Mergers and acquisitions are not something most physicians pay any attention to, unless it is one of your daughters getting married.
In the world of finance and industrial companies they are common. Witness the recent bailouts of huge financial institutions where mergers of banks, and acquisitions of financial organizations took place faster than a roving sperm trying to get to the ova.
The recent passage of the Affordable Patient Care Bill has alerted many insurance companies, hospitals, medical groups and even individual solo practitioners that something huge may be about to take place in health care and the health industry at large.
Accountable Care Organization (ACO) stands for much more than it’s name implies.
Not surprisingly, government healthcare reform initiatives will be the biggest driver of M&A activity, according to 65 percent of investors. The Patient Protection and Affordable Care Act's "clear intent ... is to spur provider collaboration," said Robert Berg, an Atlanta, Ga.-based member of EpsteinBeckerGreen. "From hospital acquisitions of physician practices (with physicians then becoming employees of the hospitals), at one extreme, to the formation of large accountable care organizations [ACOs] comprising a wide variety of independent health care providers and provider groups, at the other extreme--and all manner of provider mergers and joint ventures in between--we are likely to see an unprecedented era of collaboration and consolidation among those who provide health care services."
Gone are the barriers between profit-non profit, secular v. non-secular religious institutions in merger mode, although some fears remain.
“As nonprofit hospitals become increasingly attractive to for-profit companies looking to capture more of the hospital market, one question that looms is whether the non-profits will be able to stay true to their mission. Some worry that patients could lose out, according to Kaiser Health News/USA Today.
For example, Detroit Medical Center's (DMC) network of eight hospitals has long served as a safety net for poor patients. But because it's been cash-poor, it has not been able to borrow the money to upgrade technology, let alone keep the facilities operating properly.
After DMC CEO Michael Duggan approached Vanguard, though, the private equity firm offered a way out. It agreed to pay DMC $417 million to reduce its debt and promised to invest another $850 million in DMC's facilities. The deal has yet to be approved by the state attorney general.
Vanguard, which is best known for buying Chrysler--which was later bailed out by the federal government--pledged to keep the system's five acute-care hospitals open, and to continue its commitment to charity care for at least 10 years. But Rev. Skip Wachsmann, a pastor at the Genesis Lutheran Church on the city's east side for 34 years, said he worries about how the sale will affect poor people. He told KHN: "What happens in 10 years and one day?"
"You can probably expect more stories like this, with the uptick in M&A activity. That's because the health overhaul law's eventual extension of coverage to another 32 million people made urban hospitals more attractive acquisition targets. "Health reform gets rid of a big chunk of the uncompensated care problem," Jack Wheeler, a professor of health management and policy at the University of Michigan told KHN.”
One interesting merger is on the plate in Albany, New York.
In the New York deal, three profitable health systems--Albany-based St. Peter's Health Care Services and the two Troy-based systems, Seton Health and Northeast Health--have formalized plans to merge and form a new nonprofit corporation after 17 months of talks, reports the Albany Business Review. The as-yet-unnamed regional powerhouse will include five hospitals and 12,000 employees. The organization will be secular but operate as an affiliate of St. Peter's parent, Catholic Health East.
In other actions dissolutions and break ups are occurring in many instances as some organizations prepare to cut possible losses as a result of ACOs.
Case in Point. Misys separates itself from Allscripts after a very short lived dalliance in the heat of EMR and ‘stimulus funding”. Misys has previously been grounded in banking and business solutions with a very small arm into EMRs. The smell of ‘honey’ at the EMR hive apparently is not inviting enough to warrant the risks of ACOs and other ‘stings’ to the health care industry.