Mergers and acquisitions offer healthcare organizations a way to improve operating margins and quality of care. As the industry shifts to a value-based system that incentivizes higher quality and lower costs, it's no surprise M&A activity is heating up.
While healthcare organizations rapidly consolidate, IT — one of the top drivers of operating expenses — presents several unique challenges, especially since hospitals have dozens of EHR vendors, technology manufacturers and other IT systems providers to choose from.
In a June 7 webinar sponsored by Lenovo Health and hosted by Becker's Hospital Review, Charles Podesta, CIO of Orange, Calif.-based UC Irvine Health, and Daniel Barchi, CIO and senior vice president of New York City-based New York-Presbyterian, joined Andy Nieto, Lenovo's health solution manager, to discuss how organizations can work through these IT concerns amid consolidation.
The three presenters have extensive experience guiding organizations through M&A. Mr. Podesta helped oversee UC Irvine's successful merger with UC San Diego, as well as a failed M&A at St. Louis-based Ascension that taught him a lot of valuable lessons. Similarly, Mr. Barchi's organization has undergone several consolidations, including the recent acquisition of four nearby facilities. With Lenovo, Mr. Nieto introduces new technologies and advises IT teams on M&A tech strategies.
Here are five IT considerations for CIOs as their organization purses M&A:
1. It starts with the people. All three presenters concurred: People are the most critical aspect of an M&A. Because there is usually an overarching business motive driving the M&A, IT departments should join in the planning and strategy meetings from day one to voice concerns regarding technology infrastructure costs, which are often overlooked in the early stages.
2. Cultures don't always align. Organizations operate in different ways, which can cause conflict when merging. Figuring out how to align two distinct workplace cultures is crucial to successful M&A, said Mr. Podesta.
Speaking from his experience with UC Irvine and UC San Diego, Mr. Podesta said the two organizations had very different cultures, but "from a CEO, COO, CIO perspective, we all had very good relationships and were able to work through those cultural differences to merge the groups together, even though it took a little bit longer than we would [have] liked," he said. "If you have two very distinct cultures that work differently from a customer service perspective, it can be very difficult to merge those two together."
3. Timing is key, so move quickly yet carefully. While there are effectively only three approaches for addressing IT changes during an M&A — rip and replace, select one of the two existing systems as the go-forward solution or maintain two disparate systems — it is important to move fast. According to Mr. Barchi, the quicker the integration, the sooner savings and improved outcomes are realized. He suggested bringing the two IT teams together as early as possible and establishing a plan with a clear timeline.
"I have always integrated the teams quickly, and then put together plans for each of the clinical, financial and operational systems. Some of them might come into play in the next quarter or two, but some of them aren't slated for two or three years down the line," Mr. Barchi explained. "There is fast and then there is thoughtful. To me it is more important to have a plan and be executing on it well than to rip and replace quickly."
Mr. Nieto echoed those thoughts, noting a quick transition can help ease hospital staff's concerns with change. "Fast is very important, especially in an acquisition environment where there may be frustration or hostility, the longer you keep that separate and not integrated, the more painful it actually is," he said.
4. Bring all competing vendors together. When devising the new health IT strategy, newly merged organizations should reach out to all the vendors to support the migration, even the ones you may be ending relationships with. It is important to decide which technologies will work best at the new organization — from both a people and a business standpoint, as well as a vision or destination perspective — and talking with existing vendors can help organizations determine which tools meet their needs.
5. M&A is an opportunity to review and revise existing processes. Mr. Nieto suggested healthcare leaders use this time to also review existing workflows and make changes to reduce tech-induced burnout. This involves observing and asking end-users their preferences and re-engineering or standardizing technology environments to drive efficiencies.
One last hurdle
However, getting hospital staff to happily approve of any change can be tricky. In Mr. Nieto's experience, advisory councils that help devise the new, post-M&A workplace culture can help achieve physician buy-in. These councils serve as advocates for changes, both in recommending fixes and gaining support for these solutions among colleagues.
Mr. Barchi and Mr. Podesta said it can be helpful to paint for physicians the whole picture — in other words, lay out the organization's vision and explain how and why the go-forward strategy is best. For Mr. Podesta, hosting "Saturday summits" in which end-users voice their wants, needs and concerns — as well as draft guiding principles — for the newly merged tech has been successful.
If you can bring the value down to the end-users and let them talk through potential problems, hospital staff will feel much more prepared and supported, Mr. Podesta explained. It is taking ownership of the decisions and enabling the changes, he added.
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