Medical Institutions M & A Strategy And Risk Assessment Studies

Merger and acquisition (M&A) is one of the corporate diversification strategies or medical institutions' external expansion strategies. The M&A can enhance external expansion efficiency, without losing instant potential business opportunities on medical market and can also promptly enter a new industry or market by utilizing the existing distribution channels. While the M&A is the speediest way of improving diversification of enterprises, the risks increase at the same time.From the failure M&A cases in America and Europe, key stages of pre-merger planning and valuation, negotiation and performance in the merger, as well as post-merger effect conformity are full of unforeseeable risk variants. While enterprises are vying for higher comprehensive efficiency, profit and other performance; how to effectively choose M&A strategy, conduce risk assessment and set up management mechanism are the most urgent issues to be solved in order to prevent substantive losses.This study is to discuss the various key factors confronted with by enterprises or medical institutions in M&A from the perspectives of strategy management, financial management, risk management and Balanced Scorecard concept. The Balanced Scorecard suggests that we view the organization from four perspectives, and to develop metrics, collect data and analyze it relative to each of these perspectives: financial perspective, customer perspective, internal business process perspective, and learning and growth perspective. The Balanced Scorecard is not only a measurement system but also a management system that enables organizations to clarify their vision and strategy and translate them into action. It provides feedback around both the internal business processes and external outcomes in order to continuously improve strategic performance and results. We constructed twelve perspectives and 85 indicators under the concept of BSC by Delphi method. Furthermore, we performed the Analytic Hierarchy Process (AHP) to point out relevant important 67 indicators. We anticipate that such data could be taken into account in future medical institution M&A.It is shown by this study that, unlike the fact that traditionally the financial risks are mainly concentrated on in enterprise M&A, whether medical institution M&A could be successful depends on the assessment of governmental policies by the medical institutions and strategy chosen by the merging medical institution; it also depends on whether there is a profitable target, ideally, a target medical institution which has sound financial system and relatively less risks. Learning from the failure M&A cases, medical M&A experts agree that more detailed assessment of contingent liabilities should be taken, in order to minimize transaction risks. Therefore, it is indispensable in increasing the success probability of M&A to collect relevant laws and regulations, governmental policies and the target medical institution's information before the M&A, to analyze vertical and horizontal financial reports, to minimize the interference of the uncertain information by using appropriate evaluation methods, to instill and cultivate enterprise culture after M&A, and to immediately internalize the merged medical institution.