The pace of hospital merger and acquisition (M&A) activity is increasing in both deal count and total value. However, cost reduction is rarely the primary strategic objective of these deals. As a result, operational integration and cost reduction post-merger is falling well short of potential.
M&A presents a time-limited opportunity to improve cost performance, but only through full operational integration that captures the potential for efficiency gains and economies of scale. Most mergers are missing the cost opportunity.
We’ve identified four principles for cost-focused integration that can help ensure that newly acquired organizations become part of the solution, rather than part of a bigger cost problem. These principles are illustrated through in-depth, action-oriented profiles of Cleveland Clinic, UPMC, and Kaleida Health.