4 Ways Physician Leaders Impact Health System Consolidation
Manoj Pawar, MD
Chief Medical Officer, CTI
As we think about trends in healthcare, one thing is for certain: consolidation, mergers, and acquisitions will continue for the foreseeable future. Whether it’s hospitals, medical groups, health plans, or health systems, there are significant challenges in ensuring a successful transaction. Indeed, very few of these deals are ultimately deemed successful with 70-90 percent of transactions across all industries failing.(1)
Based on our experience in working closely with health care organizations cross the country, we see an opportunity for physician executives to add significant value in the context of consolidation activities. Our observations are that physician leaders present a source of untapped potential that can be leveraged more fully through the development of a broader set of strategic leadership capabilities.
Here are four areas to consider:
1. Playing a Bigger Role in M & A Due Diligence
Assumptions are made around the financial and strategic value of a merger or acquisition, however, those assumptions may or may not hold true. In our experience, the best performing organizations are purposeful about engaging their senior physician executives (Chief Medical Officer, Chief Clinical Officer, etc.) as key team members in evaluating the opportunity. Physician leaders can help executive teams better understand risks, including those related to regulatory or compliance issues, peer review vulnerabilities, and those related to utilization. Beyond this, the ability to uncover hidden cultural or political risks related to the physician ecosystem is uniquely suited to physician leaders. Assumptions regarding volume, membership, and retention of key physician talent must be validated to ensure that post-transaction value is sustained – by not appropriately including physician leaders in the process, there’s significant risk in alienation and departures that threaten assumptions related to volume. Finally, physician leaders can be valuable in uncovering hidden costs: the difficulty of EHR conversions, commitments made in physician contracts, delays in credentialing (and thus lost revenue) related to system conversions, and productivity or revenue cycle implications are just a handful of examples we have seen.
2. Culturally Integrating Physicians
Merging physician cultures is an area where purposeful steps early in the process to begin to build relationships can go a long way. Involving the senior physician leaders for the organization to orchestrate physician-to-physician relationship-building at all levels can set the stage for success before, during, and after two organizations come together.
One major area where physician executives can add value is in foreseeing major differences in organizations culture and attitudes, particularly as they related to compensation, behavior, quality & safety, conflict management, and physician leadership philosophies. Early and thoughtful involvement can ensure a successful and healthy outcome as physician cultures come together.
3. Managing Clinical and Cost Variation
Inmost cases, costs and pricing tend to increase with consolidation and increased market share. While beneficial in the short term, managing the clinical value proposition to ensure both affordability and superior outcomes is ultimately the long-term play needed for sustainable success. Physician leaders should be involved in understanding current state of each organization, and should play a pivotal role in developing roadmaps for integrating EHR systems and processes in a way that ensures consistency of clinical care models, alerts, and clinical decision support, to name a few. Developing the ability to develop and scale clinical care models across a larger enterprise will be critical for success in managing the clinical value proposition.
4. Providing Physician Leadership Support
Finally, support for physician leaders at all levels is essential. The complexity of bringing two clinical organizations together successfully is significant enough that it can’t only rely upon the Chief Clinical Officer, Chief Medical Officer, or Medical Group CEO. Leaders of key speciality areas, service lines, and others must be supported as the senior physician executive role moves toward support, coaching and facilitation. Furthermore, the capability to identify, surface, and appropriately resolve issues at each level is important for a successful process, and should be cultivated as core competency that can be hardwired in the new organization. Working with a trusted partner with expertise in leadership, organizational development, and strategy can help immensely with developing these skills.
Consolidation offers a great deal of opportunity, and with focus and support, physician leaders can play a pivotal role in ensuring success.
(1) The Big Idea: The New M&A Playbook. Christensen, Clayton M.; Alton, Richard; Rising, Curtis; and Waldeck, Andrew. Harvard Business Review, March 2011.
