Rock Ledge Resources > Jerry Hammann > Representative Project - Merger Contemplation

Merger Contemplation

Business Challenge

The life sciences industry is highly fragmented. A patient interacts with their primary care physician, medical specialists, the hospital, the pharmacy and their health insurance provider, among many other service providers, each often a separate business entity. Through all of these interactions, the primary goal for the patient is the resumption and maintenance of health. While all of the fragmented parts of the life sciences industry share that same objective, they also have other competing objectives and constraints. In an effort to eliminate barriers to better health outcomes and financial stability, major players in the industry were merging. A hospital system and a health insurer contemplated whether they should follow the market trend and merge.

Solution

A Rock Ledge Resources principal was engaged by one of the prospective merger partners to evaluate the merger opportunity. The principal conducted interviews of key members of the management team of both entities. The principal also developed a financial and operating model to understand the impact of the new hospital facility volumes that would derive from the merger. The model took into account the geographic locations and demographic characteristics of the insurer's existing customer base.

Results

After a top to bottom analysis, the prospective partners decided that a merger would not significantly advance the organizational objectives of the entities or the health objectives of their customer bases. The hospital system and the insurer therefore decided not to merge. Years later, the competitor merger that generated the merger discussions also unwound, and the Rock Ledge Resources principal was retained to assist one of the competitors in developing a strategic plan as a stand-alone entity.

Relationships: Jerry Hammann | Business and Strategic | Life Sciences