According to the report, hospital leaders should be wary of the following red flags when consolidating:
• “Deal fever,” or underestimating the significance of key issues.
• Overly aggressive projections.
• Reimbursement changes.
• Compliance issues.
• Unrecorded liabilities.
• Lack of a robust integration plan.
Other reasons hospital mergers and acquisitions might not meet the expectations of one or both parties involved include overpaying, culture clashes, inadequate due diligence, failure to retain key employees, ineffective communication strategies and excessive debt.
The PwC report recommends hospitals remember the “rush to consolidate” that hit in the 1990s to not let history repeat itself. It also mentions a few other consolidation arrangements that are becoming wider trends in the industry: provider-payor relationships, private equity investments and public-private partnerships.
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