Healthcare reform and a changing marketplace has dramatically shifted how healthcare payers plan their corporate development and merger and acquisition strategies. Historically, payers pursued mergers and acquisitions with a primary focus on expansion. Today, payers explore unconventional mergers and acquisitions to:
- Diversify their business portfolio: Payers want to expand their offerings and revenue streams to mitigate the impact reform will have on their bottom line.
- Expand capabilities: Payers understand the trend towards a consumer-based market and exchanges. In response, they hope to provide a broader range of consumer-oriented services and technologies including wellness programs, patient portals and mobile applications.
- Improve health outcomes: Payers need to invest in “big data” analytics capabilities to identify and predict gaps in care and eliminate waste, fraud and abuse.
- Manage the costs of healthcare delivery: By acquiring hospitals and physician networks, payers hope to control the delivery of services.
Experts predict that over the next four years, payers will spend $10 billion to $12 billion in acquisitions of these nonconventional targets. Are you prepared?
Complexities lurk beneath the surface
Payers understand the benefits a successful merger or acquisition can have. However, many still fail to reap the benefits of previous M&A activity that was focused on expanding membership base and back-office capabilities. In addition, many payers are acquiring businesses and capabilities that are new, unfamiliar and have fundamentally different business models. Integrating new capabilities poses significant challenges, leaving payers to struggle with how to capture the synergies that drove the deal in the first place.
For most payers, and the professional services firms and investment banks they hire, the top M&A priorities are to identify target acquisitions, structure and finance the transaction, and incorporate the acquired product or service capability into the organization as quickly as possible. As a result, synergy capture and true post-merger integration are often overlooked – leaving payers with the risk of managing a portfolio of businesses that lie outside their core competencies and inefficient operational management.
Capture synergies from previous M&A activity
West Monroe helps payers that have undergone M&A activity in the past realize synergy capture through integration, operational improvement, technology platform rationalization and overall business transformation. We explore possibilities including:
- Organizational strategy and performance alignment
- Customer and vendor contract and pricing synergy
- Operational efficiency and business process optimization to increase productivity
- Consolidation and integration of applications and data and/or migration to new environments
- Reporting structure implementation and key performance/metric definition for data-driven decision making and compliance
We pride ourselves on delivering on your business objectives - producing measurable outcomes that impact your bottom line. Our healthcare experts have worked in the industry and side-by-side with healthcare clients allowing us to deliver unique insights that can transform your operations. We also offer comprehensive project management and planning throughout the process to ensure that work stays on track and does not interfere with your core businesses.
Develop an integration strategy for future M&A activity
As healthcare payers respond to new drivers in the marketplace, it is imperative to have an integration framework to support a seamless transition to a combined entity. West Monroe combines deep industry, operations and technology expertise to help payers navigate the specific complexities of M&A. We help payers develop practical, efficient integration plans, establish standardized operating processes for the combined entity and define the metrics that enable you to track progress toward your goals. Advance planning and a standardized approach help you avoid headaches down the road.
Maximize the benefits of M&A
Whether you engage West Monroe before, during or after a deal, we can help you reap the maximum benefits from your transaction. Our comprehensive review examines an M&A deal from best practice industry, operational and technology angles. When integrating two or more organizations, it is imperative to examine your customers, employees, products, services, processes and technology to maximize potential synergies. Our consultants are well versed with proven expertise to manage the inherent operational complexities and broad transformation involved with merging two organizations.
During the integration and post-merger, payers also need to prioritize the customer experience and whether they have the systems, processes and people to support and engage their member base. Managing your customers through the integration, maintaining loyalty and successfully integrating acquired customers is one of the most critical success measures to manage.
Why West Monroe?
Where West Monroe Partners differentiates itself as a firm is through our ability to provide mid-market payers with the industry context, operational process excellence and technology depth in a single package. We work with you to develop a healthcare strategy and roadmap to help you succeed in an increasingly competitive marketplace.
Since 2010, the West Monroe healthcare team has assisted more than 100 healthcare organizations with M&A activity, including IT and operational due diligence and post-close integration. We are uniquely qualified to transform your business from strategy through integration, adoption and ongoing project management.
That’s business in the right direction.