Toolkit: Acquisition and Affiliation Strategies

This toolkit is a companion to HFMA’s Value Project report, Acquisition and Affiliation Strategies. The report addresses drivers of acquisition and affiliation activity, options for value-focused acquisitions and affiliations, and legal and regulatory issues. This toolkit offers tools for assessing your organization’s situation, determining acquisition and affiliation options, and moving toward finalizing an agreement. Three example scenarios are also provided.

Assessing the Situation

Organizational assessment 
The first step in developing an acquisition and affiliation strategy is to assess the strategic vision and goals of your organization, its financial and market position, and current readiness to meet its goals.

Market assessment 
The next step is to take a close look at the market or markets in which your organization operates. What communities and populations does it serve? How much competition is there? Who are the major payers

Common acquisition and affiliation goals 
The answers to questions about your organization and its market should help define the goals of an acquisition or affiliation strategy. Your organization may have multiple goals, which may suggest multiple approaches to acquisition or affiliation.

Determining Options

Common acquisition and affiliation approaches
There are various approaches along a continuum from less than fully to fully integrated acquisitions and affiliations. Each approach has distinct advantages and disadvantages.

Identifying potential partners 
With a sense of how your organization’s goals and approaches align, assess which organizations are the best candidates for potential acquisition or affiliation partners.

Educating your board 
It is essential to keep your organization’s board of directors up to date on your organization’s current situation, capabilities and needs, and potential options for acquisition or affiliation.

Moving Forward

Communicating your strategy internally 
Once your organization has committed to moving forward, it is critical to inform staff on possible impacts of the acquisition or affiliation activity. 

Key steps in finalizing an agreement
The steps toward finalizing an acquisition or affiliation will differ depending on the degree of integration involved. A basic road map for moving forward is provided in this section.

Learning from Example Scenarios

Use the following scenarios to see how different organizations might work through the steps toward an acquisition or affiliation.  

• A stand-alone hospital determines its consolidation approach 
  Triangle Health, a standalone hospital, senses, “Now is the time to consider our options.” How will Triangle navigate its opportunities?
• An academic medical center aims for long-term sustainability 
  Star Medical Center, an academic medical center, asks, “What is a sustainable model for the future?”
• A multi-hospital pursues a regional strategy and system-wide economies of scale
  Leaders at Pyramid Health, a multihospital system, ask, “How can we continue to pursue systemwide economies, but also respond to regional issues and opportunities?”

Additional Resources

Integration Planning and Execution

Strategies and business practices related to integration planning and execution that correlate with achievement of higher margins in the first two years after a merger. 

Foundational Strategies

Explore HFMA’s foundational strategies for improving value in health care.