Robin Raiford and Jordan Stone
Merger and acquisition (M&A) strategies are no longer the exception among providers; whether motivated by financial insecurity or the need to integrate care across the continuum in response to risk-based payment, many health systems are actively seeking consolidation.
However, acquiring systems could be placing their meaningful use (MU) trajectories at risk in the acquisition process. More specifically, acquirers stand to lose millions of dollars in incentives and may face negative payment adjustments if the newly consolidated entity fails to meet MU thresholds.
What is meaningful use?
Meaningful use refers to requirements—specified in the 2009 HITECH Act—that hospitals, eligible professionals, and critical access hospitals must meet to qualify for Medicare and Medicaid incentives aimed at promoting electronic health record (EHR) use.
MU requirements are phased in across three stages of increasing responsibility and complexity. Systems eligible for “Stage 1” must complete the attestation process by Nov. 30, 2012 to receive EHR incentives for 2013.
Based on readiness in FY2013, all eligible, non-compliant providers will be at risk for “payment adjustments”—1% cuts to Medicare reimbursement—if they have not met MU targets. These penalties will be assessed starting in FY2015 and will increase by 1% annually through FY2018.
M&A strategy: Assess meaningful use early to prevent losses
Last week the Nashville Health Care Council held its annual “Financing the Deal” panel discussion on recent and expected trends in health care merger and acquisition (M&A) activity. The panelists represented members of the health care investment banking industry, including J.P Morgan and Galen Partners. The experts agreed in their expectations that health care M&A activity will remain consistent with levels seen in 2011—a year that included 86 hospital mergers and acquisitions, a 10-year high in M&A deals (according to Irving Levin & Associates).
Investment experts predict continued health care M&A activity