Bucyrus Community Hospital Merger Case Study
A competitive strategy that Vandenberg should continue is merging and acquisition with other organizations. Competitive strategies can help organizations because it examines the market and organizations within the market to get a competitive advantage. With so many threats in health care Mr. Vandenberg himself stated that “there is a great opportunity for mergers and acquisitions for the future to set up more growth.”
With the new health care reform and the uncertainty of the US health care system, there is a growing trend of healthcare organizations to merge and acquire other organizations. Healthcare organizations like multi-hospital health systems, stand-alone hospitals, large medical groups, small independent physician group practices, …show more content…
ambulance care facilities and other provider organizations see consolidation as a key financial strategy for surviving the new health care reforms. With payers wanting new technology to better improve their healthcare experience like such as, electronic health records can put a financial strain on health care organizations. So organizations will merge to help split the cost. (3) The triple aim of health care model is a challenge that health care leaders have accepted. Some health care leaders believe that merger and acquisition can help address patient experience, cost reduction, the emphasis on being accountable in health care, disease management and improve quality of care as a larger organization. Payers also want to move away from individual services and move towards collaboration of health care services. When looking at the numbers of announcements and deals of mergers and acquisitions from 1998- 2013 it was up and down stated by the American Hospital Association (AHA). From 2008 there was a steady increase from 78 announcements of mergers and acquisitions to as high as 283 in 2013. (2 chart)
In a study conducted by CIT Healthcare Outlook they asked healthcare executives if mergers and acquisitions are a good thing in health care. Three in four healthcare executive surveyed said mergers and acquisitions activity is generally a good thing for all stakeholders, including the company, the industry as a whole, the public and shareholders. (3)
So what are some benefits of merging and acquisition with other organizations?
One benefit is it can increase efficiency because you can cut duplicated care services and you can cut the overflow of patients because now you have a parting organization who can take some of your patients. Another benefit of merging and acquisition is it can benefit a whole community. An example of this can be seen with the acquisition of Bucyrus Community Hospital by Avita Health System in Galion, Ohio.These two hospitals were located only 12 miles apart. Avita was able to save $1 million per year in administrative costs with this acquisition. Both hospitals also shared an electronic medical record system and was able to recruit more specialists to enhance volume in their organizations. Avita hired more nurses and added 300 full-time employees. Also, patients around Bucyrus Community Hospital now don’t have to travel to get services because Avita was able to prevent the hospital from closing down. Another positive was that there were no layoffs and if Bucyrus hospital would have closed it would have resulted in 250 layoffs approximately. This acquisition was a success and a benefit to the community because (1) it increased jobs, (2) it prevented layoffs, and (3) it prevented patients from traveling farther to receive care.
(#4)
One negative that private insurers believe come from mergers and acquisitions is that it reduces competition and drive up prices for payers and consumers. (3) This can be seen in several decades of research. There was a hospital merger boom in the 1990s and it increased patient costs by 5 to 40 percent in areas where only a few hospitals govern according to the Robert Wood Johnson Foundation. (5)
If you decide to consolidate here are some questions, Mr. Vandenberg should be asking himself. (1) What is the pace of merger and acquisition activity in my market? (2) If my organization is an acquisition target, how can new leadership improve the hospital’s overall position? (3) How can I put together the correct team for this possible opportunity? (4) What key characteristics can help us have a successful & merger and acquisition? (#6)
To close, we as a group and as well Mr. Vandenberg believe that merge and acquisition is the best strategy for Vandenberg Ambulance to adopt. It can help the company grow and expand into other areas. It can benefit its patients by increase efficiency as well save the organization with cost. It can benefit a community by increasing jobs and saving jobs. We feel that this trend will continue to grow in the health care sector.
With the new health care reform and the uncertainty of the US health care system, there is a growing trend of healthcare organizations to merge and acquire other organizations. Healthcare organizations like multi-hospital health systems, stand-alone hospitals, large medical groups, small independent physician group practices, …show more content…
ambulance care facilities and other provider organizations see consolidation as a key financial strategy for surviving the new health care reforms. With payers wanting new technology to better improve their healthcare experience like such as, electronic health records can put a financial strain on health care organizations. So organizations will merge to help split the cost. (3) The triple aim of health care model is a challenge that health care leaders have accepted. Some health care leaders believe that merger and acquisition can help address patient experience, cost reduction, the emphasis on being accountable in health care, disease management and improve quality of care as a larger organization. Payers also want to move away from individual services and move towards collaboration of health care services. When looking at the numbers of announcements and deals of mergers and acquisitions from 1998- 2013 it was up and down stated by the American Hospital Association (AHA). From 2008 there was a steady increase from 78 announcements of mergers and acquisitions to as high as 283 in 2013. (2 chart)
In a study conducted by CIT Healthcare Outlook they asked healthcare executives if mergers and acquisitions are a good thing in health care. Three in four healthcare executive surveyed said mergers and acquisitions activity is generally a good thing for all stakeholders, including the company, the industry as a whole, the public and shareholders. (3)
So what are some benefits of merging and acquisition with other organizations?
One benefit is it can increase efficiency because you can cut duplicated care services and you can cut the overflow of patients because now you have a parting organization who can take some of your patients. Another benefit of merging and acquisition is it can benefit a whole community. An example of this can be seen with the acquisition of Bucyrus Community Hospital by Avita Health System in Galion, Ohio.These two hospitals were located only 12 miles apart. Avita was able to save $1 million per year in administrative costs with this acquisition. Both hospitals also shared an electronic medical record system and was able to recruit more specialists to enhance volume in their organizations. Avita hired more nurses and added 300 full-time employees. Also, patients around Bucyrus Community Hospital now don’t have to travel to get services because Avita was able to prevent the hospital from closing down. Another positive was that there were no layoffs and if Bucyrus hospital would have closed it would have resulted in 250 layoffs approximately. This acquisition was a success and a benefit to the community because (1) it increased jobs, (2) it prevented layoffs, and (3) it prevented patients from traveling farther to receive care.
(#4)
One negative that private insurers believe come from mergers and acquisitions is that it reduces competition and drive up prices for payers and consumers. (3) This can be seen in several decades of research. There was a hospital merger boom in the 1990s and it increased patient costs by 5 to 40 percent in areas where only a few hospitals govern according to the Robert Wood Johnson Foundation. (5)
If you decide to consolidate here are some questions, Mr. Vandenberg should be asking himself. (1) What is the pace of merger and acquisition activity in my market? (2) If my organization is an acquisition target, how can new leadership improve the hospital’s overall position? (3) How can I put together the correct team for this possible opportunity? (4) What key characteristics can help us have a successful & merger and acquisition? (#6)
To close, we as a group and as well Mr. Vandenberg believe that merge and acquisition is the best strategy for Vandenberg Ambulance to adopt. It can help the company grow and expand into other areas. It can benefit its patients by increase efficiency as well save the organization with cost. It can benefit a community by increasing jobs and saving jobs. We feel that this trend will continue to grow in the health care sector.