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Premier Inc. C-Suite Survey: Clinical Integration and Consumer Satisfaction Driving M&A Activity Among Healthcare Providers

CHARLOTTE, N.C. (July 24, 2018) – According to a new Premier Inc. (NASDAQ: PINC) survey, health system leaders say the strongest drivers of merger and acquisition (M&A) activity are linked to the need to integrate and better manage care across the continuum, and meet consumers where they want to be seen.

Premier®, a leading healthcare improvement company, surveyed its established member C-suite panel to understand integration trends across the industry. Nearly half of surveyed health system leaders said they had completed a merger or acquisition in the past two years, and most (77 percent) reported they expect to do so in the next two years.

“Healthcare providers are increasingly feeling pressure to form coordinated, high-value networks with aligned payment models, care delivery practices and financing capabilities,” said Joe Damore, Vice President of Population Health Management Consulting at Premier. “As they work to establish connections with providers outside the hospital to eliminate duplicative services and improve care for patients, some health systems are merging and acquiring other providers.”

Specifically, the desire to better integrate care across the continuum and manage patient care more efficiently and effectively was ranked as the strongest driver of M&A activity. The increasing prevalence of consumerism and the shift toward creating more points of access (retail clinics, outpatient centers, etc.) was ranked as the second strongest driver of M&A activity.

Additional drivers of M&A activity reported by health system C-suite leaders:

  • Competitive positioning: The need to improve competitive positioning in markets where large physician groups are self-organizing clinically integrated networks (CINs).
  • Achieving success in value-based care: The need to succeed in new payment models that hold providers accountable for cost, utilization, quality and satisfaction beyond their direct control was a very strong driver behind M&A.
  • Building a CIN: The benefits of becoming a CIN in order to participate in contracts for advanced Alternative Payment Models (APMs).
  • Market consolidation: Increasing consolidation among suppliers, pharmacies, pharmacy benefit managers and other private sector entities.
  • Competitive scale: Considering M&A in order to match the scale and capabilities of insurance providers.
  • Financial pressures: Capital and balance sheet considerations.

“These insights prove that competition in healthcare is becoming much more dynamic and robust. Given the need for total, end-to-end services, clinical integration isn’t just nice to have, it’s essential for the future,” said Steve Valentine, Vice President of Strategy and Advisory Consulting at Premier. “Insurers, retailers and physician groups have rapidly created a new playing field with their own high-value networks that provide a range of choices and a focus on integrated, evidence-based care delivery. To stay abreast of this trend, health systems are evolving to meet consumers where they want to be seen, while enhancing the care experience. For some, M&A initiatives are being pursued to spread the significant costs of this work, such as data management and the infrastructure needed to achieve economies of scale.”

To navigate this terrain, Premier’s industry-leading consultants assist hospitals and health systems in evaluating and pursuing transactions and/or acquisitions, as well as with strategic growth planning and implementing economic payment models to align providers. They recently released a blueprint for providers forming CINs, which recommends strategies for optimizing performance as these networks expand throughout the country to accept two-sided risk, create new care delivery arrangements for larger patient populations, and participate in advanced APMs with commercial, employer and government payers.

Survey Methodology

The survey was conducted online, with the results based off responses of 45 healthcare C-suite leaders (CEO, COO, CMO, CFO, CIO or CTIO) from April 24 – May 19, 2018. Participants were selected and invited to join the panel by Premier prior to survey administration.

About Premier, Inc.

Premier Inc. (NASDAQ: PINC) is a leading healthcare improvement company, uniting an alliance of approximately 4,000 U.S. hospitals and health systems and approximately 165,000 other providers and organizations to transform healthcare. With integrated data and analytics, collaboratives, supply chain solutions, and consulting and other services, Premier enables better care and outcomes at a lower cost. Premier plays a critical role in the rapidly evolving healthcare industry, collaborating with members to co-develop long-term innovations that reinvent and improve the way care is delivered to patients nationwide. Headquartered in Charlotte, N.C., Premier is passionate about transforming American healthcare. Please visit Premier’s news and investor sites on www.premierinc.com; as well as Twitter, Facebook, LinkedIn, YouTube, Instagram, and Premier’s blog for more information about the company.

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