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5 Tips for Clinical Consolidation in Hospital Transactions

This is the second article in a series of three articles focused on pressing issues that hospital and health system executives need to focus consider when exploring mergers and acquisitions. The first article covers strategic considerations for a hospital transaction.

Many times hospital and/or health system leaders focus on the decision to conduct a merger, the search for a partner and the negotiation of the deal. While the strategy and process are extremely important, executives cannot neglect clinical considerations — how will the clinical operations of both organizations merge successfully?



Andy AgwunobiAccording to Andrew Agwunobi, MD, leader of the hospital performance improvement practice for Berkeley Research Group, a global consulting firm with a focus in healthcare, the clinical components of a transaction are important in order to align care philosophies so a transaction delivers value and meets goals. Since goals often include more coordinated and integrated care, enhancements to service and better innovation for efficient and effective delivery of care, it is only logical that the clinical consolidation be emphasized. Without effort clinically, these outcomes could not be realized.

Here, Dr. Agwunobi offers five tips to help executives develop a process for effectively introducing and managing clinical consolidation.

1. Have a clinical burning platform for change. Hospital executives need to provide a "clinical burning platform for change" so physicians from the two different systems understand why coming together will improve care, says Dr. Agwunobi.

"When a children's hospital in Atlanta merged with Children's Healthcare of Atlanta, the vision surrounding the merger was that every child in Atlanta who is admitted to the hospital will get the same level of care — the level of care of a top 10 children's hospital," says Dr. Agwunobi. "That mission gave the hospital a clinical burning platform for change. It would be difficult to reach that high level — clinically and financially — without merging."

2. Articulate the patient-care related vision for the future. Although, it is great to have a platform for change, if the hospital does not articulate that vision, it is not effective. An important component is clearly and repeatedly articulating a patient care- related vision for the hospital's future, according to Dr. Agwunobi.

"You have to tell physicians that they need to come together with other physicians in order for the system to improve care for the patient population. Physicians will rally behind improved care for their patients," says Dr. Agwunobi.

3. Understand and address underlying competitive dynamics. It is important that hospital leaders understand and address the underlying competitive dynamics of the physician profession. It is possible that physicians at merging hospitals could have patient, facility or specialty competition between them, according to Dr. Agwunobi.

"If a medical oncologist in the primary service organization of hospital A has competed with a medical oncologist at hospital B for patients, the hospitals need to discuss a strategy to bring those physicians together without financially harming either," says Dr. Agwunobi. "I saw one situation where an intensive care unit physician had to join a larger ICU physician group in a large hospital due to a merger. He was able to increase the quality of his practice while also enjoying better lifestyle benefits — less on call work, colleagues to collaborate with, etc. If a hospital can create a win-win situation like that for physicians, the merger of two clinical cultures may be smoother," he adds.

4. Utilize physician leaders. In order to merge clinical cultures, hospitals need to work through physician leaders — physicians with influence among the medical staff and the larger physician community. "It is not just the hospital administrators who merge the clinical culture of two hospitals. It has to be co-leadership with physician leaders — representatives that have practiced for many years and can foster a community among disparate groups of physicians," says Dr. Agwunobi.

5. Be upfront about merger outcomes. Hospital leaders need to be upfront with physicians about what a merger will and will not produce. If one hospital will transition into a tertiary center and the other will offer "bread and butter" services, the physicians prefer to know upfront, says Dr. Agwunobi.  "Physicians like to know the pros and cons of a situation — that is how they present conditions and treatments to their patients. That is what they understand," says Dr. Agwunobi.

To read the third article on workforce issues during hospital transactions, click here.

More Articles on Clinical Consolidation:

7 Tips for Hospitals to Foster Trust Among Physicians
Hospital-Physician Alignment: 8 Core Thoughts
Size Matters: How Capella Healthcare Executes its Development Strategies

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