By Jason Z. Rose

To cut costs, boost cybersecurity, improve clinical outcomes, and spark innovation, merging healthcare systems must consolidate their bloated application portfolios and, ultimately, revitalize disparate data through an enterprise unification strategy.

Health system mergers and acquisitions (M&A) can deliver substantial operational efficiencies and competitive advantages around achieving economies of scale, expanding market share, or improving care delivery. However, strategically prioritizing Application Portfolio Management (APM) through consolidating their Electronic Health Record (EHR) and Enterprise Resource Planning (ERP) systems and the hundreds of auxiliary applications that remain redundant or underutilized should be part of the M&A thesis. This hidden layer of IT complexity can erode the very synergies—such as cost savings, streamlined operations and innovation—that M&A deals promise.

A proactive APM strategy—grounded in data enablement and enterprise governance—is vital for deriving maximum value from healthcare M&A transactions. Further, a sound APM strategy can provide seamless active archiving through the divestiture’s Transition Service Agreement (TSA) strategy, thereby expediting cost savings and offload burdensome operational support. By systematically consolidating overlapping systems, decommissioning outdated or legacy applications, migrating data to a secure, compliant active archive data lakehouse, and establishing strong governance, organizations can save millions on licensing and infrastructure. These measures not only reduce cybersecurity risks but also position hospitals to drive innovation through advanced analytics, AI validation, clinical trial matching and other emerging strategic opportunities essential for long-term success.

While integrating core systems often appears straightforward, ensuring that all health system data—from clinical applications to administrative tools—are reconciled and accessible for future initiatives can be surprisingly complex.  Yet it is precisely this comprehensive data integration—spanning legacy applications, clinical systems, and back-office platforms—that opens the door to novel capabilities and real-time insights.

As healthcare mergers evolve and grow in complexity, healthcare leaders have an unprecedented opportunity to weave effective APM into every stage of the M&A investment thesis. This white paper explores strategies for ensuring a smooth, data-driven consolidation process and highlights how Clearsense’s solutions can accelerate application decommissioning and data integration to deliver sustained value and efficiency throughout the M&A lifecycle.

The Ebb and Flow of Healthcare M&A

Healthcare mergers and acquisitions (M&A) activity naturally fluctuates with evolving economic conditions, regulatory shifts, and market dynamics. After a brief resurgence in early 2024—with 20 major healthcare M&A deals,¹ including four "mega-mergers” surpassing $1 billion each—the anticipated momentum has slowed. A recent analysis by consultancy Kaufman Hall²  indicates providers are cautious about pursuing hospital transactions due to ongoing uncertainties around tariffs, federal funding stability, state and federal regulatory changes, and broader economic volatility. As evidence, only five hospital and health system mergers were announced in the first quarter of 2025, primarily involving financially distressed facilities in critical need of financial stability.

Simultaneously, significant changes in Medicare and Medicaid policies continue to push smaller and mid-sized healthcare facilities toward strategic partnerships, affiliations, and “credit split”³ transactions. These arrangements typically pair financially stable providers with those experiencing financial vulnerabilities, particularly targeting rural and underserved geographies to navigate antitrust scrutiny and enhance regional market coverage.

This evolving landscape marks a shift from high-profile mega-deals toward smaller, mission-driven collaborations designed to strengthen the foundational stability of America’s healthcare delivery systems. However, the underlying appetite for strategic consolidation persists, and a more stable economic and policy environment could catalyze a broader resurgence in healthcare M&A by year’s end.

Regardless of current M&A trends, integrating diverse IT systems remains a formidable challenge. As organizations strive to merge their workforces, standardize operations, deduplicate application portfolios, and unify complex IT ecosystems, enterprise technology consolidation frequently becomes a stumbling block.

Consider mergers where one organization relies on Epic for its EHR platform and another depends on Cerner—each with its own ERP solutions, security applications, and countless specialized tools. In many cases, Enterprise Resource Planning (ERP) rollouts such as Workday are already underway, replacing Lawson or other legacy systems and adding yet another layer of complexity. Compounding these issues is the need to retain decades of historical data for compliance and legal requirements. Without a thoughtful plan for data consolidation, many organizations end up juggling multiple IT environments even years after a deal closes.

These complexities underscore an important reality: technology solutions alone aren’t enough to ensure a seamless M&A transition. Effective processes, guided by robust governance and collaboration, are critical for translating lofty synergy targets into tangible results—especially when dealing with large-scale application portfolios.

Seizing the Cost-Savings Opportunity: Rationalizing Redundant IT

Managing costs and improving operational efficiency remain critical priorities for healthcare organizations. The financial models behind merger deals typically show dramatic reductions in operating expenses in non-clinical departments like IT—in the form of consolidated licenses, infrastructure, and personnel. But too often, these projected savings remain unrealized as organizations continue to prop up bloated application portfolios.

Industry analysts estimate that 20 to 30 percent of IT system resources⁴ within merged health systems are redundant or obsolete. This creates an immediate opportunity for health systems to quickly achieve cost reductions, but most lack the governance structure, tools, and processes to execute an application rationalization strategy at scale.

Bloated application environments not only drive up licensing and infrastructure costs, but also require health systems to continue employing disparate IT teams to support legacy systems. Rather than synergizing, these teams continue to work in their own siloes, managing redundant and incompatible applications.

According to Gartner®,⁴ these legacy applications often linger long after organizations roll out new and better solutions. “The success rate of application decommission activities is low because it is often part of the implementation project of the replacing system,” Gartner wrote in 2024. “The actual campaign of the replaced legacy applications is often postponed, forgotten, or called off entirely. Replaced applications stick around for too long, becoming senile and eventually becoming zombies: applications that are not fully alive or dead but linger around to consume budget and disturb people.”

Application rationalization, strategically consolidating redundant or outdated IT systems, presents an immediate pathway for health systems to quickly achieve financial goals. Application rationalization typically involves upfront capital expenditures (CapEx), including investments in new technology solutions, software customization, and expert consulting services. But these initial capital investments enable significant reductions in ongoing operational expenses (OpEx), such as licensing fees, infrastructure upkeep, and staffing requirements for legacy systems.

Capitalizing ERP implementation costs and similar technology solutions aligns with standard accounting practices, allowing healthcare organizations to depreciate these costs over the technology’s useful life, thereby aligning expenses with long-term benefits. In contrast, routine maintenance and minor system upgrades typically remain operational expenses.

To hit their cost takeout targets for IT, merging health systems need a modern data enablement platform like Clearsense that can efficiently scale to handle massive application decommissioning projects. The 1Clearsense Platform  can ingest cumulative data from multiple legacy systems, validate for accuracy and completeness, and make information accessible to current health system clinical and operational workflows.

With the right tool as a foundation, the cost savings of an application decommissioning effort can be massive. For instance, leveraging Clearsense, one national health system decommissioned 750 applications in four years after a series of M&A deals and enterprise software consolidation, saving $65+ million in the process with a target goal exceeding over $100 million in cost takeout once their enterprise EHR is archived.


Beyond these cost savings, the client’s project was recognized by KLAS Research in August 2024: “Clearsense delivered the largest, most complex decommission projects, with the highest implementation support quality of any vendor.”⁶

TSAs and Active Archiving Strategy for Healthcare Data Access in Mergers & Acquisitions

A sound active archiving strategy represents a proactive approach to managing healthcare data access challenges during mergers, acquisitions, and divestitures. By establishing clear protocols for data retention, access, and eventual migration, healthcare organizations can facilitate faster transitions, reduce costs, and maintain regulatory compliance throughout the TSA period. TSA management aligns perfectly with the benefits of active archiving, emphasizing the importance of clear exit strategies, detailed service descriptions, and thoughtful planning for successful transitions.

For healthcare organizations facing potential M&A activity, investing in active archiving capabilities before they’re needed creates a strategic advantage that supports smoother transitions and better outcomes for all stakeholders involved in the transaction—most importantly, the patients whose data must remain accessible and secure throughout any organizational change.

Safeguarding Merged Environments: Cybersecurity and Risk Mitigation

Beyond the substantial cost savings, modernizing IT systems through application rationalization and decommissioning also plays a crucial role in mitigating the cybersecurity risks associated with outdated, unsupported legacy systems.

Outdated and unsupported legacy systems aren’t just a drain on financial resources. These hidden risks can also expose healthcare organizations to significant security vulnerabilities by increasing vulnerability to ransomware attacks.

When organizations merge, they often inherit applications that are no longer supported by vendors, run on outdated operating systems, or were developed in-house long ago without modern cybersecurity controls. In some cases, these systems cannot be patched or upgraded or migrated to new servers due to operating system incompatibilities. And, if the applications are not being actively used to support clinical or operational workflows, they may go largely unmonitored by IT and security teams, making them a prime target for cybercriminals.

The consequences of a data breach in healthcare can be catastrophic for obvious reasons. Depending on the nature of the attack, a network breach could bring down IT operations, lock teams out of their applications or data, or publicly expose patient data—outcomes that can expose organizations to massive financial losses and incalculable reputation damage. And, as witnessed recently, cripple the entire healthcare industry’s ability to operate.

Cyber threats against the healthcare sector are growing in both sophistication and volume. According to Sophos, 67 percent of healthcare organizations were successfully hit by ransomware in 2024. That’s up from seven percentage points from the year before, and it is nearly double the percentage of organizations that reported ransomware hits in 2021.

Healthcare organizations can mitigate these risks through application decommissioning and migrating data from legacy systems into a modern, HITRUST- and SOC 2 Type 2-certified cloud environment. By decommissioning applications and moving data to a secure public cloud platform, health systems will eliminate a significant source of cyber vulnerabilities, while ensuring that they remain compliant with data retention regulations.

With the cost inefficiencies and cybersecurity vulnerabilities of legacy systems addressed, healthcare organizations can now shift their focus to leveraging modern data platforms to unlock new capabilities and drive strategic innovation.

From Passive Archives to Active Assets: Fueling Innovation Post-M&A

Consolidating an application environment should enhance a health system’s capabilities, not limit them.

Rather than merely archiving legacy application data, forward-thinking healthcare leaders can leverage an M&A event as a catalyst to revitalize their data on modern platforms that support emerging technologies and innovation. Traditional archiving practices often result in “passive data,” which sits in isolated repositories and does little to advance clinical or operational goals. Healthcare doesn’t just need to store data—it needs to activate it.

By contrast, modern data enablement platforms facilitate enterprise active archiving, transforming static archives into dynamic assets that keep longitudinal patient information readily accessible within clinical workflows in real time. Acting as middleware, these platforms foster an environment ripe for innovative applications such as clinical trial matching, advanced population health analytics, AI validation, and other forward-looking initiatives. With the right infrastructure in place, M&A transitions become launchpads for digital transformation—not merely exercises in cost reduction.

An essential step in this evolution is ensuring that data from diverse sources is cumulative, complete, and accurate. Modern data lakehouses unify the flexibility of data lakes with the structured analysis of data warehouses, creating a comprehensive environment for both current and historical information. This consolidation is especially crucial for emerging AI capabilities. Without clean, validated, and representative datasets, AI models risk delivering inaccurate or biased outputs—a widespread issue, as an estimated 85% of AI projects fail or underperform due to poor-quality data⁸.

Moreover, many CIOs are concerned about the “AI tax”⁹—the significant investment in infrastructure, specialized talent, and ongoing maintenance—when the immediate ROI of AI initiatives remains less understood. However, by unifying clinical, operational, and financial information under a data enablement platform, organizations can demonstrate tangible benefits: timely patient matching for clinical trials, precise population health forecasting, and more accurate predictive modeling. This clarity helps justify AI expenditures, mitigating skepticism around high costs while facilitating smoother executive buy-in.

Finally, by bringing together archived legacy data from disparate sources, organizations can deliver complete patient histories—sometimes spanning decades—straight into clinicians’ EHR workflows. Freed from the burden of tracking down and maintaining legacy systems, healthcare providers and IT teams can reallocate resources to innovation rather than mere maintenance. In short, modern data enablement turns data from a regulatory burden into a strategic asset that drives better outcomes and positions the newly merged entity for sustained growth.

Governance and Process: The Foundations of Seamless M&A Integration

Technology tools alone cannot ensure a seamless M&A transition. Without a deliberate plan to guide IT integration, organizations risk maintaining fragmented environments long after the deal is finalized. This is why establishing cross-functional governance teams—including representatives from clinical, financial, legal, and IT—must be a top priority. These teams tackle bottlenecks and keep application rationalization efforts on track, particularly crucial when dealing with hundreds of legacy systems.

A proven method is the “decommissioning assembly line,” which follows three main phases. During phase one, organizations will tackle important prep work that may include consulting, vendor management, contract management, and budgeting. In the second stage, tech teams will perform data tasks such as acquisition, conversion, and migration. During phase three, teams will finally decommission the applications, and also manage tasks like decommissioning equipment, technical review, end-user support, and regulatory compliance.

Daily huddles ensure that every stakeholder’s perspective is considered and that issues are addressed before they escalate. By following this systematic process, one health system was able to decommission over 200 applications per year, dramatically reducing IT sprawl and unlocking resources for higher-value initiatives.

When strong program governance and application decommissioning are embedded into the M&A investment thesis from the start, integrated health systems can leverage mandated efficiencies to save millions—or even tens of millions—of dollars in licensing fees and infrastructure costs, reduce cybersecurity risks, and establish a robust foundation for strategic innovation. With the right mix of enterprise governance, data acquisition services, and modern data enablement tools, application rationalization becomes a systematic review of redundant and obsolete applications—thereby unlocking significant financial and operational benefits.

From inflated IT costs and cybersecurity vulnerabilities to the need for robust data integration, healthcare organizations face major hurdles during M&A. Yet, by streamlining application portfolios and modernizing data infrastructures, they can not only realize substantial cost savings but also enhance security and drive strategic innovation. This integrated approach transforms legacy burdens into competitive advantages, setting the stage for future growth and operational excellence.

Beyond the Deal: Leveraging Clearsense for Sustainable M&A Success

Healthcare mergers and acquisitions are inherently complex, and while many organizations recognize the need to unify clinical and operational systems, the thought of simultaneously decommissioning hundreds of legacy applications can be overwhelming. Clearsense provides a powerful, integrated approach that guides health systems through these complexities—so they can achieve tangible ROI, reduce risk, and set the stage for ongoing innovation.

At the core of Clearsense’s solutions is ReviveCS, a secure and scalable active-archiving data-driven software solution designed to support large-scale application decommissioning. By centralizing and preserving critical patient data in a HITRUST- and SOC 2 Type 2-certified cloud environment, ReviveCS not only streamlines compliance but also allows clinicians to retrieve historical patient information without ever leaving their existing EHR workflows. This modern approach to data archiving helps dramatically lower costs by retiring redundant applications and minimizing infrastructure demands.

For organizations aiming to accelerate cost takeout even further, Clearsense Accelerated Services provide a managed services program that systematically identifies redundant applications, coordinates resource allocation, and sets up repeatable decommissioning processes—much like a well-run assembly line. By embedding governance and prioritization throughout the health system, Clearsense ensures that the transition to a consolidated IT environment proceeds swiftly, delivering both immediate and long-term savings.

Meanwhile, RevealCS transforms the wealth of cumulative and current production healthcare data into actionable insights. By creating a clean, normalized clinical data repository, RevealCS positions health systems to optimize operations, enhance patient outcomes, and embrace advanced analytics—making it easier to train AI models or roll out clinical decision support tools. This ability to integrate data from multiple sources across decades of patient events paves the way for genuine data-driven innovation.

Whether preparing for an upcoming M&A transaction or looking to streamline the aftermath of a recent deal, the1Clearsense Platform combines expert guidance with proven technology, creating clear pathways to measurable ROI and sustainable competitive advantage. To learn how Clearsense can transform your health system’s IT environment and spur innovation, reach out and start a conversation with our team today.

About the Author
Jason Z. Rose, MHSA, is a serial entrepreneur who brings 30 years of technology innovation, business development, strategy and leadership experience in healthcare IT. Jason currently serves as CEO and Board member of Clearsense, a Data Enablement Platform company that partners with healthcare organizations to increase data value, governance, and transparency.

Notes

1 Todd Shryock, First quarter of 2024 sees surge in hospital and health system mergers and acquisitions, Medical Economics, April 11, 2024.

2  Anu Singh, M&A Quarterly Activity Report: Q1 2025, KaufmanHall, April 8, 2025.

3  Alan Condon, Hospitals’ ‘credit split’ to widen in 2025: Fitch, Becker’s Hospital Review, December 11, 2024.

4 Stefan Van Der Zijden, Prioritize Business Domains for Application Rationalization, Gartner, November 29, 2023

5 Chet Shemanski, Unlocking the Future of Healthcare: Insights from the 2023 Gartner Report on Digital Transformation, Ennov, February 9, 2023.

6 Tyson Blauer and Paul Warburton, Data Archiving 2024; Examining the Complexity & Content of Archive Deployments, KLAS Research, August 27, 2024.

7 The State of Ransomware in Healthcare 2024, Sophos, August, 2024.

8 BeyondMinds, Why most AI implementations fail, and what enterprises can do to beat the odds, VentureBeat, June 28, 2021.

9 Stephanie Baladi, Understanding the AI tax: How to avoid the hidden cost of AI, Glean, January 16, 2025.