Transactions can be overwhelming initiatives for hospitals whether they are full integrations into a large health system, joint ventures or clinical affiliations with another community hospital. When a hospital undergoes any type of transaction, it is important to prioritize goals and rally everyone's efforts toward reaching specific outcomes. For these reasons, strategic plans detailing any changes are critical.
Due to the complexity of strategic plans, focusing on strategic issues in addition to negotiations, due diligence and governance issues can be overwhelming. Here, Akram Boutros, MD, founder and president of BusinessFirst Healthcare Solutions, discusses three tips for managing strategic initiatives during a transaction.
1. Develop clear parameters for strategic initiatives. It is important the boards and executives from each hospital develop a set of parameters and guiding principles for strategic initiatives during and after a transaction. "The parameters should include everything from what the new organization structure will look like to how to foster a new culture. Whether the transaction includes the back office of the hospital, clinical operations or both, parameters will give the management a guideline from which to operate," says Dr. Boutros. In addition, Dr. Boutros recommends the parameters include specific timelines and measurable goals. "Tactics and milestones define accountability and provide support for each person charged with moving the transaction forward," Dr. Boutros says.
2. Focus on cultural changes. The blending of cultures and standardization of processes is important, so hospitals should focus on clearly defining any cultural changes. "Unless the leadership clearly demonstrates the specific values it wants to promote, then culture will not change," Dr. Boutros says. For example, the incentive or reward system for physicians and nurses is a key element of a hospital's culture. "If the hospital executives want to focus on new behaviors, such as a renewed focus on eliminating waste, they need to reward that new behavior and make it explicit in the hospital's strategy," says Dr. Boutros. Another example would be if two hospitals with strong cardiology programs integrated. If each hospital previously rewarded physicians for the total number of procedures completed but wanted to focus on total procedures across both systems in the future, they would need to implement changes to the reward system, according to Dr. Boutros. These types of changes need to be developed by the hospital executives before the transaction is final.
3. Craft messaging for all constituents. A transaction affects many constituents of a hospital, so executives need to include messaging in strategic plans. The messaging should be carefully crafted to address issues and concerns that are relevant to each party. For instance, there are half a dozen constituents for any acquisition or merger: the attorney general, the community at large, the physician community, regulators, insurers and the hospital staff. "You have to worry about all of them. Typically the staff of the organization is concerned about whether there will be a surviving entity they can work for after the transaction. Will they have a job? Will there be cuts? All the concerns are at a personal level, whereas regulators and the attorney general are concerned more with due diligence and competition," says Dr. Boutros. Executives may not spend enough time on tailoring the messaging strategy for each constituent. "Each constituent deserves the same emphasis because they all have the ability to make or break the transaction," Dr. Boutros says.
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Due to the complexity of strategic plans, focusing on strategic issues in addition to negotiations, due diligence and governance issues can be overwhelming. Here, Akram Boutros, MD, founder and president of BusinessFirst Healthcare Solutions, discusses three tips for managing strategic initiatives during a transaction.
1. Develop clear parameters for strategic initiatives. It is important the boards and executives from each hospital develop a set of parameters and guiding principles for strategic initiatives during and after a transaction. "The parameters should include everything from what the new organization structure will look like to how to foster a new culture. Whether the transaction includes the back office of the hospital, clinical operations or both, parameters will give the management a guideline from which to operate," says Dr. Boutros. In addition, Dr. Boutros recommends the parameters include specific timelines and measurable goals. "Tactics and milestones define accountability and provide support for each person charged with moving the transaction forward," Dr. Boutros says.
2. Focus on cultural changes. The blending of cultures and standardization of processes is important, so hospitals should focus on clearly defining any cultural changes. "Unless the leadership clearly demonstrates the specific values it wants to promote, then culture will not change," Dr. Boutros says. For example, the incentive or reward system for physicians and nurses is a key element of a hospital's culture. "If the hospital executives want to focus on new behaviors, such as a renewed focus on eliminating waste, they need to reward that new behavior and make it explicit in the hospital's strategy," says Dr. Boutros. Another example would be if two hospitals with strong cardiology programs integrated. If each hospital previously rewarded physicians for the total number of procedures completed but wanted to focus on total procedures across both systems in the future, they would need to implement changes to the reward system, according to Dr. Boutros. These types of changes need to be developed by the hospital executives before the transaction is final.
3. Craft messaging for all constituents. A transaction affects many constituents of a hospital, so executives need to include messaging in strategic plans. The messaging should be carefully crafted to address issues and concerns that are relevant to each party. For instance, there are half a dozen constituents for any acquisition or merger: the attorney general, the community at large, the physician community, regulators, insurers and the hospital staff. "You have to worry about all of them. Typically the staff of the organization is concerned about whether there will be a surviving entity they can work for after the transaction. Will they have a job? Will there be cuts? All the concerns are at a personal level, whereas regulators and the attorney general are concerned more with due diligence and competition," says Dr. Boutros. Executives may not spend enough time on tailoring the messaging strategy for each constituent. "Each constituent deserves the same emphasis because they all have the ability to make or break the transaction," Dr. Boutros says.
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