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Assessing Your Situation – Common Acquisition and Affiliation Goals

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Tools & Tips | Value-Based Payment

Assessing Your Situation – Common Acquisition and Affiliation Goals

The answers to questions about your organization and its market in should help define the goals of an acquisition or affiliation strategy. 

The answers to questions about your organization and its market should help define the goals of an acquisition or affiliation strategy. Note that your organization may have multiple goals, which may suggest multiple approaches to acquisition or affiliation.

Common goals include:

  • Favorable access to capital. If the investments your organization needs to make to reach its goals exceed its financial resources, a full merger (e.g., one that consolidates balance sheets and fiduciary responsibilities between the merging organizations) may offer access to superior borrowing terms and rates.
  • System-wide economies. If your organization is struggling to find further opportunities for cost reductions, it might benefit from system-wide economies that can come from increased size and scale. Some of these (e.g., supply chain, revenue cycle, specialized expertise) are not dependent on physical proximity of the affiliating organizations, while others (e.g., service line or asset rationalization) do require closer physical proximity.
  • Primary care aggregation. If your organization needs to support specialty and acute-care services, it is important to connect/integrate more primary care physicians with the system. A strong patient referral network is even more critical since inpatient and even outpatient facility utilization per patient will likely decrease.
  • Population health expertise. Your organization may want to affiliate with another organization that is farther along the path to population health. Note that an organization with multiple needs (e.g., improved capital access and population health expertise) may choose different partners and different methods of affiliation to meet these needs.
  • Population health infrastructure. The costs of developing an infrastructure to manage population health can be significant. Collaborative development of this infrastructure with other partners (including interoperable EHRs, other IT and business intelligence tools, clinical benchmarks and care pathways) may make more sense than going it alone.
  • ACO/CIN formation. Organizations need not merge in order to amass the large populations that are desirable to manage care efficiently. Time will tell whether merged or affiliated CINs perform most effectively.
  • Other regional economies. Many health systems are working now to aggregate an efficient, cross-continuum regional delivery system: from primary care, to specialist and acute services, to pre- and post-acute care options, and beyond.
  • Other payment initiatives. Vertical integration between providers and insurers, employers, and other payers can leapfrog capabilities for the aggressive health system that wants to participate in managing the premium dollar. These benefits may or may not require other forms of consolidation (such as mergers).
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