Many healthcare organizations are looking for opportunities to address gaps in their growth and delivery capabilities. In almost every case, the key question becomes “build or buy?” The answer begins with defining the desired future state and evaluating which option can most effectively help you meet your objectives.

Build: An In-House Plan

When we work with healthcare clients to align their capabilities with market demands and/or optimize operational performance through growth, scale, and efficiency, we typically create an “organic” plan. It outlines a potential in-house solution to close growth and delivery gaps and outlines the necessary activities, resources, and time needed to achieve the desired results.

Once the organic plan is defined, it becomes a baseline against which to measure the efficacy of alternative solutions.

Buy: Healthcare M&A or Other Forms of Collaboration

Joining forces with other organizations can be done through various means including full M&A, joint marketing and operations agreements, or other forms of collaboration.

The intent is to speed up realization of your goals and objectives and reduce the risk of implementing new growth strategies. The potential investment should create a positive return over the life of the acquired asset considering the cost of the acquisition, transaction, and integration.

Here are 6 business objectives you can achieve by collaborating with the right company:

  1. Achieve Strategic Synergy – solidify market strength and brand perception.
  2. Achieve Operational Synergy – improve overall clinical and administrative operations. Clinical care coordination and integration should be a particular focus in support of industry transition to value based reimbursement. This is true whether you are a provider, payer, or supporting solutions supplier.
  3. Lower Risk – Use proven strategies, processes, and systems to lower execution risk.
  4. Achieve Scale Faster – Leverage existing operating infrastructure (people, process, tools) to avoid investment and time developing them from scratch.
  5. Speed Revenue Increase – acquire existing business to add revenue immediately and provide a higher baseline for continued growth.
  6. Acquire Talent – Avoid the time and cost of having to recruit and onboard new executive and management staff.

By quantifying specific performance targets in each of these areas, you can effectively compare a potential M&A approach to your organic growth and operational plan.

It’s important to note that every acquisition carries its own risks to be managed as well. Utilizing external expertise is strongly recommended for those organizations without the experience or capacity to tightly lead and manage this process. If you’d like help determining if an M&A is right for you, contact us for a free consultation.

Stay tuned for the next article: 5 Steps to Finding the Right Healthcare M&A Targets. I’ll go into more detail on identifying and assessing the best M&A targets and how to realize performance objectives through careful integration planning and execution.

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