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With the ongoing global health crisis now entering its third
year it might be easy to overlook market activity away from Covid-19 related
headlines. However, the wider Healthcare IT sector has seen extensive activity throughout
2021 with M&A activity buoyant.
Here we will take a look at some recent high-profile transactions,
the challenges and expectations faced by firms operating within it, and the role
that the UK Government it is taking in the sector.
Recent market activity
The Healthcare IT sector in 2021 saw a number of acquisitions
and other activity that is helping to shape the industry landscape moving
In December of 2021 Alcidion, an Australian specialist in Smart
Healthcare Infomatics, announced the acquisition of Silverlink PCS Software
Limited. This was Alcidion’s second acquisition of the year and followed the
purchase of, patient flow software provider, ExtraMed in April.
The strategic benefits behind these purchases include the integration
of shared knowledge across these organisations. New opportunities are expected
for customers around integration, automation, clinical decision support,
resource management, patient observation and clinical communication. The
combined entity will benefit from local knowledge allowing other products to be
brought to market quickly and potential using established contractual
relationships to reduce time to sell.
In February Wellbeing Software a provider of radiology and
maternity software was acquired by Australia’s Citadel Group in a deal worth
£103 million. The move was seen to effectively dovetail with Wellbeing’s
Connected Healthcare offering and to support UK market growth and International
In July WellSky International, formerly known as JAC and best
known for their electronic prescribing and medicines administration solutions,
was acquired by System C. This acquisition will broaden System C’s product
portfolio and is a highly strategic addition to the company’s integrated cloud
EPR suite. Moreover, this transaction brings in a number of international
At the end of August Digital software provider Servelec was
acquired by the health and social care division of The Access Group having
itself early acquired social prescribing technology specialists Elemental
Software. The acquisition will enable Access to offer integrated solutions and
services across local government, health and social care, combining Access’
suite of health and social care solutions with Servelec’s ability to integrate
technology across social care, healthcare, education and youth services.
Procurement challenges and expectations for acquirers
As with any ‘technology as a service provision’, particularly
when operating in highly regulated sectors, those operating in the Health IT
sector require extensive accreditation, qualification and certification. Firms
seeking to make acquisitions within the sector should have an awareness of
these barriers, and of NHS security and data protection requirements. Of vital
importance too is accurate and up to date market Knowledge and an established
relationship with ‘referenceability’ which is seen as reduced risk on the buyer
The procurement process frequently involves the completion of a
pre-qualification questionnaire (PQQ) where potential suppliers will usually be
required to provide details regarding experience in providing similar services
including references and adherence to a number of standards comprising quality
/ connectivity and resourcing. These criteria are often pass / fail. So not
being able to respond in the appropriate manner will result in a supplier being
unable to bid. Utilisation of a company already meeting these criteria and
established in the UK will be an enabling tool.
By buying an established supplier to the NHS, acquirers can
potentially benefit from long term customer relationships already in place.
Furthermore, such synergies can provide cross selling and upsell opportunities.
As well as complimentary products that may be able to be sold in to “home
Where an acquirer doesn’t have a UK presence but has a UK growth
strategy it allows the establishment of a hub and hopefully proven management team
to help in the acquisition of further companies and growth. Combined products
may allow extended market to be targeted that previously could only be achieved
by working with third parties.
Government backing for sector
Digital innovation has been a key part of the UK Government’s
plans for the NHS. This emphasis on the importance of digital technology has
led to a recent announcement to merge NHSX, NHS Digital into NHS England to
drive digital transformation in the health service. In the October budget
Chancellor Rishi Sunak confirmed an additional £2.1billion for NHS IT upgrades
and digital health technology.
The funding will cover “innovative use of digital technology so
hospitals and other care organisations are as connected and efficient as
possible”. With the NHS employing over 1.3 Million staff, of which over 50% are
professionally qualified clinical staff, it represents an attractive market to
Integrated Care Systems in England are set to embed
collaboration and promote more joined up care, the acquisition gives Access the
opportunity to integrate systems and data right across the health and social
Achieving interoperability of data and IT systems is a
longstanding aim and essential to current plans for digital transformation. Yet
it will be highly challenging to fully achieve this goal as the NHS has many legacy
systems, not all of which can meet these requirements. The Department of
Health’s vision for digital, data and technology sets out plans to expand the
supplier market using limited contractual frameworks to ensure all technology
suppliers meet standards that will allow interoperability between IT systems.
Nonetheless, increasing the number of suppliers could make interoperability
more difficult to achieve because there will be more system-to-system
The outlook suggests there will be further acquisitions and
consolidation in the marketplace constrained only by the number of
opportunities available. An increasing number of target companies are no longer
available as they have been purchased by US Funds which, based on a number of
cases, tend not to resell. This may drag other companies into the healthcare net,
perhaps including those delivering communication solutions, specialist cyber
security, healthcare resource management and scheduling. No doubt 2022 should
be another highly active year.