Consolidation strategies continue to be a popular way for health systems to advance their overall goals and improve patient health. Today’s options are vast, from more informal arrangements with affiliations to large mergers and acquisitions that create brand-new health systems.
But these transactions bring different risks for all parties involved. As finance executives consider their options for consolidation, the following are key considerations for a successful integration:
Align Overall Objectives with Operational Processes
During any type of deal or reorganization, the first objective is to ensure that the new processes, systems and plans being developed align with the overall objective of the new organization. Consolidation often results in new patients coming into the healthcare system, so it is critical to be operationally ready and integrated to manage an uptick in patient flow. It is imperative for patients whose care and personal experience will benefit from a consistent experience, from making an appointment through the follow-up.
Alignment with overall objectives is also vital for healthcare workers, from the physicians to the back-office accountants. The healthcare industry already benefits from a workforce that is committed to making life better for their patients. But consolidation can cause stress on employees who will rely on management to communicate the new strategy to all employees. Finance leaders should ensure the executive team is considering questions such as:
- Will the new organization care for new patient groups?
- If so, what needs does this group have, compared to the existing client base?
- If the new organization will add staff, what talent needs will the new group have?
- If the new organization must reduce its workforce, how should that be done?
Once those questions are answered, and broad strategies are developed, financial executives can look for ways to simplify operations to the benefit of patients and team members. Factors to consider while growing include managing patient volume, upgrading payment systems and streamlining business operations.
From a finance perspective, the new organization also offers ways to manage working capital and potential operational needs in a more holistic, and efficient, way. By identifying competing priorities, establishing cross-functional alignment, measuring performance and applying solutions, executives will be able to ensure that integration points are being made.
Reserve Capital for Digital Needs
Organizations often reserve capital for post-consolidation, to ensure that they will be able to meet unexpected demands of the new organization. In our digital world, where patients and caregivers expect to be able to manage tasks via digital means, finance executives should reserve capital for digital expansion or upgrades.
A key consideration for organizations will be how to integrate IT systems, as a result of the mandate to convert to electronic records and the desire by patients to access their records remotely. How to do so will vary according to the type and size of the organization. For instance, smaller organizations may want to standardize, which can eliminate choke points on data flow, making the information available to a broader group of users in a timelier manner.
Larger organizations formed by a merger or acquisition, however, will likely need a joint, collaborative process to integrate both systems. This process will include reviewing the life-cycle replacement needs of the existing systems. At the same time, financial executives should complete a thorough risk analysis to determine the process and cost. These considerations include questions such as:
- Which systems will need to be maintained?
- Which will need to be converted to a new process?
- Which should be dismantled?
These are important issues because healthcare systems are increasingly challenged by rising costs for providers and higher payment responsibilities for patients. But new technologies, which increase automation and save time, can also help streamline processes and save costs.
Give Cultural Issues Time
When it comes to processing the cultural issues that arise from consolidation, it often takes longer than the operational considerations. It is vital to incorporate adequate time in the process for the different cultures to come together. In fact, the process for the cultural integration already exists, as it follows the business process for the consolidation.
To start, the executive team begins the discussions and sets the agenda for the agreement. Once those groups are aligned, and an agreement is approved, the executive team must be sure that the management teams are aligned on objectives, strategies and tactics moving forward.
This important step, which requires in-person meetings and strategic plan review, often sets the tone for how the team members from each department will interact. As a result, finance executives should advocate for appropriate time to merge the cultures. Taking the time to do so at the beginning of the process will result in faster adoption of the overall business plan – and lead to faster return on investment.
Conclusion
Consolidation is an important way to drive growth and achieve greater patient outcomes at many healthcare organizations. By understanding the operational, cultural and financial factors of a potential consolidation, financial executives will be able to better manage risk while supporting the organization in meeting patient care needs.
The views, opinions and positions expressed within these guest posts are those of the author alone and do not represent those of Becker’s Hospital Review/Becker’s Healthcare. The accuracy, completeness and validity of any statements made within this article are not guaranteed. We accept no liability for any errors, omissions or representations. The copyright of this content belongs to the author and any liability with regards to infringement of intellectual property rights remains with them.
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