Mergers, Acquisitions and the Quality of Healthcare: Questions Raised, Answers Uncertain

Mergers, Acquisitions and the Quality of Healthcare: Questions Raised, Answers Uncertain

Is there any industry that has been buffeted by more powerful, transformative change than healthcare? The cost of care continues to outpace inflation rates. Fee for service has given way to value-based care. New technologies have rendered existing applications obsolete even before they have been fully tried and tested.

Similar forces have disrupted finance, media, retail and telecom, yet those fields have become more affordable and accessible. The healthcare sector, meanwhile, has become ever more expensive even as the COVID-19 pandemic exposes inequities in the sufficiency of care.

To survive, as Galen observed just last year in this whitepaper (Healthcare Application Portfolio Management & Decommissioning: Decrease Costs, Increase Agility), “Every kind of healthcare enterprise has accepted partnerships, mergers, and acquisitions….” Since then, the pandemic has added to the impulse to find new partnerships. To cushion operating margins while still delivering quality care, mergers with larger organizations continue to appeal as a sound strategy to obtain more cash and provide better care. In fact, a recent 2020 M&A activity report released by Ponder & Co. revealed Q4 volume showed signs of pick-up despite the lowest annual announced transaction count for the decade.

The savings realized from these new alignments have been used well, characterized by significant capital investment, upgrades in IT and facilities, and renovations, expansions, or acute facility creation.

But these enhancements have not always improved care quality and have had no meaningful impact on readmission rates or 30-day mortality. As HealthcareLeaders editor Christopher Cheney observed, they have yet to reduce hospital service prices.

The root of this discouraging news has been the continuing difficulty of dealing with unfamiliar technologies such as those in a new EHR system. With the adoption of new technology often necessitated by the need to integrate disparate systems from once-separate organizations, routine tasks have become more time-consuming and error-prone.

Interoperability issues are often exacerbated by merger and acquisition, with semantic management, including dictionary, nomenclature, and ontology mapping between EHRs posing to be problematic. Findings from a survey of hospital and health system IT leaders revealed in integrating disparate systems as part of M&A, data conversion and data retention shouldn’t be viewed mutually exclusive. Instead, a consensus among respondents suggest subsets of data should be converted from legacy systems to ensure clinical continuity and archiving of all data should be performed to satisfy legal retention requirements and reduce costs.

“Without planning,” says the JAMA report, “such changes can cause significant patient risk. Even with training, a learning curve makes formerly routine tasks more time- and attention-intensive and error-prone…(Even) finding the correct form in an electronic health record for ordering a test, identifying the correct substitution medication and dose from a new formulary, or transferring a patient” can no longer be taken for granted.

In short, interoperability remains just as significant and problematic as ever.

The Galen whitepaper points out that mergers and acquisitions have increased year after year but have not spurred healthcare delivery organizations to implement a full integration of operations and assets. Each time there is an addition to information technology application portfolios, organizational inertia reflexive thinking is to choose the path of least resistance – if legacy systems are working, there is no need to disrupt or rationalize, especially with a litany of other priorities. And that can create problems: most health IT applications serve well as temporary solutions, but they may not align perfectly with M&A strategies that were formulated for enterprise-level, business, and organizational objectives.

As soon as a merger or acquisition occurs, it is essential that a proactive application rationalization program be executed. Whether seller or buyer, healthcare organizations must first focus on simplifying their portfolios and the systems and personnel who support them. Unless they attend to this, they are liable to spend more, sacrifice efficiencies and neglect the most important matters – legal and regulatory issues, cybersecurity posture, systems and process integration, business continuity and the quality of patient care.

The mitigation of patient safety risks demands that hospitals and health systems identify components of their application portfolio that are not interoperable. They need to detail the process for integrating new health IT systems, applications and solutions into established workflows and create a process for evaluating physician and staff competency with new items.

We believe you’ll find value in reaching out to Galen for guidance in making the best choices about application decommissioning following a merger or acquisition, choices that will not only preserve business value but enhance patient care. Contact us to schedule an executive brief.

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