Post-merger integration: Developing the courage to succeed
Healthcare mergers and acquisitions are on the rise, and the stakes have never been higher. In an earlier article, Hospital Pre-Merger Planning: 7 Success Factors for Technology Due Diligence, we talk about the value of preparing for a healthcare merger with a comprehensive approach. We can’t overemphasize how important due diligence is to the success of your merger. The output of that process should be the foundation of your integration and communication plan.
Tracking integration plan progress
Diligently tracking your progress throughout your merger is critical. The most productive mergers incorporate stakeholder feedback and buy-in on success metrics, and identify clear accountabilities for leaders to achieve their integration goals. Those metrics should include:
- Achievement of milestones in the integration implementation plan
- Employee satisfaction
- Physician satisfaction
- Community acceptance and perception of the company’s new identity
- Improvements in system performance metrics
- Improvement in system quality measures
- Improvement in population health metrics
- Documentable financial metrics, such as:
- Cost per admission
- Cost per episode of care
- Per Member Per Month (PMPM) changes
How will your technology organization measure its success? Here are some ideas:
- Annual cost of operating your IT infrastructure and services
- IT across the new system operating as a single entity
- Unified organization chart
- Standardized job descriptions
- Standardized policies and procedures
- Unified data strategy and data governance
- Consolidated and unified software platforms
- Unified data collection, analysis, and reporting
- Centralized demand management and responsiveness
- IT employee satisfaction survey scores
- IT customer satisfaction survey scores
5 keys to integration success
1. System leadership and commitment: For IT to achieve its full post-merger potential, leadership must demonstrate an ongoing commitment to integration. That means that tracking progress on key metrics should be a regular board and senior management meeting agenda item. At the same time, leadership must stay accountable to the funding commitments made prior to the actual merger.
2. Implementation champions: Hospitals systems are incredibly complex. That’s why it’s critical to have respected champions on either side of the merger to guide decision-making. Given the range of potential change, you’ll need champions from senior management, nursing, and your medical staff. Board commitment and support is also critical – both pre- and post-merger.
3. IT leadership and management: Effective business transformations are only possible when leadership is invested and aligned around a shared vision. For the benefit of the IT department, in particular, and the system in general, it is imperative to put the right leadership in place and to do so quickly following the announcement of the merger. This should be aligned with change management efforts that prepare employees to accept change as a positive and necessary part of merging systems.
It’s also important for the management team to have the skills and temperament required for a significant culture change. It takes courage to succeed, along with the right team to lead the department through its transformation. During this time, the management team must be united. Regardless of the distance between facilities, all facilities and employees should feel like valued members of the new organization.
In the absence of effective leadership and support, employees will cling to their former ways of believing, thinking, and working. This will effectively stall progress and create the inertia that leads to failure.
Technology change in and of itself can cause a lot of anxiety. The courageous organization will use its resources to help employees successfully adopt the changes necessary to becoming a single operating entity.
4. External resources and support: The majority of healthcare organizations experience mergers once in a generation. You might not have anyone in the organization with the right experience and expertise necessary to effectively manage the complexity of the post-merger integration process. Maintaining your daily operations alone may take all of your existing IT resources.
Experienced consultants can provide the right guidance and support to effectively and efficiently move the organization forward in a timely manner.
5. Objectivity: The beauty of external resources is that they’re unbiased. They won’t be burdened by former ways of doing business, emotional commitments to hardware and software platforms, or personal preferences or prejudices. And that leads to more business-driven, evidence-based decision-making. Their contributions to the transformation should be considered in the following areas:
- Implementation management
- Overseeing and guiding all of the project implementation leaders and team
- Assuring the overall plan stays on track and on schedule
- Identifies and helps to remedy any problems that arise
- Identifies and supports changes to the plan if necessary
- Project management
- Most project implementation teams will be led by system managers
- Some projects will exceed the capacity or skills of internal resources
- Skilled project managers will assure project success
- Change management
- Most managers can readily effect change on a small scale
- Mergers requires a substantial adjustment to two merging cultures
- Underestimating culture dynamics can scuttle even the best laid plans
- Change management tools can also enhance education and training
- Employee engagement
- Creating a sense of purpose and adapting to change requires individual engagement
- Employee engagement requires multiple tools and prolonged efforts
- Employees make changes when they are a real part of the process
- The skill and capacity are best applied initially with outside resources
- Customer engagement
- For IT, the customer is everyone outside of the IT Department
- Mergers require regaining the support and compliance of IT customers
- Communication plans
- Everyone will want and need to know what is going on
- Multi-dimensional communication tools will improve adoption
- Appropriate content will assure its effectiveness
Implementing the integration plan: the technical bricks and mortar
The most promising (and challenging) part of bringing together two organizations is the opportunity to standardize and optimize its information and technology infrastructure. The goal is to improve operational effectiveness and efficiency by consolidating and reducing software applications used across both organizations.
The biggest challenge companies face post-merger is the ability to affect change due to cultural or political resistance. If senior management hasn’t committed to changes pre-merger, it will be it will be very difficult to obtain post-merger.
IT and system technology inventory and assessment
An inventory and assessment of the state of technology in both organizations should have been conducted as part of your pre-merger due diligence. This should include recommendations for upgrading and standardizing, where appropriate. If this wasn’t done during the pre-merger assessment and planning phase, it should be do as soon as possible after the merger.
The data imperative
Aside from changing the new entity’s name, there are several areas that must change in order to demonstrate meaningful change. Typically, they include HR, Finance, Marketing and IT. Each of these areas need to be able to provide regular, accurate combined reporting. In today’s rapidly evolving environment, it is imperative for System IT to be able to support the increasingly complex data needs of managed care contracting, population health management, and meaningful quality improvement. It is all about data. To be optimally successful, the merging organizations must commit to developing uniform, standardized data collection, analysis, and reporting.
The bottom line
Mergers are anything but easy. Everyone knows that marriages take serious effort and compromises after the emotional rush to the altar. Business marriages are no different.
The most convincing evidence for whether a merger has been, or is going to be, successful is found in the IT functions across merged organizations. Do the hard strategic planning upfront to demonstrate the courage to make your merger successful. If the leadership of both organizations can’t make a commitment to measurable success equivalent to a prenuptial agreement, they aren’t ready to get married.