 WordsMar 14, 20176 Pages
Key factors that promote M & A in health care service In economic theory, M & A is created by a defensive firm to make another firm more vulnerable. From a theorectical perspective, there are factors that arrive at mergers and acquisition. One major factor is to increase and maximize shareholders wealth and value. However, practitioners of U.S health care system do not follow this theory. So, what is driving health care mergers? From my perspective, I think many factors are responsible for takeover. For instance, most independent health care practitioners are struggling to break even. Due to weak profits, cuts in medicaid and in order to survive economically and maintain long term viability in the bevy of hospital chains, they are…show more content…
Individual practitioners in the health sector merge in the first stage if they are sure the industry will generate a positive net present value (NPV). However, many SME health cares have no option but to merge in order to increase their financial and operational efficiencies. Doing a SWOT analysis will help identify where the organization has trodden financially after merging. It helps determine the negative factors that influence mergers survival, their financial results and how it can be reversed to positive results. Prior to SWOT analysis, the analyst should get information about the company on merger care system through their industry publication. Whether or not the merger acquisition is successful depends on (a) the net present value of the investment and (b) paper announcement of the merger. I mean once the merger is sealed, between three and eleven days, changes in the company’s value (the accurer and target) at the time of annoucement of the merger determines the acquisition financial success. The paper announcement returns is supported by Andrade Mitchell and Stafford (2011) after using the database of University of Chicago. Simulation analysis can also be used. Normally, revenue, economies of scale are incentives that drives M&A activity to spread it operations. Key factors that will drive financial planning process for post mergers in the health sector depends on ‘soft factors’ such as vision, planning,

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