Life Sciences & Health Care M&A Update: Q2 2017, pill bottle

Analysis

Life Sciences & Health Care M&A update: Q2 2017

The incentives of Medicare Access and Chip Reauthorization Act of 2015 (MACRA) pose both opportunities and challenges for physicians and other stakeholders across the industry. In turn, larger industry players are increasingly looking to acquire clinics with robust, cost-effective, patient-focused data collection platforms that enable MACRA compliance and improved care quality. This Life Sciences & Health Care M&A update provides Deloitte Corporate Finance LLC insights and market data analysis that shed light on M&A trends in the Life Sciences and Health Care industry.

Rebuilding Health Care under MACRA¹

A key component of the broader push toward value-based care, the Medicare Access and Chip Reauthorization Act of 2015 (MACRA) promotes a continued shift away from the existing fee-for-service payment model by rewarding physicians for the quality of their care rather than the volume of the procedures they provide. MACRA’s incentives pose both opportunities and challenges not only for physicians, but also for all other stakeholders across the industry.

Consolidation of systems through M&A activity will play a key role in facilitating the MACRA implementation. MACRA’s fast-paced rollout and broad reach require organizations across the health care industry to work together. However, rather than fostering collaboration and integration, executives say, in many instances, they are hindered by organizational, competitive, and regulatory barriers brought on by other industry players’ response to MACRA implementation. Consolidation would help to remove these obstacles and align incentives, ultimately expediting the shift to value-based care through MACRA implementation.

Companies that do not invest in technology will look to M&A to compete with peers that have built-out data capabilities. Health care companies that have made sound investments in technology are expected to fare better on cost and quality measures, as technology and data enables stakeholders to gain insights regarding performance improvement. Those with limited investment in technology will likely look to acquire companies with significant IT and data capabilities to avoid issues such as information blocking from competitors and limited interoperability between clinics and electronic health records.

Providers that best collect patient information and accurately predict costs will likely be acquisition targets. Few health clinics document patient information to accurately and completely reflect patient acuity. Further, some clinics are more cost-effective than others, and clinical variations exist among small practices. Larger industry players are increasingly looking to acquire clinics with robust, cost-effective, patient-focused data collection platforms that enable MACRA compliance and improved care quality.

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References

1 “Rebuilding the Foundation of Health Care Under MACRA,” Deloitte Center for Health Solutions. May 2017.

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