The current healthcare environment is one of the most active hospital and health system consolidation markets seen in years. This is driven by the shift to value-based reimbursement.  There is increasing financial pressure on providers and healthcare organizations to increase efficiency and control costs. Healthcare organizations announced 115 merger and acquisition transactions in 2017, according to Kaufman Hall’s report. 2018 is likely to exceed the number of deals made in 2017. At this pace, the global M&A market could reach $4.8 trillion for all of 2018, according to a report cited by The Wall Street Journal.
Healthcare organizations considering a merger or acquisition will improve their chances of a successful outcome by performing thorough financial and operational due diligence to identify opportunities as well as obstacles. Below are best practices to follow that will maximize benefits from a completed merger or acquisition.
1.  Conduct a preplanning process – preplanning allows healthcare organization executives to consider problems and issues before meeting with potential partners or undertaking a transaction. This exercise will create a set of objectives which will help determine suitable partners.
2. Use experienced transaction advisors early in the preplanning process – An experienced advisor could expand the choices the healthcare organization may consider. This will avoid opportunities being overlooked.
3.  Build a strong team – In order to maximize the potential of a deal, choose a few key people for the beginning of the transaction. Then add others as the process develops. The initial team may include:
4. Spend Time on Partner Selection and consider alternate proposals before deciding:
5.  Write a details letter of intent – Although not binding, it provides an outline of the transaction. And it can be used as the template for the developing deal.
6. Pre-Close Planning
7. Post-Close Implementation
8.  Ongoing Support