In Brief: IT is foundational to any successful M&A transaction and can be a significant driver of success when engaged during planning and prioritized during post-transaction integration.
The merger and acquisition (M&A) definitive agreements have been executed. Now what? Patient care coordination, cultural alignment, and shared services related to finance, payroll, and back-office functions (e.g., marketing and legal) are often addressed immediately after the close of the transaction. IT, meanwhile, is often left behind as something to deal with later. And that’s a problem, because healthcare IT has a far-reaching organizational impact, and a suboptimal system can diminish many of the efficiencies sought through the transaction.
Why IT is Critical to M&A Success
IT presents opportunities to reduce costs and serves as an enabler for post-transaction goals by driving standardization and providing visibility into organizational performance. Organizations that engage IT leaders during M&A planning and prioritize it during post-transaction integration can realize several key benefits:
Cost Reduction
Eliminating duplicate applications, negotiating more favorable pricing due to economies of scale, and restructuring teams to operate more efficiently can translate to post-transaction savings. Top areas for IT cost reduction include:
- Application portfolio rationalization.
- Staff consolidation or restructuring.
- Renegotiated purchased services agreements, particularly for highly skilled areas such as cybersecurity and network architecture.
- Transition onto shared technology infrastructure.
Workflow Standardization
Standardizing clinical and operational processes through technology-driven workflows enables organizations to operate more efficiently. Thoughtfully designed and implemented technology supports the adoption of leading practice workflows, driving improved patient care. In addition, standardized processes allow for easier sharing of staff and clinicians across locations, allowing organizations to flex to meet shifts in demand or address bottlenecks.
Reporting Consistency
Prompt reporting standardization allows stakeholders to understand costs and performance for the newly combined organization without needing to reconcile multiple sets of reports, typically a cumbersome and time-intensive process. The ability to report system-level data consistently and accurately also supports other common objectives of M&A activity, such as negotiating improved managed care contracts or using enterprise referral patterns to inform capacity planning, recruitment priorities, and other strategic initiatives.
Six Success Factors
Organizations considering a transaction should incorporate these success factors to ensure proactive IT integration planning, accelerate benefits realization, and build organizational confidence in the newly combined organization.
1. Involve IT early.
IT is frequently brought into post-M&A integration discussions after the deal closes, forcing the IT team to plan from a reactionary position rather than one that is strategic and proactive. Involving IT during due diligence allows them to help identify and quantify potential transaction benefits, raise considerations that may impact transaction resourcing or timelines, and escalate to leadership how other top organizational priorities requiring IT support impact, or may need to be adjusted to accommodate, post-deal integration
2. Begin IT integration immediately.
Supported by robust planning prior to the transaction close, IT integration should begin immediately so that impact to staff and providers can be communicated in advance, benefits realization occurs quickly, and the organization can transition to standardized, value-added processes as soon as possible.
3. Mitigate security risk.
In today’s climate of high-profile security breaches involving healthcare organizations, consolidating resources to efficiently monitor and mitigate potential threats, buttress infrastructure, and train personnel on how to minimize security risks is essential to protect patient information and maintain business continuity.
4. Manage change.
Complement technical integration efforts with a change management plan that clearly communicates to users what changes they will experience and when, how they will be impacted, and what training and support resources are available to them. Update stakeholders through multiple channels (e.g., town halls, website updates, emails) and clearly define who is responsible for developing and executing each change management initiative.
5. Automate manual processes to reduce stress on staff.
Beyond cost reduction and standardization efforts, prioritize automating manual processes to reduce stress on staff. These initiatives build goodwill by providing tangible benefits to users and support adoption of the many other changes stemming from the merger or acquisition.
6.Streamline systems to ensure positive provider and patient experiences.
Deliver a seamless experience to providers and patients to minimize disruption and enhance satisfaction. While long-term integration may involve consolidation of major IT systems such as EHRs or patient portals and require time to implement, incremental steps like deploying single sign-on and standardizing help desk support processes can help ease users’ navigation of multiple systems in the interim.
High Costs of Failed IT Integration
Failure to adequately integrate IT people, processes, and technology introduces risks to maintaining pre-transaction performance and realizing the advantages of the combined organization. Poorly integrated IT systems can cause service delays, increase inefficiencies, decrease provider and patient experience, and erode organizational confidence in leadership’s ability to effectively navigate the transition.
IT enables the achievement of M&A transaction goals through direct cost reduction, workflow standardization, and consistent reports that provide visibility into organizational costs and performance. Engaging IT during due diligence to help quantify benefits and initiate post-integration planning will allow the organization to accelerate benefits realization while also ensuring positive patient, provider, and staff experiences.
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