A hybrid play may be the way
Some companies may find they will need to become hybrids of two strategic identities to fulfill their missions and remain competitive. “The Product Leader in the future will be a much harder sell,” said Dr. King Li, dean of the Carle Illinois College of Medicine at the University of Illinois at Urbana-Champaign and chief academic officer of the Carle Health System, in an interview with HRI. “It’s hard to say you are a Product Leader when people make decisions based on the same AI support. In this case, patient experience will become much more important in achieving a positive outcome.”[xiv]
For example, one academic medical center (AMC) may choose to be a Product Leader but decide that a community hospital in its system should be an Experience Leader that creates lifelong relationships with patients and directs them to the AMC when they need higher-acuity care. New digital technology that leverages advanced analytics and automation can help companies more quickly identify acquisition targets that match with strategic, operational and financial goals.
Beware consumer and employer perceptions and expectations
Consumers are not convinced that healthcare deals benefit them, according to a recent HRI consumer survey. Health companies should pursue deal strategies with the patient in mind, communicate with patients starting when a deal is underway, and make sure they can deliver an experience in line with customer expectations on day one post-close. Segmenting consumers to understand priority populations and their unmet needs, such as the social determinants affecting their health, may help determine which acquisition targets will bring the most value to them.
Employers have considered megadeals — of hospitals, in particular — to be inflators of medical cost trend, at least in the short term.[xv] As they become more active in making healthcare more affordable, employers also will be looking for more value out of healthcare deals. Some are even pursuing their own, such as Haven Healthcare.[xvi]
Consider private equity as a potential deals partner
As private equity firms broaden their footprint in healthcare, they are eyeing customer experience and innovation. In 2018, Washington, DC-based The Carlyle Group invested $350 million in One Medical, a consumer-focused, tech-enabled primary care practice based in San Francisco.[xvii] Executives at The Carlyle Group noted One Medical’s integrated technology and smooth, convenient access for patients as a remedy for an increasingly frustrating primary care environment.[xviii]
In July 2019, Swedish private equity firm EQT acquired a majority interest in Aldevron, a Fargo, North Dakota-based supplier of plasmid DNA to gene therapy developers.[xix] “There continues to be a lot of excitement and deal-making in the gene and cell therapy space, but there will be winners and losers,” said Les Funtleyder, healthcare portfolio manager at E Squared Capital LLC, a New York City public and private investment fund, in an interview with HRI. “Most of the companies working in this area haven’t yet proven that they can navigate logistical and supply chain processes to successfully break into the market.”[xx]