Another Mega Merger Announced
Another healthcare mega-merger is in the works! Trinity Health and CommonSpirit Health have agreed to acquire MercyOne, a health system based in Iowa, to expand into the Midwestern region. This acquisition comes when healthcare providers are being pressured to combine and streamline operations to compete effectively. Trinity Health and Catholic Health Initiatives have run MercyOne.
MercyOne will ultimately join Trinity Health's common platforms, including a single electronic health record (EHR), allowing patients to more efficiently manage their care across all MercyOne services and facilities. As a result, the communities of MercyOne are receiving a more convenient and consistent care experience.
In 2021, the number of collaboration, merger, and acquisition transactions between hospitals and health systems was down overall, but the deals were larger. However, this pattern will reverse in 2022. As healthcare organizations become pickier about finding a partner, mergers and acquisitions are anticipated to rise.
One pattern emerged during 2021 in health system MA, and that is the number of transactions decreased, yet the value of transactions increased. The impact on transaction activity of the changes in the healthcare industry continues to develop. Unaffiliated and independent health care facilities are uncommon, and organizations have become more discerning about potential partners due to their focus on business reasons.
What's Next? Key things to watch for are:
Which culture will dominate in the merger? that also dictates the strategic approach and the leaders who will stay post-transition.
Technology consolidation is one way to standardize processes and operating models.
Will mergers be better for the patients? Hopefully so, but that has not been the case historically.
The consolidation play helps with payer negotiations, but will these mega-mergers turn towards creating a payer marketplace?
Tell me your thoughts about mega-mergers in 2022.