Healthcare organizations announced a record-breaking 115 merger and acquisition transactions in 2017, and that number will likely be matched or surpassed this year, RevCycle Intelligence reports.
But do these transactions really reduce costs, as healthcare organization leaders often contend?
A 2017 study by the Charles River Associates for the American Hospital Association backs up the notion, according to RevCycle Intelligence. Researchers interviewed hospital executives from 20 different hospital systems.
Here are six findings:
1. Acquired hospitals each saved $5.8 million after completing a deal. They observed a 2.5 percent decrease in operating expenses per admission.
2. Hospital mergers and acquisitions were linked to about a 1 percent decrease in 30-day readmissions rates for acute myocardial infarctions, heart failure and pneumonia.
3. It takes at least two years to generate cost savings from a hospital merger and acquisition, as operating revenues typically decline at a higher rate than operating expenses when a merger is initiated.
4. Forty percent of healthcare leaders said their organization realized 25 percent of their cost-structure efficiency goals two years post-merger.
5. Eighty percent spent the savings on capital investments post-transaction, 66 percent on health IT or facility upgrades and 33 percent on renovations, expansions or new acute facilities.
6. About 50 percent reported care improvements after a deal. Around 17 percent said the deal resulted in both care quality improvements and cost reductions.