Today's healthcare market pressures are combining with the Patient Protection Affordable Care Act's emphasis on cost and quality of care to drive revolutionary changes in which fee-for-service will no longer define healthcare payment. The complexities and high overhead of managing independent practices is rapidly becoming prohibitive, and the healthcare service paradigm is changing to focus on patient-centered health delivery, whether through comprehensive care models or accountable care organizations. The delivery model is thus shifting from independent islands of care to integrated physician-hospital care. This dynamic requires collaborative alignment among healthcare players with a common viewpoint and objective.
It is unquestioned that success requires a cultural shift among participants from an independent to an institutional perspective. An aligned, performance-based, physician-hospital organizational structure for a cardiology practice will emphasize shared vision, alignment of incentives, goals and quality initiatives to overcome the conflicts over autonomy, entitlement and unclear expectations that mark a misaligned organization. When combined successfully, the integrated organizations will be able to give improved care to a greater volume of patients while achieving cost efficiencies.
A successful partnership requires thorough due diligence to understand the facts about the organization. This due diligence should focus on all aspects of the organization with special focus on the critical areas of financial, human resources and operations, particularly when integrating a smaller practice into a hospital system or larger physician practice group. How to manage and integrate inside and outside cardiology groups should be determined as part of the due diligence effort and clearly communicated as the integration process proceeds.
The strategic foundation for integrating cardiology practices is to ensure the parties involved have similar strategic goals and are aligned with the desired operational outcomes. Whether the combination is of practice groups, or practice groups and a hospital system, the parties must determine up front what the vision is in becoming one larger group. The primary desired outcome typically is to achieve a value-added benefit for both groups. The desired benefit defines the strategy and must be determined at the outset, or the combination will be a failure. This is done by specifying the explicit desired outcomes: objectives, goals and measurements for success.
The more complex concerns involve governance. This is particularly true for physicians' involvement in governance, which can involve various options. If there are two groups, there needs to be representation between both. It is important to have the practicing physicians on the governing board help set strategic direction and participate in the change management process. Without true physician leadership in the governance, the integration will fail.
There are other organizational decisions that go beyond the actual pro¬vision of healthcare services. These can include:
• What ancillary work will be done in the practice itself?
• What functions will be done by outside services?
• Will provider-based billing we used in any way?
• Will investing to create the desired facilities be cost-prohibitive?
However these questions are answered, there should be no misalignment in expectations at the end, whether of physicians or of administrators.
Step three: Developing the plan
Now that the vision has been defined and the organization structures identified, the plan to transform to the new organization has to be developed. Developing a plan may seem easy but incorporating the multi-faceted aspects of bringing two unique organizations into an integrated one can be challenging. People often work in silos creating their own "list of things to do" versus developing a prioritized, integrated, time-phased plan with assigned financial and human resources. The plan needs to take into consideration the “hard” and “soft” sides of the transaction and includes developing internal and external communication and change management strategies.
Choosing the "right" leader with the right skills to manage the process is critical. That includes having the right personality to manage cardiologists, who often are professionals with a strong sense of their self-worth and the value of their contribution. This is what makes them successful but not always experts in the field of integration. Structuring the integration team and scope of work properly is another important aspect of the "art of integration." For example, ensuring the extensive state and federal regulatory concerns involving a combination are properly prioritized and addressed is vital. Finally, to ensure that all operational bases are covered, other functional areas should include subject matter experts from information technology, purchasing and facilities management to marketing and communications.
Personal side
The personal side involves the simple question, "How is this going to affect me or my family personally?" Both medical professionals and staff members will want to know if they still have a job in the combined organization and, if so, where they will fit in. More practically, they will want to know if compensation, benefits, scheduling or other personal considerations will change and, if so, what those changes will be. Addressing these concerns should be relatively straightforward and timely. Problems only arise when communication is lacking.
Professional side
The professional side centers on job responsibilities. "How will this affect the work I do every day? Will I be forced to go onto a new electronic medical record system? Who will I be reporting to?" For this type of change, be sure to enumerate and make explicit the benefits of the combination: improved quality of care, increased efficiency in patient flow, improved billing accuracy and leverage from the economies of scale.
One of the biggest pitfalls in the integration process is that participants tend to look at it in silos. When the silo mentality is present and not counteracted by effective communication and transparency, every group ends up with its own list of priorities and objectives which can lead to competing outcomes and stressed resources. This happens when there is no over-arching plan, and each silo pursues its checklist independently. The result is chaos and frustration. The only solution is for the organizations to continually remind themselves of the desired integration outcomes and to follow the agreed-upon plan from first step to last.
Involving unbiased outside experts who have integration experience can be a major advantage. An informed third party perspective can assess the business; deliver operational objectives timely and within budget; and offer unique solutions for issues that arise in execution. They can accommodate every element: personalities, environment, geography, demographics of the market and culture of the combined groups. This art cannot be scripted; its visible application is in execution. A third party objectively guides the integration team and reinforces the goal of achieving the mission and vision of the new organization.
Marsha McCarthy is an associate director at Navigant Healthcare. Marsha has more than seventeen years of experience in multiple industries, including healthcare, finance, manufacturing, and aerospace and defense. Her expertise includes merger & acquisition integration, strategic planning, business development and organizational performance and alignment. In her tenure, Ms McCarthy has lead several organizations to improve overall organizational performance through major organizational change and restructures. Marsha is a Certified Project Management Professional and a Certified Six Sigma Black Belt.
Cardiology practice integration
Cardiology is an ideal field for such integration, involving single or multiple cardiology groups aligning with each other or with a larger hospital system. The objectives can range from lowering the cost of group operations, to improvement in physician compensation, to justifying expenditure on more sophisticated equipment. The driving force is unquestionably to reduce costs while improving the quality of care. Integrating cardiology groups together or into a hospital-based system can be challenging. There are often differences in processes, cultures and opinions involved in integrating the groups. There is a science in proper integration planning that must address these aspects for the process to succeed. The art is in the execution.It is unquestioned that success requires a cultural shift among participants from an independent to an institutional perspective. An aligned, performance-based, physician-hospital organizational structure for a cardiology practice will emphasize shared vision, alignment of incentives, goals and quality initiatives to overcome the conflicts over autonomy, entitlement and unclear expectations that mark a misaligned organization. When combined successfully, the integrated organizations will be able to give improved care to a greater volume of patients while achieving cost efficiencies.
The science of integration
The science of the integration process embraces following a set of steps throughout the different phases of combining two entities; from pre-planning and due diligence through planning, implementing, transitioning and closing the project. Assessing the strategic intent or value creation of the two organizations coming together and developing sequential steps to follow in each of these phases helps achieve the desired outcomes. In planning the integration, each step must build upon the other in order to achieve the predetermined strategic intent of the new organization.A successful partnership requires thorough due diligence to understand the facts about the organization. This due diligence should focus on all aspects of the organization with special focus on the critical areas of financial, human resources and operations, particularly when integrating a smaller practice into a hospital system or larger physician practice group. How to manage and integrate inside and outside cardiology groups should be determined as part of the due diligence effort and clearly communicated as the integration process proceeds.
The sequential steps in the planning phase
Step one: Defining strategic visionThe strategic foundation for integrating cardiology practices is to ensure the parties involved have similar strategic goals and are aligned with the desired operational outcomes. Whether the combination is of practice groups, or practice groups and a hospital system, the parties must determine up front what the vision is in becoming one larger group. The primary desired outcome typically is to achieve a value-added benefit for both groups. The desired benefit defines the strategy and must be determined at the outset, or the combination will be a failure. This is done by specifying the explicit desired outcomes: objectives, goals and measurements for success.
Step two: Organization structures
Once the parties agree on strategy, what will the legal, governing, branding, operational and reporting structures look like? Will there be one office manager, or multiple managers? Will all offices be kept? What will be the physical layout of the offices and patient care areas? These questions must be answered clearly, and not be left for decision after the fact. The organizational structure should support the strategic intent and the long-term operations of the new organization.The more complex concerns involve governance. This is particularly true for physicians' involvement in governance, which can involve various options. If there are two groups, there needs to be representation between both. It is important to have the practicing physicians on the governing board help set strategic direction and participate in the change management process. Without true physician leadership in the governance, the integration will fail.
There are other organizational decisions that go beyond the actual pro¬vision of healthcare services. These can include:
• What ancillary work will be done in the practice itself?
• What functions will be done by outside services?
• Will provider-based billing we used in any way?
• Will investing to create the desired facilities be cost-prohibitive?
However these questions are answered, there should be no misalignment in expectations at the end, whether of physicians or of administrators.
Step three: Developing the plan
Now that the vision has been defined and the organization structures identified, the plan to transform to the new organization has to be developed. Developing a plan may seem easy but incorporating the multi-faceted aspects of bringing two unique organizations into an integrated one can be challenging. People often work in silos creating their own "list of things to do" versus developing a prioritized, integrated, time-phased plan with assigned financial and human resources. The plan needs to take into consideration the “hard” and “soft” sides of the transaction and includes developing internal and external communication and change management strategies.
The art of integration
The art of the integration is in how you execute. It's the intuitive nature that comes from experience in successfully executing the process. It's found in the leader of the integration who knows what to say, to whom and when; when to go fast and when to slow down; where to get involved and where not; and generally what it will take given the environmental factors to be successful.Choosing the "right" leader with the right skills to manage the process is critical. That includes having the right personality to manage cardiologists, who often are professionals with a strong sense of their self-worth and the value of their contribution. This is what makes them successful but not always experts in the field of integration. Structuring the integration team and scope of work properly is another important aspect of the "art of integration." For example, ensuring the extensive state and federal regulatory concerns involving a combination are properly prioritized and addressed is vital. Finally, to ensure that all operational bases are covered, other functional areas should include subject matter experts from information technology, purchasing and facilities management to marketing and communications.
Managing change
Change management is all about what you do to help people move through the change process quickly with as little disruption to the business as possible. There are two sides that concern people during this time: the personal side and the professional side. Integration threatens people both personally and professionally, whether the threats are real or perceived; therefore appropriate strategies must be developed to address these concerns. These two sides encompass everyone in the organization: physicians, administrators, clinical staff and clerical staff. The integration leader and change managers must communicate effectively with all people on personal and professional issues. If they don't provide full information and transparent communications, members of the organization will fill the void with their own interpretations, which often will not reflect the strategic plan and thus can be very damaging to a successful integration.Personal side
The personal side involves the simple question, "How is this going to affect me or my family personally?" Both medical professionals and staff members will want to know if they still have a job in the combined organization and, if so, where they will fit in. More practically, they will want to know if compensation, benefits, scheduling or other personal considerations will change and, if so, what those changes will be. Addressing these concerns should be relatively straightforward and timely. Problems only arise when communication is lacking.
Professional side
The professional side centers on job responsibilities. "How will this affect the work I do every day? Will I be forced to go onto a new electronic medical record system? Who will I be reporting to?" For this type of change, be sure to enumerate and make explicit the benefits of the combination: improved quality of care, increased efficiency in patient flow, improved billing accuracy and leverage from the economies of scale.
Problems: When art and science fall short
Avoiding problems in the integration process must be done right from the start. One of the key parts of due diligence is pointing out the dangers and making a go/no-go decision based on whether the combination of practices is a good match. Sometimes the answer is "no-go," and that can be a good decision. It often comes down to whether the cultures can be blended.One of the biggest pitfalls in the integration process is that participants tend to look at it in silos. When the silo mentality is present and not counteracted by effective communication and transparency, every group ends up with its own list of priorities and objectives which can lead to competing outcomes and stressed resources. This happens when there is no over-arching plan, and each silo pursues its checklist independently. The result is chaos and frustration. The only solution is for the organizations to continually remind themselves of the desired integration outcomes and to follow the agreed-upon plan from first step to last.
Execution: When science and art succeed
As with all the steps leading up to it, executing the final practice integration is again a mix of science and art. The science involves the tools and the process. The art is more complex and involves leading the management of all the healthcare, business and human related issues. Together they make the difference between a true collaborative combination and a takeover.Involving unbiased outside experts who have integration experience can be a major advantage. An informed third party perspective can assess the business; deliver operational objectives timely and within budget; and offer unique solutions for issues that arise in execution. They can accommodate every element: personalities, environment, geography, demographics of the market and culture of the combined groups. This art cannot be scripted; its visible application is in execution. A third party objectively guides the integration team and reinforces the goal of achieving the mission and vision of the new organization.
Marsha McCarthy is an associate director at Navigant Healthcare. Marsha has more than seventeen years of experience in multiple industries, including healthcare, finance, manufacturing, and aerospace and defense. Her expertise includes merger & acquisition integration, strategic planning, business development and organizational performance and alignment. In her tenure, Ms McCarthy has lead several organizations to improve overall organizational performance through major organizational change and restructures. Marsha is a Certified Project Management Professional and a Certified Six Sigma Black Belt.
More Articles on Cardiology Integration:
From Silos to Service Lines: Integrating Care to Meet Hospital Goals
The Cardiovascular Service Line Approach: Creating Value in Organization Structure
Acquiring Physicians, Cardiology Practices: Key Concepts to Consider