Post-Merger Integration Strategy Starts Early
Post-merger success and the ability to achieve a timely return-on-investment are often significantly impacted by post-merger integration with the acquired practice.The most successful companies in this regard will have outlined a post-merger integration strategy with planning beginning early in the acquisition process. Such early planning ensures, among other things, that compliance due diligence is addressed in addition to financial and regulatory due diligence. Surprisingly, many companies acquire practices with little forethought to post-merger integration, resulting in an often chaotic post-close environment and potentially at-risk processes that remain unknown and/or unaddressed by the acquiring company.
The first step in a winning strategy is an affirmative decision regarding how and when post-merger integration will occur. Will the acquired target be permitted to operate independently or “as it always has” for a period? What is the anticipated timeframe? Why? Will a strategy be set for the timely integration of vital corporate functions? The Board, who is often deeply engaged in the pre-acquisition process, should extend its oversight to the post-merger integration function.
Areas of Consideration
- The Electronic Health Record. Will the new practice transition to the acquiring company’s system? If not, are the two systems compatible?
- How quickly will the acquired company be integrated into corporate communication systems (email addresses, access to the company intranet, etc.)?
- Human Resources Programs. How will the newly acquired employees/providers be onboarded to the same standard as the existing company employees/providers? When will the employee handbook be distributed and acknowledged? How will you ensure the timeliness of connecting benefits to employees/providers? When will the new employees/providers be placed in the existing payroll system?
- Physical Facilities. Will the staff be integrated, or will two separate offices co-exist? Consider how culture may be impacted.
- Day-to-Day Operations. How will the new practice be folded into the existing day-to-day operational procedures?
- Financial Operations. With accounts payable, accounts receivable, revenue cycle policies and procedures, how will consistency be assured?
- Compliance and Ethics Program. How will you ensure that the existing company’s Code of Conduct and policies and procedures are implemented as soon as feasible? When will the training of the officers, employees, and Board occur? Will the existing Compliance Officer manage the newly acquired practice? Will there be a separate Compliance Officer? How will consistency across the programs be assured?
Again, planning for post-merger integration is critical and will impact your actions in the diligence phase. With a post-merger integration strategy in place, for example, a meaningful review of existing agreements can occur and consider whether accepting the assignment of an agreement fits within your integration plan (EMR, Financial systems, etc.). Additionally, a compliance diligence review component in the early acquisition phase allows for a timely update to the company’s compliance risk assessment and an update to the annual work plan to ensure identified compliance issues are addressed, audited, and monitored.
Steps You Can Take When Acquiring a Practice
- Conduct compliance due diligence in addition to financial and regulatory due diligence.
- Establish your post-merger integration strategy.
- Assign post-merger integration to a senior leader.
- Consider separating integration responsibility from day-to-day operational responsibility to ensure success and timeliness.
- Set an integration timeline with key milestones.
- Hold the integration team accountable.
Contact us today for more information about our services and for assistance in establishing a post-integration strategy.
