Healthcare M&A focus shifts to value

An alternative M&A strategy known as “value-focused acquisition and affiliation” is emerging in healthcare, as hospitals look more toward improving the quality or cost-effectiveness of care as opposed to market domination. This is revealed in a new report, Acquisition and Affiliation Strategies, which is based on a series of interviews conducted by the Healthcare Financial Management Association (HFMA).

Mergers of equals: HFMA received 145 total responses to a survey sent to a random selection of its senior financial executive members in October 2013. Half of the respondents represented stand-alone hospitals, and half represented health systems. The hospital acquisitions trend may be “shifting toward mergers and acquisitions that take place between financial equals,” as opposed to more traditional acquisitions in which a stronger healthcare system acquires a weaker one, says the report.

The research also suggests several “defining characteristics” of acquisition and affiliation activity in the current marketplace. It also identifies the expected improvements in capabilities as the result of an acquisition or affiliation.

For more details on the research, see the Healthcare Value Wire (free registration required).