Key issues in mergers and acquisitions. Healthcare organizations must approach collaborations with caution

Most collaborations between healthcare providers are based on a desire to better serve their communities, develop critical mass, eliminate duplicative services, create economies of scale, and enhance survivability. Unfortunately, collaborations may not always produce the benefits desired. Thus careful planning and execution are critical to first determine whether the transaction makes sense and, if it does, to develop strategies that maximize the expected benefits. Whether the participating entities are secular, religious, public, or private, I recommend they consider the following 11 key issues when evaluating or pursuing a merger or acquisition: (1) understand the transaction's magnitude, (2) assess the alternatives, (3) select potential partners carefully, (4) determine and examine threshold issues early, (5) focus on the right issues, (6) agree on a valuation approach, (7) recognize the importance of governance, (8) develop an acceptable structure, and use a memorandum of understanding, (9) establish and adhere to a communications policy, (10) perform due diligence, and (11) recognize the significance of activities after the transaction.