Transact to Transform
Utilizing transaction events to drive business and operating model transformation
New business model combinations are happening across the health care industry as organizations seek new growth and expanded capabilities. Our team has a track record of helping health care organizations assess, design, build, and execute vertical and horizontal combinations, separations and partnerships that transform business and operating models.
What EY can do for you
Unlocking value in transactions is not a new concept. However, the track record of health care organizations in defining and achieving value through M&A has been underwhelming during the transaction boom of the last decade. Today, vertical mergers and new business model combinations, often enabled through separations, are more prevalent than ever in the sector. The time is right to redefine your organization’s approach to integration and separation planning and execution to unlock growth, efficiency and improved competitiveness.
The rapidly evolving health sector landscape is being driven by:
- Shifting expectations and needs of patients, members and customers
- Changing regulatory landscape
- Increasing financial pressures
- Diversification in sites of care
- Technology enablement
As a result, key players are branching out to adjacencies vertically and horizontally to create new combinations and portfolios that will enhance the management of populations. To support growth strategies, health sector leaders are also realizing the requirements for unique and complex operating model combinations and separations. Furthermore, assessing and activating these disruptive strategies, and the partners they bring, comes with an unfamiliar set of risks, complexities, operating models, competing priorities, and value potential.
Creating an effective, deliberate approach and developing a transformative future state operating model is imperative. EY resources can help address and mitigate various risks while prioritizing value identification and extraction. This includes, but is not limited to:
- Back-office integration and/or separation
- Business continuity planning
- Front-office/product and customer experience design
- Associate and employee experience
The time is right for players in health care to be bold and proactive about how they unlock value from their transactions. Our track record of helping leading health care organizations evaluate and execute on these transformative transactions provides us a valuable perspective to help accelerate and prioritize your results.
We have supported some of the largest and most complex deals in the health care sector. We help clients create forward-looking integration and separation strategies, supported by leading-practice processes, to enable the creation and execution of the plan. Our team and approach are deployed collaboratively with your organization to help you overcome financial, regulatory and technological complexities. Working together, we can help enable innovative models of care, top decile patient/member/associate experiences and competitiveness within a high-cost pressure sector with emergent payment models.
With our Transact to Transform approach, we can help you achieve your evolutionary growth goals.
The EY approach to transformative transactions
Our approach is tailored to our clients’ desired visions and deal rationales. As we explore the best way to assess, design, build and execute your combination or separation, we examine your future goals and challenges. Key considerations include how your operating model could evolve to enable value capture and limit stranded costs, mitigate risks and support business continuity to ultimately drive transformative growth. The table below shares some of the high-level considerations, specifically for integrations, we will address as we work with your organization to activate your transformative goals as your operating model evolves:
Phase |
Key outputs |
Opportunities |
Risks |
|---|---|---|---|
Current state (pre-close) |
|
|
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Day one (close) |
|
|
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Interim state (day 100 and beyond) |
|
|
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Transformative future state |
|
|
|
Note: This table is not exhaustive, and approach is tailored based on specific transaction requirements, deal thesis and integration strategy considerations. While considerations will be similar in a separation, the operating model will evolve differently.
To achieve an effective transformative state, it’s important to remember the evolutionary steps that combine two distinct businesses into one or that separate an existing business unit. Breaking down the process into distinct operating models allows for more effective change management, risk mitigation and capture of incremental value through the combination.
As referenced in the table above, our experience in these transformative transactions highlights the importance of a team-based approach with a robust strategy and plan plus the identification of opportunities and risks. Our team will help you:
- Navigate defining a clear strategy
- Understand the similarities and differences of the businesses involved in the transaction
- Think through the prioritization of integration/separation efforts
- Develop a governance structure and decision-making authority
- Create collaboration that starts to address cultural and “ways of working” differences
- Solve for organizational design requirements based on the defined operating model evolution
As you consider your approach to enable transformation as part of your growth agenda, an EY team can help you to make informed decisions, then plan and execute with trusted methodologies, tools, and templates.
