Nearly Half of Healthcare Execs Say Cybersecurity Challenges Create M&A Headaches

Ever-increasing cybersecurity challenges have left nearly half of healthcare professionals dissatisfied with the steps taken to protect critical information and ward off threats after merging with or acquiring another firm, according to a recent research report.

In its “Reshaping Healthcare M&A” report, consulting firm West Monroe Partners examined a broad cross-section of issues, including deal drivers and getting more value from mergers and acquisitions (M&As) made within the sector. The impact of technology — particularly the challenges of cybersecurity — plays a huge role in conducting due diligence before any kind of purchase is made, the authors wrote.

Concern Around M&As on the Rise

According to the report, 49 percent of healthcare professionals expressed dissatisfaction related to cybersecurity due diligence. This is up sharply from the 16 percent who reported the same concerns in the firm’s 2017 “Software M&A Frenzy” study. The report speculated that this rise may be attributed to the increasingly specific laws and industry regulations in healthcare.

More than half of those surveyed (54 percent) said organizations they acquired lacked expertise in dealing with cybersecurity challenges. In addition, 48 percent expressed concerns about insider threats.

Cybersecurity Challenges Emerge Too Late

Part of the problem is that the details of an acquired firm’s data protection issues tend not to emerge until it’s too late. Fifty-eight percent of healthcare executives said they discovered such cybersecurity challenges after the M&A deal was already done. Some of the biggest surprises cited in the survey include lack of robust policies and procedures to address cybersecurity challenges (36 percent), lack of adequate infrastructure to ward off threats (30 percent), and lack of encryption on some devices (29 percent).

While concern about the potential for data breaches is high with healthcare M&As, the report suggested that scenarios in which one firm buys multiple small providers at once are particularly challenging. The firms included in these roll-ups may vary in terms of the quality of their IT systems and specific integration issues, necessitating further due diligence on the part of the purchasing organization.

Shane Schick

Writer & Editor

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Concern Around M&As on the Rise

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