Prime’s active involvement in cross-market M&A

Prime Healthcare, based in Ontario, California, is changing the game with its innovative strategy for merging and acquiring across different markets, culminating in its most substantial acquisition yet – eight hospitals in Illinois, an entirely new territory for the health system. In just over two months, this physician-led organization has been busy creating over 1,000 job opportunities by bringing certain services in-house, such as laboratory and environmental support. They have also established a non-profit medical group catering to hospitalists and implemented the Epic EHR system in one of Chicagoland’s largest hospitals with plans for further expansion.

Dr. Sunny Bhatia, Prime’s president and chief medical officer, recently shared his insights on the “Becker’s Healthcare Podcast” about how the health system evaluates potential acquisitions, utilizes economies of scale, and aims to revitalize struggling hospitals while staying true to their patient-centered philosophy.

In evaluating cross-market deals, Prime Healthcare looks for hospitals where they believe they can significantly improve upon the existing services provided, especially for underserved communities or those facing financial instability or closure. Their mission-driven approach, established since the organization’s inception in 2001, focuses on enhancing and sustaining care for communities in need. They prioritize hospitals integral to their communities that require additional support, whether it be resources, leadership, or operational enhancements. Avoiding unsustainable ventures or those lacking clear paths to collaboration is crucial, as the healthcare sector poses substantial challenges. Driven by transparency, shared objectives, and a dedication to delivering exceptional care, Prime Healthcare emphasizes quality over mere expansion.

For future acquisitions, the health system plans to expand within current markets or penetrate new regions with a cluster-scale setup. Adapting to the evolving healthcare landscape, Prime Healthcare underscores the importance of strategic scaling and continual support. Their operational efficiency, market awareness, and flexible growth tactics uphold their core tenets of keeping hospitals operational and accessible to underserved populations.

Integrating hospitals from diverse markets into a unified system raises operational and cultural clashes. Prime Healthcare has discovered that upfront investments, physical presence, and visible commitment are vital strategies for successful integration. Focusing on capital upgrades, clinical enhancements, and establishing robust clinical and operational frameworks early on fosters consistency and quality care delivery. Emphasizing their commitment, addressing concerns, and engaging with local leaders, staff, and communities are crucial for effective market expansion.

On the subject of economies of scale, Prime Healthcare anticipates shared leadership, increased purchasing power, and strategic advantages with health plans to lower overall care costs. However, realizing these benefits can be challenging in various markets, although a robust market presence can potentially mitigate expenses and enhance care quality through a market-centric strategy.