Integration Playbook for Health Care Mergers and Acquisitions: A Guide for Hospitals and Medium to Large Provider Practices

Mergers and acquisitions (“M&A”) in the health care sector, particularly among hospitals and/or medium to large provider practices, are increasingly common as organizations seek to expand their service offerings, achieve economies of scale and improve care delivery systems. Health care M&As are complex endeavors requiring meticulous planning and execution to ensure a smooth transition and, if done thoughtfully, can add and maximize the value of the enterprise. Integrating an acquired entity requires planning and execution by business and clinical leadership, with IT enablement as well as supporting governance.

While the legal documentation for M&A is critical, the transaction does not end when the deal is signed and the celebrations commence. Rather, the value of the transaction is realized through successful integration, which occurs when the parties have in place the right leadership combined with the right preparation, execution plans and resources as outlined in the key phases and steps below.

Planning & Preparation Phase

1. Preparation: Define clear integration objectives aligned with the overall M&A strategy. Set forth specific requirements by each party for between signing and closing. Prioritize key areas, including patient access, service line integration, revenue cycle management and technology harmonization.
2. Due Diligence: Assess financial performance, operational efficiency, legal and regulatory compliance and cultural fit.
3. Negotiation: Negotiate key definitive documents to define integration tasks, deliverables and key information when appropriate.
4. Integration Planning: Develop a detailed plan with an integration team, communication strategy, cybersecurity, legal and regulatory tasks, marketing and branding strategy and risk management. Much of this plan can and should be detailed in a binding legal agreement.
5. Transition Services Agreement (“TSA”) Support: Negotiate TSA as needed and assess day one expectations.

Sign – Close Phase

1. Regulatory Tasks: Ensure all required consent/notice/filing deadlines are tracked and processes are in place to ensure there is no gap in billing or other payments.
2. Define Day One Requirements: Review key day one go-live requirements to ensure all parties are aligned as to material conditions to close.
3. Updated Schedules: Ensure schedules with key information for integration are updated and reviewed.

Integration Phase

1. Day One/Take Ownership: Onboard new employees, transition to new systems, ensure patient safety protocols and ensure the supply chain is available.
2. Operational Integration: Standardize clinical operations, administrative processes and technology integration across people, processes and technology. Address contract duplication and standardization.
3. Human Resources Integration: Communicate with staff, clarify roles and provide training.
4. Financial Integration: Align billing systems, financial reporting and cost management.
5. Improvement: Identify, prioritize and implement equipment needs, facility repairs and cosmetic upgrades. 

Value Realization/Post-Integration Phase

1. Value Realization: Track system standardization and key performance metrics, gather feedback and continuously improve processes.
2. Cultural Integration: Align leadership, conduct cultural workshops and engage employees through multiple communication channels.

Best Practices for Successful Integration

1. Clear Vision and Goals: Establish a clear vision and set measurable goals.
2. Strong Leadership: Ensure effective leadership throughout the integration process.
3. Physician Alignment: Address physician concerns proactively and involve them in the integration process.
4. Transparent Communication: Maintain open communication to build trust and set appropriate expectations for the team.
5. Focus on Patient Care: Prioritize patient care during the integration.

Practical Takeaways

Integrating hospitals and medium to large provider practices through M&A is complex but rewarding. By following a defined process, health care executives can navigate the challenges and achieve a successful transaction that enhances operational efficiency, improves patient care and drives long-term growth. When structured thoughtfully, a well-defined process can be duplicated to further future growth efficiently and effectively.

Hall Render and Hall Render Advisory Services has the experience and depth of knowledge to be your one-stop legal and information technology M&A partner, bringing decades of experience and expertise to help your organization. We can help your organization across all phases to realize the anticipated benefits of a deal, from expanded patient reach and service offerings to improved operational efficiencies and financial performance.

If you have any questions or would like additional information about this topic, please contact:

• John Norling at (214) 615-2010 or jnorling@hallrenderas.com;
• Katie Miller at (317) 977-1404 or kmiller@hallrender.com; or
• Your primary Hall Render or Hall Render Advisory Services contact.

Hall Render blog posts and articles are intended for informational purposes only. For ethical reasons, Hall Render attorneys cannot—outside of an attorney-client relationship—answer specific questions that would be legal advice.