While reading a recent report by Kaufmann Hall on hospital/health system mergers and acquisitions (M&A) and how they have morphed post-pandemic, it reminded me that IT is one of the first areas impacted. In this post, I’ll focus on provider, hospital, and health system consolidations. Of course, the size and scale of a consolidation drives the level of complexity, but the issues are pretty consistent regardless of size. They can also be emotional and make for strange bed-fellows — I remember the merger of two rival hospitals that would argue about high school football while I was trying to discuss which lab system to keep.
M&A is a test of leadership for CIOs, in that the logical first step would be to make strategic, clinical, and business decisions/plans first, and then develop a corresponding IT plan. But in my experience with numerous M&As, clinical and business consolidation plans are a work in process and take time. So, being “first in,” IT is typically faced with the dilemma of having to make plans for the short term that may change in the longer term with those evolving clinical and business plans. For example, you could assume that a central business office (CBO) will happen, but when? To make it more challenging, the overall organization and decision-making bodies may also change over time. Faced with such uncertainty yet the need to accomplish things, I have laid out some malleable strategies that might help CIOs stay fluid in this process.
CLIF NOTES
If you have limited time, here’s the abbreviated version of these six strategies:
- Introduce IT staff from each organization so they can establish good rapport.
- Form a multi-disciplinary task force to guide the consolidation.
- Inventory all of your systems, including stand-alone ones.
- Identify what must be accomplished immediately.
- Continue to plan for large-scale changes.
- Communicate often and be honest.
But if you have time, read on for more important details below. – Clif
6 Strategies for CIOs:
- Facilitate a Who’s Who. Before jumping into some of the logical steps that follow, just some basic introductions can set a positive tone. For example, having some informal open houses amongst the IT departments can be a good ice-breaker. Off-site venues can be a good start.
- Create a Task Force. Forming a task force that has multi-disciplinary and organizational representation will be enormously helpful. By helpful I mean that they should be charged with communications, organizing/facilitating interactive work between various departments, bridging the gaps on clinical and business plans, decision-making, and validation of IT plans. Keep in mind that the organizational cultures play a big role in consolidation.
- Assess and Inventory. OK, this will sound a bit like Planning 101, but conducting an assessment and inventory of all of your systems – including stand-alone – is an absolute necessity. Not only is it a good time to communicate with various departments and areas, but it can also flush out all sorts of “shadow IT” items. Where feasible, track all systems, include a “keep or replace” strategy, and include this on your spreadsheet. It may be arduous, but collecting the various contracts and expirations dates will prove helpful, too.
- Prioritize. Think of yourself as an NFL quarterback facing a top defense that could vary from blitz to zone defensive, and you need to figure out what’s going to hurt you first. Creating an IT consolidation plan will take some time and involvement, but is critical since there will be changes that are time sensitive. Depending upon the organization’s evolving plans, some items that might hit the IT hot/must do list – oftentimes with short deadlines – include:
- Changes to infrastructure such as network and application access, security, network and cybersecurity standards
- Changes to bank accounts, tax IDs, billing ID numbers, data submissions
- System changes such as website, intranet, payroll
- Plan. Even while you’re dealing with the short-term issues, you will need to address the large-scale software systems that will likely take more time to plan and carry out such as EHR, ERP, and related niche/specialty systems. These could be considered a second phase where you may have time to sort through questions such as the ones below. Each of these spill over to organizational and cultural issues than are so much wider than bits and bytes:
- Is there a logical EHR that would support the enterprise?
- To what degree will there be consolidated services, such as laboratory, imaging, pharmacy?
- Who will govern the medical protocols and standards?
- Will there be a CBO?
- What about the age-old chart of accounts (remember that hospitals may not have changed this since the 1974 AHA book)?
- Will there be standardized position and pay practices so that staff can work at multiple facilities?
- Address Your Organization. During the early stages of M&A, the elephant in the room quickly becomes the merger of the IT departments and all the paranoia that goes with uncertainty about job security, positions, roles, structure, and the like. Honesty goes a long way, so my first suggestion is to be candid and open about it, and even say “I don’t know yet, but it will be a fair and logical process.” It’s best if IT leadership from all the parties galvanizes and presents a unified message. While there will be pressure to reduce FTEs through consolidation, it would be a good time to re-invent some new roles to address unmet needs and the future of technology initiatives such as AI, BI/analytics, and telemedicine/remote patient monitoring.
If you have seen one, you have seen one. With all the M&As we’ve seen, they all have unique issues and dynamics. So, as one of the first leaders to tackle things, CIOs should be prepared to deal with issues that are way outside of technology. The good news is that this is an opportunity to show IT leadership skills and demonstrate that we can juggle both keeping the technical trains running while our organizations sort out how to become our vision of healthcare systems that place patients first, and have efficient services and support systems.
If you need a helping hand, our experts at HealthNET Consulting are available to assist. Just contact us to learn more about the Mergers & Acquisitions services we provide.
Blog Post Author:
Clifton "CLIF" Jay, CEO
HealthNET Consulting
Clif founded HealthNET in 1990, and it is his vision that has created the long-term partnerships we have with many of our clients. With 30+ years of experience in healthcare IT and operations management, he continues to be a creative leader as HealthNET assists clients with strategies, tactics and optimizing their use of information technology. Clif received his BS and MS in Industrial Engineering/Operations Research from Syracuse University, attended graduate studies at MIT Sloan School of Management, and is a candidate for professional engineering registration. He is a past-president of HIMSS New England Chapter, and a HFMA member. Prior to founding HealthNET, he held practice director and vice president positions for national healthcare consulting firms and was vice president for the Massachusetts Hospital Association consulting subsidiary. HealthNET employees know Clif as the “go to” for approaching challenges with a thoughtful and unique perspective. In addition to his leadership responsibilities, Clif manages to find time to pursue his other interests as a musician, tennis player, angler, and car enthusiast.