advisory board acquisition - reaction data€¦ · advisory board acquisition data collected...

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Advisory Board AcquisitionData Collected Through the Research Cloud September 2017

Vendors, consultants and other firms:

For more information about the full report, email Jeremy Bikman at [email protected]

Healthcare Providers:

For more information about how your organization can access all of our full reports at no charge email Taylor Madsen at

[email protected]

Insights Available in the Full Report:• Customer and non-customer awareness of the acquisition

• Perceived impacts of the acquisition among both customers andnon-customers

• Likelihood that customers of Optum and Advisory Board will stay withthem after the acquisition is finalized

• Impact of the acquisition in attracting new customers

• Provider awareness of Optum’s ownership and expansion of outpatientfacilities

• The likelihood providers will work with Optum or Advisory Board in thefuture because of Optum’s ownership and plans to continue expandingownership of medical practices

• Providers’ views of the acquisition in open text format

• Explore the raw data through an online visualization portal

How to Access our Full Reports:

Executive Summary

At the time of the writing of this report on Optum’s acquisition of The Advisory Board Company, news just broke of yet

another healthcare technology M&A (ZirMed+Navicure). We’ve joked about this before but when you follow this news

close enough, time is almost measured in mergers and acquisitions. We find ourselves saying, “Wasn’t that around the

same time XYZ acquired ABC?” So, with these events as prevalent as they are, and no sign of a slowdown, it begs the

question, “Is consolidation among vendors good for healthcare as a whole?” This is a complicated question that

doesn’t have a perfect answer. On one hand, businesses become stronger, potentially providing better products and

services to customers through the principle of synergy. Unfortunately, on the other hand, providers are all too often

swept along in the M&A current with little recourse other than ending relationships with vendors that just aren’t cutting

it. Also, they are often one of the lower priorities on the totem pole, with executives often putting M&A deals together

full well expecting significant customer attrition.

However, this acquisition is a little stickier than normal. Optum, which is both a vendor and a provider (with outpatient

facilities in 12 states and likely expanding), is acquiring Advisory Board, which has information technology (Crimson),

consulting services, and research/insights products and services. This dynamic has the potential of mudding the waters

of impartiality when consulting with and providing insights to organizations that may compete with your own

organization’s assets. To make things even murkier, Optum is owned by the largest payer in the country—UnitedHealth

Group. Payers and providers are not always on the best terms. Based on open-text responses from participants of our

research, many providers do not believe impartiality can exist under the new arrangement. So, how much fallout will

we see? Or will Advisory Board see the same fate as McKesson and Lexmark, where pieces of their business were

sold off after their acquisitions, to avoid perceived…or real conflicts of interest.

In this study, we gathered feedback from high-level decision-makers on the following topics:

• Customer and non-customer awareness of the acquisition

• Perceived impacts of the acquisition among both customers and

non-customers

• Likelihood that customers of Optum and Advisory Board will stay with them

after the acquisition is finalized

• Impact of the acquisition in attracting new customers

• Provider awareness of Optum’s ownership and expansion of outpatient facilities

• The likelihood providers will work with Optum or Advisory Board in the future because of Optum’s

ownership and plans to continue expanding ownership of medical practices

• Providers’ views of the acquisition in open text format

Note: As always, we are extremely grateful to our participants of this study. Your willingness to provide your candid perspective on these topics offers insights into the area that matters most regarding M&As—improving the customer experience.

For more information about this report and our premium content, email Jeremy Bikman at [email protected].

Demographics

163participants

CEO 32%

CFO 19%CNO 15%

COO 10%

Chief Medical Officer 7%

HIM Director 6%

HIM Manager 4%

Other 7%

by organization type

StandaloneHospital

Hospital affiliated with an Integrated Delivery

Network (IDN)

Physican-ownedpractice

Hospital-ownedpractice or clinic

48% 39% 8% 5%

33

Familiarity with the Acquisition

Not Familiar46%

Somewhat Familiar35%

Very Familiar20%

aggregate response

As usual, providers in general are not very familiar with Optum’s (Unitedhealth Group) acquisition of Advisory Board. Perhaps this is a side effect of the endless barrage of M&A causing providers to tune out a bit...and coupled with the fact that they have bigger fish to fry than keeping up with the vendor-side drama.

44

CUSTOMERS OF BOTH

54% 38% 8%

26% 47% 29%

27% 32% 41%

customer familiarity

Somewhat Familiar

Very FamiliarNot Familiar

What can we say about Optum and Advisory Board customer awareness of the pending acquisition? Optum customers are, for the most part, in the dark, which isn’t a surprise as the news is likely to have little to no impact to them in the short to midterm. Advisory Board customers are fairly evenly split on what they know. Interestingly, when a provider is a customer of both companies, awareness is at a high (41%) discovering “why” awareness is eleveate among this group, is a function available in our Research Cloud platform available to clients and participants of this research.

55

Familiarity with the Acquisition

SEP6 - 11

41%

55%

39%

27%

20%

18%

Not Familiar Somewhat Familiar Very Familiar

SEP12

to current

66

Non-Customer Familiarity

Look what happens when we breakout non-customers of both companies? With no skin in the game, non-customers just don’t care what’s happening around this news.

12%were somewhat familiar

70% of non-customers reported being

with the acquisiton. being unfamiliar

8%were very familiar

77

Acquisition Impact

AVAILABLE IN FULL REPORT

Contact Jeremy Bikman at [email protected]

88

Acquisition Impact (customers)



99

Acquisition Impact(non - customers)





1010

Long-Term Impact on Customer Retention



1111

Acquisition Impact to Attracting New Customers



1212

Comments About the Acquistion (Out of 92)

Disclaimer: In fairness to companies we cover in our research, we always try to show a representative cross-section of responses, which usually includes a mix (though usually not equal) of positive, ambivalent and negative comments. This was not the case with this study. With the exception of participants who work with Optum and Advisory board, the comments were mostly moderately to significantly negative this time around As the cliche goes... don’t kill the messenger.



1313

Comments About the Acquisition (Out of 92)



1414

Awareness Optum Owns Medical Practices



1515

Awareness Optum Owns Medical Practices (customers)

AVAILABLE IN FULL REPORTAVAILABLE IN FULL REPORT


1616

Does the fact that Optum is expanding its ownership of medical practices impact your decision to work with either company in the future?



1717

Does the fact that Optum is expanding itsownership of medical practices impact yourdecision to work with either company in the future? (customers)



1818

Awareness Optum Owns Medical Practices (non - customers)



1919

Conclusion

With another acquisition announcement in the books, we continue to build a body of knowledge that supports the idea that provider distrust is growing, or at least holds steady, with each of these events. They don’t feel they are a consideration but are, rather, the collateral damage of putting a deal together. Seems counterintuitive.

At the end of the day, vendors have a long road ahead if they want to repair the damage that has been done. The next M&A to come along (think Zirmed-Navicure), could take an opposite approach by keeping their customers in the loop early and often. Doing some outreach to reassure them they are an important part of their future plans, and to let them know that current products and services are not going to be abandoned (unless they are going to be neglected and abandoned...it happens). It’s amazing these simple activities need to be enforced and even still are ignored.

The good news is the providers are resilient. They survived countless M&As and will continue to roll with the punches, doing what they do best.

Organizations of Participants

Adventist HealthAHMC Anaheim Regional Medical CenterALICE PECK DAY MEMORIAL HOSPITALAmeris Health Systems LLCArkansas Methodist Medical CenterAspirus Ontonagon HospitalBakersfield Heart HospitalBaptist Medical Center - BeachesBaptist Memorial Hospital - MemphisBaptist Memorial Hospital - TiptonBassett HealthcareBaylor St. Luke's Medical CenterBOTHWELL REGIONAL HEALTH CENTERCarrier ClinicCentura Health - St Thomas More HospitalCHILDRENS HOSPITAL COLORADOCHRISTUS St. Patrick HospitalCleveland Clinic Hospital - ClevelandColorado River Medical CenterCommunity Clinic IncCommunity Health Center of Southeast KansasCommunity HospitalCommunity Memorial hospitalCooper University HospitalCoxHealthCullman Regional Medical CenterDelaware Outpatient Center for SurgeryDenver Health Medical CenterDeSoto Memorial HospitalDignity HealthDoctors Hospital at RenaissanceDPIEast Jefferson General HospitalEdward W. Sparrow HospitalFall River Hospital

Fall River HospitalFirst Choice Home CareFirstHealth Moore Regional HospitalFulton County Health CenterGadsden Regional Medical CenterGeorge Nigh Rehabilitation CenterGilliard Health Services IncGouverneur HospitalGrays Harbor Community HospitalGreat River Medical CenterGreenville Health SystemGwinnett Medical CenterHamilton Medical CenterHarris Methodist Hospital SouthlakeHarrisburg HospitalHarrisburg Medical CenterHCA Inc.HealthPartners, Inc.Henry Mayo Newhall Memorial HospitalHighland District HospitalHomeland HospiceHouston Methodist Sugar Land HospitalIllinois Valley Community HospitalIndiana Regional Medical CenterIndiana University Health West (Clarian West Medical Center)Inimeg Management Company IncInova Fairfax HospitalInterCareINTERMOUNTAIN HEALTHCAREIntermountain HealthcareJackson County Memorial HospitalJackson General HospitalJennie Stuart Medical CenterKentuckyOne Health (CHI)


Lancaster General HospitalLaPlace Rehabilitation HospitalLifecare Solutions, Inc.Loma Linda University Medical Center - Heart & Surgical HospitalLOWELL GENERAL HOSPITALLSU Healthcare NetworkLutheran Medical CenterLynn County Hospital DistrictMagee Rehabilitation HospitalMahaska Health PartnershipManatee Memorial HospitalMayo Clinic Hospital - New Prague Hospital (FKA Queen Of Peace Hospital)Meadowlands Hospital Medical CenterMedline IndustriesMeeker Memorial HospitalMemorial Medical CenterMercy Memorial Hospital SystemMethodist Richardson Medical CenterMission Community HospitalMitchell County Hospital DistrictMorton County HospitalMountain Medical ImagingMsu- John Longest Student Health CenterNCH Downtown Naples HospitalNebraska Medicine - BellevueNebraska Spine HospitalNewton Medical centerNorman Regional HospitalOakBend Medical Center - Jackson Street Hospital CampusOchsner Extended Care Hospital of KennerOchsner Medical Center - Main Campus (Ochsner Foundation Hospital)

OSF St. Joseph Medical CenterOthello Community HospitalParis Community HospitalPhelps County Regional Medical CenterPinehurst Surgical Clinic, P.CPoplar Bluff Regional Medical Center-Oak GrovePorter Portage Hospital CampusPost Acute Medical LLCPromise Hospital of Salt LakeRiverwood Healthcare CenterRoger Mills Mem. HospitalSaint Elizabeth Regional Medical CenterSaint Francis Health SystemSalem Community HospitalSanford Luverne Medical CenterSequoyah Memorial HospitalSevigny & Associates Eye CareSky Lakes Medical CenterSonora Regional Medical CenterSouthcoast Health System, Inc.Southwestern Medical CenterSpecialty Hospital of MeridianSt Davids North Austin Medical CenterSt. Alexius HospitalSt. Joseph MartinSt. Joseph Regional Health CenterSteadman Philippon Research InstituteStillwater Medical CenterStory County Medical CenterStrong Memorial Hospital - University of RochesterSURGICAL SPECIALTY CENTER OF BATON ROUGETemple University Health System


Temple University HospitalThe Christ HospitalTHE CHRIST HOSPITAL HEALTH NETWORKThe Regional Medical CenterThe Wellness PlanThedaCareTri-City Health CenterTridentTyler County HospitalUkiah Valley Medical CenterUnion HospitalUniversity Health Care SystemUniversity of Iowa Hospitals & ClinicsUniversity of Maryland Charles Regional Medical Center (FKA: Civista Medical Center)Upper Connecticut Valley HospitalUTMB Austin Women's HospitalValley Regional HospitalValleyCare Health SystemVanderbilt University Medical CenterVia Christi HealthVirginia Brain And SpineVNS at St Francis IncWarm Springs Rehabilitation SystemWayne Memorial HospitalWellmont Bristol Regional Medical CenterWhite Memorial Medical CenterWilliam Newton HospitalWilson Memorial HospitalWinchester Medical CenterWoodland Heights Medical CenterWyoming County Community HospitalYoakum County Hospital

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