In the fast-evolving healthcare industry, mergers and acquisitions (M&A) are hotter than ever, with annual deal volume remaining 70% higher than the pre-COVID trendline. Hospitals are joining forces to expand services, improve efficiencies, and stay competitive. Yet, one of the biggest challenges in any healthcare M&A is managing the processes behind provider compensation.
When organizations merge or acquire new facilities, they inherit a diverse set of physician contracts and compensation models. Without clear visibility, they risk hidden costs, compliance violations, and provider retention issues. However, by honing in on three key areas, you can transform inherited contracts from potential liabilities into strategic assets.
1. Provider Alignment & Communication
Successful integration starts with clear expectations and transparency around provider compensation. When M&A activity is finalized, healthcare organizations should immediately:
Communicate expected changes early and offer training to ease the transition.
Equip teams with intuitive tools to track compensation seamlessly and gain valuable reporting insights.
The bottom line: Disruptions in provider payments can erode trust with your medical teams and increase attrition.
2. Automating Compensation for Compliance & Efficiency
M&A often results in a patchwork of compensation structures. Standardization of contracts and automation help mitigate risk and streamline processes. With multiple providers and varied contract terms, regulatory oversight becomes increasingly difficult for healthcare teams to manage. An automated payment system can help:
Centralize provider contract data.
Automate payments for compliance with Stark Law & Anti-Kickback regulations.
Identify payment inconsistencies and outliers, and reduce manual payment errors.
As our client Kim Frye from MyMichigan Health shared in a recent Becker’s webinar:
“As we’ve grown through mergers, we noticed every contract was different. Managing 45 different methodologies was extremely challenging. We worked hard to standardize key contract components. Using Ludi’s DocTime®, we were able to easily centralize contract data, ensuring consistency and providing physicians with monthly progress reports—building trust and streamlining compensation processes.”
3. Preserving Institutional Knowledge
A common oversight in M&A is the loss of institutional knowledge. Key considerations:
Who currently manages provider contracts and payments?
Will they stay post-merger?
How will knowledge transfer be handled to prevent disruptions?
Healthcare organizations must have a clear plan for training and handoff processes to ensure continuity. Establishing a dedicated compensation team ensures a seamless transition and reduces errors.
Laying the Groundwork for Long-Term Success
The success of an M&A deal depends on provider alignment, continuous communication, efficient contract data management, and transparent compensation structures. Prioritizing these areas helps healthcare organizations control costs, ensure compliance, and strengthen physician engagement. With the right tools and strategy, hospitals can transform M&A activity into an opportunity to streamline complex provider contracts—laying the groundwork for long-term growth and operational success.
