Keys to managing risk with healthcare M&A
Healthcare private equity tends to outperform other segments amidst economic upheaval. That’s partly what’s been driving a rise in healthcare M&A over the past decade.¹
As the trend continues, healthcare leaders should understand the risks associated with M&A: employee attrition, cybersecurity vulnerability and data integration challenges. This is critical because patient outcomes and organisational success hang in the balance.
1. Continually identify and plan for potential risks, including:
- Changes to the delivery of care
- Staff retention
- Regulatory compliance
- Incompatible IT systems (risk of lost, delayed, or compromised data; HIPAA and regulatory violations; cybersecurity gaps)²
- Lack of oversight of insurance schedules, policy transfers, tail/extended reporting endorsements, premium funds, tail premium invoicing and payment, and management of open litigation
2. Communicate clearly to reduce uncertainty
Help to avoid confusion and anxiety among employees with a communication strategy rooted in trust, patience and open-mindedness.³
- Encourage team members to voice concerns about potential risks without fear of backlash
- Have both seasoned and new team members communicate with employees
- Lead by example: expect the unexpected; be flexible and patient
3. Prepare for attrition during and after M&A
Some employees will proactively look for new jobs. Others might dislike changes and depart months after the deal is complete. Both scenarios could create a situation of more new employees than seasoned staff. The imbalance of experience requires adjusting to equipment, practices and protocols as well as an increased risk for treatment delays, misdiagnosis and other medical errors. These issues could lead to medical malpractice suits and workers’ compensation requests, making it critical to plan for initial and delayed attrition.
A time for trusted guidance
As leaders of healthcare organisations consider the risks and benefits of M&A, an experienced risk-management partner can be a great ally, helping anticipate and plan for hazards. This partnership goes a long way in easing tension and uncertainty during the frenzied M&A process.
Sources
¹ Deloitte: When done well, M&A can achieve valuable outcomes