The transition to value-based care has M&A marketplace focusing on health IT interoperability and health information exchange opportunities.
Health IT interoperability is the aim of current healthcare IT mergers and acquisitions, but that wasn’t always the case. Megamergers have abruptly given way to middle-market acquisitions. While this shift is undoubtedly good news for aspiring middle-market M&A targets, there is a catch: today’s M&A opportunities are not like those of years past.
In the crowded M&A market, buyers are no longer focused on targets with “me too” growth strategies or opportunities in saturated niches. Instead, optimal targets must create forward-looking solutions that converge in ways that align with consumer-preferred devices.
These targets will need to create solutions that change the customer experience, enabling patients to track their information and access individualized dataat any time. In the end, they will advance the industry toward a single destination where every patient can simply and securely access their longitudinal healthcare record.
Connecting people with their data
While the global healthcare IT market grew by nearly 63 percent in the last five years according to a recent Markets and Markets report, many of the industry’s most prominent growth areas are nearing or have reached saturation, such as:
- Revenue cycle management
- Electronic health records
- Picture archiving and communication systems
- Data analytics technology
As a result, buyers are looking beyond these areas, with the goal of finding healthy M&A targets that will advance the industry to an individual patient’s wellness focus. In particular, these companies are developing solutions that will allow consumers to engage, access, control, and secure their complete health data.
Among the most viable of these middle-market targets are companies that will change the consumer experience by connecting people with their data.
This area has seen tremendous recent growth, as the percent of consumers accessing their EHRs nearly doubled from 2014 to 2016, according to a recent Accenture survey. However, nearly half of all consumers still have not used more than one digital health technology.
Today’s acquiring companies recognize the value of these consumer-centric solutions, knowing that an increase in data portability and access will yield similar increases in overall patient knowledge, accountability, and engagement.
Shifting from volume to value
In addition to connecting people with their data, the companies best positioned for emerging M&A opportunities are driving a change in the Big Data environment from volume to value.
They are developing solutions that will enhance consumer engagement via wearable and mobile technologies that are grounded in the Internet of Things, allowing for the capture and consolidation of recurrent data points. These solutions, which are key to the industry’s overall shift to value-based care, will improve adoption rates, population health, research, and clinical decision support.
Cloud infrastructure technologies are also critical in this area, as they are increasing access while reducing complexity and operational costs. However, the best-positioned companies are those also addressing widespread security and interoperability challenges. Information must be both protected and accessible by the patient and multiple secondary sources.
Also, systems and data must ultimately be accessible across platforms, especially for patient-generated mobile health data to be useful and available in the clinical setting. Only then will true health information exchanges and value-based healthcare be realized.
Staying one step ahead of the regulations and industry trends
In the long run, the ideal M&A targets will produce proactive solutions that allow organizations to stay one step ahead of regulatory actions and industry trends.
For example, industry growth in recent years has been driven in part by government requirements and corresponding penalties in areas such as EHR and the Health Insurance Portability and Accountability Act . However, as we look to the future, long-term growth opportunities will be in solutions that move beyond not satisfy these requirements.
Another example can be found in the market for wearables from producers like Fitbit and Apple, which shipped more than 76 million devices last year alone, according to a recent IDC report. In lieu of developing “me too” wearable solutions, attractive M&A targets are looking beyond the current market to solutions that mirror the shift of health organizations to value-based care models.
For instance, many of these companies are creating solutions that will cross from the consumer to clinical sphere, such as data delivery systems that maximize accountable care organization performance. By providing access to actionable patient data, they will enable doctors to be better connected with patients and ACOs to better monitor and manage populations, which will lead to enhanced shared savings and quality of care.
Ultimately, those companies with the right innovations married with mobile technologies that leverage data for patients and providers in a secure and accessible fashion will be the prime targets of tomorrow’s M&A activity.
Date: May 9, 2016