Healthcare payers are constantly looking for ways to reduce or improve costs. One way to do that is to acquire another company in the healthcare industry or join with another payer.
If your organization is looking for ways to grow and improve, you might consider merging with or acquiring another. Learn more about the difference between mergers and acquisitions, the benefits of each and how to successfully navigate one or the other.
During an acquisition, one healthcare organization gains control of another. For example, one insurer could acquire another to increase membership or enter a new market with enhanced products and services. Though larger companies typically buy up smaller ones, in some cases, one insurer might purchase another similarly sized one.
Following an acquisition, the purchasing organization takes over the operations of the practice it bought, often changing the hiring policies, operating hours and HR standards.
A healthcare payer might decide to purchase another payer or service provider for various reasons.
Acquisitions can be friendly or hostile. During a friendly acquisition, the two companies cooperate throughout the process. The organization’s leadership team has accepted the offer and given their approval.
During a hostile acquisition, the management of the acquired organization isn’t in favor of the purchase. The management team might reject the offer from the acquiring company or try to block the sale.
During an acquisition, one organization absorbs the other. In contrast, the two organizations join forces during a merger. A payer merger might involve two similarly sized insurance companies teaming up to create a new, separate, larger organization. A payer might combine with a services provider to create a more robust product offering. Usually, mergers occur between two similarly sized organizations.
After a merger, the two organizations become the same legal entity. For example, if two healthcare payers merge, the new organization might change its name to reflect the shared market or to unify the formerly separate names.
Genuine mergers are less common than acquisitions because it’s less likely that both organizations will benefit equally from combining their resources.
Here are some of the reasons to consider a merger.
If growth is one of your healthcare organization’s goals, a merger or acquisition can help you achieve it. In addition to expanding your organization’s reach and market share, here are some of the benefits of a merger or acquisition.
During a merger or friendly acquisition, you want an outcome that works for both parties. The secret to a successful merger or acquisition is having a specific idea of what you want to gain from it before beginning the process. Knowing what your organization needs to grow will guide you through the process of choosing another healthcare company to merge with or another practice to acquire. Don’t rush the process.
It can be helpful to get outside support during the M&A process. ProspHire’s growth and expansion services can help you develop a strategy to improve your organization’s profits and to secure its future.
If you’re ready to transform your healthcare organization, ProspHire is here to help. Our business growth and expansion division has experience providing support to organizations that want to grow internally and externally. We work with you to develop a strategy and roadmap to guide you to where you want to be. Contact us below to learn more.