Dive Brief:
- A recent report by PricewaterhouseCoopers found a potential bump in the road for hospital mergers and acquisitions. The group estimates that integrating computer systems can create unexpected costs, particularly if the hospital being purchased has poor IT infrastructure.
- A typical integration can last anywhere from three to five years. During that time, the group estimates that IT integration costs can total somewhere between $70,000 and $100,000 a bed.
- PwC said IT integration could add 2% a year to operating costs during the period of integration. These costs can come from both clinical and business systems, including demands related to quality payments and the labor associated with integration.
Dive Insight:
When deciding whether to undertake a merger or acquisition, these costs should be considered, particularly as more organizations move toward implementation of electronic health records.
Depending upon the size of the merger, however, the costs may be a hiccup. In 2013, Trinity Health and Catholic Health East merged into an 80-plus bed system. During the first nine months of the fiscal year, CHE Trinity Health's operating income dropped by nearly 30% as it absorbed overvalued property and merger-related charges. But the nearly $25 million in costs related to the merger put just a small dent on the books. During the first three quarters, the system's surplus was nearly $875 million.