Sponsored by VMG Health | info@vmghealth.com | 214.369.4888

Michael Dowling: Preserving community hospitals' authentic local identities during acquisitions

Since I became president and CEO of Northwell Health in 2002, our system has acquired approximately six community hospitals. I can proudly say those hospitals are in better shape today than when we took them over.

The healthcare landscape today makes it nearly impossible for many community hospitals to continue to operate efficiently as independent entities. That's why many have joined forces with large health systems, whether through mergers, acquisitions, affiliations or other forms of strategic alliance. 

But at the end of the day, healthcare is local. People expect and deserve access to the right care at the right time within their own communities. And the identities of community hospitals are often fundamental elements of local heritage.

People tend to come up with different definitions for a "community" hospital. To me, a community hospital is the principal facilitator of healthcare in a specific neighborhood or metro area. Even though most healthcare is now delivered on an outpatient basis, many people in a given area identify healthcare with their local community hospital.

When a health system approaches a community hospital for an acquisition — or visa versa — the question to answer first and foremost is, "Can the health system help strengthen the community hospital?" The goal in these types of relationships is to enhance the quality of care at the local hospital. Health system partners can facilitate that in various ways.

For instance, a strong health system brand can lend credibility and trust to an ailing community hospital. When evaluating the hospital's quality, the health system partner can help the community hospital leaders identify gaps in services. The health system can also point out certain service lines that don't have enough volume to ensure high quality or remain economically justified.

At the same time, it is critical that the health system does not undermine the community hospital's reputation or take away its local identity.

Northwell Health's considerations when evaluating an acquisition opportunity

There is a lengthy list of factors to consider when mulling a community hospital acquisition. We look at whether the hospital's geographic location has strategic importance to us. We talk to physicians in the region to ask what they think of the hospital and whether they refer patients to it. Finally, we talk to community members to evaluate their experience at the hospital, and we analyze to what degree patients are migrating to other hospitals and for what services. 

An acquisition is essentially like a marriage. You are joining up with a partner, so you want to have common values. While some of each partner's goals and desires are malleable, neither will completely change their value system. If you find as a health system that you and the prospective community hospital partner are incompatible, the relationship will likely end in a divorce.

Along the same lines, it is important to evaluate the community hospital's culture and identify areas in potential need of improvement. While it's important to maintain a community hospital's local culture when you acquire it, it is also critical to ensure it will blend with the overall system. The acquisition won't be successful if the community hospital has a negative, silo-oriented, noncollaborative culture. The key is figuring out how to embed the community hospital's local culture with the values and mission of the acquiring health system.

When planning an acquisition, much of this type of cultural assessment is done before the deal is finalized. It requires a lot of behind the scenes work. The best way to get to know  a hospital's leaders is to meet with them outside of the office in small groups, often in casual settings such as a restaurant. I like to get to know people's families and friends. Sometimes it's obvious a person will not be a fit, other times they may seem to have potential, and other times you know they're a keeper.

It is important to recognize that a hospital's culture and its leadership are intertwined. If the community hospital has a negative culture, oftentimes this can be remedied by changing the hospital's leadership — in the C-suite and mid-manager level. I've found in my experience that the best way to improve a negative culture is to change the people. If there is a CEO who is not a team player, who does not want to collaborate, does not promote a culture of trust or is obstructive, it is probably best to get someone else. Some people can learn to modify their behavior, and others can't.

Making such changes can effectively improve the hospital's culture, position it to mesh with the larger health system and preserve the community hospital's uniqueness and identity.

Changes continue after an acquisition is finalized

After you take a hospital over, invariably things change. You never really know what a place is like until it becomes part of you. While a lot of the work can be done upfront, more often, there will need to be modifications to your plan after you acquire the hospital. But healthcare is never static; what might feel like an appropriate decision this year may not next year.

When acquiring a community hospital, the key is balance. Preserving the hospital's local identity is important to its staff, providers and patients. Often, the hospital has long served as an emblem of the community and represents an important part of its heritage. But that doesn't mean the health system can't or shouldn't make any changes. The cultures must adapt to fit together, and certain services the hospital offers may be amended. At the end of the day, all of these changes are intended to improve the quality of care at the community hospital while simultaneously strengthening the health system. 

Copyright © 2024 Becker's Healthcare. All Rights Reserved. Privacy Policy. Cookie Policy. Linking and Reprinting Policy.