# IT Challenges in Mergers & Acquisitions

Hi everyone, this is Erica Spicer Mason with Becker's Healthcare. Thank you so much for tuning into the podcast Today, I'm thrilled to be joined by Dave Lamar, the Chief Growth Officer at Quant. Today we're going to discuss information technology as it relates to mergers and acquisitions. Dave, thank you so much for being here with us today.

## Introduction to M&A Challenges
Well, as you stated, I'm Chief Growth Officer here at Quant. I've been here coming up on seven years. I've seen a lot of change and a lot of activity in the M&A space and how it's impacted both the systems sold and the acquirer. So, I lead sales and marketing here, and client services and primarily drive the go-to market strategy and execution for the organization.

## Benefits of Mergers and Acquisitions
Mergers and acquisitions are certainly a hot issue right now. They benefit organizations in their ability to scale, reduce costs, and improve care. However, these deals also come with challenges.

## Key Issues in Technology During M&As
Can you describe for us some of the key issues that you are seeing hospitals and health systems face in mergers and acquisitions, especially as it relates to technology?  
I think the M&A process has come a long way and they do a fairly good job of identifying and valuing the efficiencies that they would expect to gain through these transactions. However, the most change I've seen is in understanding the technical debt associated with each organization. As these organizations get bigger, there's more of this debt when they merge. The size of the application inventories in these health systems is immense, in hundreds if not thousands of applications.

The process still lacks a good way to understand that technical debt. Many applications may be underutilized or not used at all, which is often a missed opportunity during the M&A process.

## Addressing the Challenges
How are you seeing organizations address these challenges?  
I've seen organizations that take a more cost-effective approach, attacking high-value systems while pushing low-value systems off to later phases. This leads to accumulating applications that create data loss exposure and security issues because they are unsupported or not managed properly. A better approach is building a permanent program within their organization that focuses on handling M&A activities to remove all systems, not just the high-value ones.

## Effective Strategies for M&A Management
Folks that have built a comprehensive program end up understanding the need to remove 100% of those systems and justify that upfront early in the process. Realistic timelines are crucial, and getting the right staffing support is necessary as many organizations struggle with understaffed IT departments.

## Data Retention Requirements
A significant concern that we're not seeing clarity on is data retention requirements. Health systems don't have a solid history of maintaining these requirements, but that's starting to change. Organizations are beginning to get a better handle on data retention and purging unnecessary data.

## Recommendations for Initial Steps
What initial first steps do you recommend to hospitals or health systems engaged in an M&A?  
The first step you should take is to negotiate a strong transition services agreement that accounts for the time needed and the kind of help required for the transition. Understanding the types of applications that need to be transitioned and getting help in doing an inventory is vital for success.

## Post-Merger Trends
What trends do you usually see related to data and software applications in the post-phase?  
Early on, there is a heavy focus on supply chain efficiencies and consolidating systems that support those efficiencies, especially in ERP and patient accounting systems. I recommend including your patient accounting system in the transition off your ERP system to save potential issues.

## Final Thoughts on M&A Strategy
Overall, managing data and technical debt aggressively is key for success in these activities. Consolidating systems and managing data can improve the quality of the merger significantly. As the costs and risks associated with managing unnecessary data increase, active management is becoming essential.

I see a positive outlook for M&As, believing there's a lot of opportunity for growth and efficiency which will benefit the healthcare landscape.