Post Merger Analysis On The Health Care Industry

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

In a world of budget cut and layoffs, medical corporations face new and different challenges in addition to helping and healing patients. I used to work as a medical biller in a physician’s office for five years and I experienced how difficult for the health care providers to get reimbursed. The government and the insurance companies have been limiting the budget towards the health care services. This action also affects the hospitals greatly because Centers for Medicare & Medicaid Services (CMS) and some policymakers have requested the hospitals to reduce the

The healthcare system in America started as a predominantly volunteer system where patients were required to pay little to nothing for treatment. Since it began, the healthcare industry has seen tremendous changes that have transformed it into a business entity which has operations like financial management, strategic planning and functional specialties to keep the industry viable. The industry is one of the largest in the country employing 15 million people with a projected increase of jobs with 3 million jobs annually. As the healthcare industry continues growing, services and personnel are changing, and various dynamics are coming into play to accommodate changes (Smith, Saunders, Stuckhardt, & McGinnis, 2013).

Analyze the technology necessary to meet the federal mandated requirements that will affect the merged healthcare organizations in the given scenario.

The expanded health insurance coverage via the Affordable Care act is having a major effect on managed care hospitals in many avenues. These effects are impacted via the increase in demand for care, the increase of patient revenues, as well as a lower uncompensated care especially for the uninsured. Not surprisingly, the constraints as well as the controls that are being imposed by the managed care have lead to an outrage by the doctors and their patients. Managed care in the United States finds itself under attack from every side. As far as the managed care organizations are concerned, administrators are unease regarding the profitability or the surplus for reinvestment and even the consumers are also worried about the possible closure of hospitals (Goodson, 2010). Managed Care Organizations have been forced to reduce hospital utilization even though there have also been a few facility closures.

Our group defined the success of the merger based on several outcomes. First of all, financial stability within the first two years of the merger; the formation of value-based payment models or other innovative payment structures which appeal to both payers and employers; low employee turnover, at or below the national benchmark; high employee engagement levels based on national benchmarks for the healthcare industry and finally the maintenance of accreditation. Once we defined success, we built out the following steps to work towards these outcomes.

The Stanford Health Services and UCSF medical center merger was projected to have a great turnout as it was supposed to be “enhanc[ing] the academic mission[s], strengthen[ing] referrals, and creat[ing] a more cost effective teaching hospital” (Sjoberg, 1999). The two competitors joined forces in hopes that it would alleviate the pressures of the new managed care systems by merging resources and acquiring more bargaining power. Stanford Medicine and UCSF came together at a time when many other academic health centers were looking to improve their negotiating powers with healthcare plans and physician groups. The merger offered hope to UCSF and Stanford by strengthening training programs and offering innovation plans as well as financial support.

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

The major difference between healthcare finance terminology and business finance terminology is that these terms focus on factors unique to the health services industry. For example, the provision of health services is dominated by not-for-profit or¬ganizations (such as ours), which are inherently different from investor-owned businesses. Also, the majority of payments made to health¬care providers for services are not made by patients—the consumers of the services—but rather by some third-party payer (e.g., a commercial insurance company or a government program). Even the purchase of health insurance is dominated by employers rather than by the individuals who receive the services. These terms emphasize ways in which the unique features of the health services industry affect financial decisions. The healthcare industry is a service industry. It is not in the business of manufacturing, say, widgets. Instead its essential business is the delivery of healthcare services. It may have inventories of medical supplies and drugs, but those inventories are necessary to service delivery, not to manufacturing functions. Because the business of healthcare is a service, this overview of key healthcare terminology will focus on the practice of financial management in the services industry.

The future and direction of health care has been the topic of discussion amongst politician and U.S citizens today. There are several challenges surrounding the future and strategic direction in which health care should be heading. Accreditation, quality of health care and organization’s compliance; access to health care, maintaining a skilled workforce, information technology and pay for performance are some of the challenges that currently presenting itself in healthcare today. If health care is not dealt with appropriately it will have a significant effect an impact on the strategic direction in the future and direction of care.

Understanding the financial analysis of healthcare organizations is strategic to the organization by understanding their stand on the amount of revenue they gain, healthcare assets, and their financial goals. This paper will provide a comparison on the performance of financial analysis of several California Healthcare Organizations such as; Scripps Health, Palomar Health, Sharp Healthcare, and Tri-City Healthcare. The four healthcare organizations will be illustrated with an overview about what the organizations have been doing financially , where they have been growing financially, and what have they accomplished over the past year from examining their financial statement. As the nation’s healthcare model continues to evolve,

Competition drives innovation and ultimately leads to the delivery of better healthcare. Competition has played a vital role in shaping the delivery of healthcare in the United States. Competition results in lower prices and broader access to health care and health insurance. Competition among and between hospitals and physicians intensified with the development of managed care organizations. In addition to putting pressure on costs, managed care plans have pressured providers to use shorter hospital stays and to offer alternative outpatient treatments (Botti, 2007). This led to lower costs and an increase in choice without sacrificing quality. Lower costs and improved efficiency has made health insurance more affordable and available. Another benefit of competition in health care is the innovation in healthcare technology (i.e. endoscopic surgery, anesthetic agents available in ambulatory surgery centers).

For several decades health care has been tied to the economy and with the current downturn we see continued efforts to control and reduce over-head costs. Health care organizations in their effort to become more efficient and address changes in the industry have altered their strategic business plans. Lee & Alexander (1999) researched organizational change in hospitals and their survival, in this paper I hope to discuss their findings and add other examples to validate their conclusions.

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.

With each passing day the health care industry is experiencing an increase in participants due to its perfect competition nature. Due to this increase the industry participants, the industry has vicious competition which in effect leads to an increased in the cost of doing business. Smaller companies within the industry are hard hit by this competition due to their limited resources and therefore find it hard to remain relevant within the industry. Due to the looming threat of closure and liquidation, small companies must explore various strategies they may use to remain in operation. On the other hand large hospitals that are looking to eliminate competition and at the same time improve on their market share and in effect their revenues, merge with those that are struggling with low profitability. These mergers are beneficial to the smaller struggling companies since they provide increased savings on company overheads and availability of specialized machinery. Growth is also expected due to the increased market share as well as the good will already established by the large company. Contrary to popular opinion, mergers are not always between a large and a small company. In the healthcare industry two small companies may come together in order to pool their resources together and be in a position to compete against the large companies.