A Healthcare Mergers Framework: How to Accelerate the Benefits

A Healthcare Mergers
Framework:
The Most Efficient
Path to Cost Savings
HEALTH CATALYST EDITORS

© 2020 Health Catalyst
Proprietary. Feel free to share but we would appreciate a Health Catalyst citation.
Hani Elias, JD, MPH
Chief Executive Officer, Lumere
This report is based on a 2019 Healthcare Analytics Summit presentation
given by Hani Elias, JD, MPH, Chief Executive Officer, Lumere, and Amy
Whitaker, RN, BSN, Vice President, Supply Chain Clinical Integration
Accountability, Bon Secours Mercy Health, titled, “Expediting Mergers &
Acquisitions: The Role of Data and Clinical Evidence.”
A Healthcare Mergers Framework:
How to Accelerate the Benefits

Health system mergers and acquisitions
promise appealing benefits, including
eliminating inefficiencies and the competitive
advantage of scale.
However, successfully navigating the merger
process for optimal gains is complex, and
research shows that organizations often fail
to fully leverage cost synergies.

0%
2%
4%
6%
8%
10%
12%
14%
16%
Expected savings Actual savings
For example, while executives may expect a supply chain cost savings of
15 percent (e.g., $1.7 million) with a merger, the average savings realized
is far lower at 1.5 percent (e.g., $176,000).
15%
1.5%

Part of the challenge is that federal, state,
and internal regulations may prevent two
legacy systems from accessing each other’s
data before the merger, compounded by
possible distinct standards, governance
structures, IT infrastructure, and cultures
between the two systems.

Though healthcare mergers may not yield
the big gains once forecasted, organizations
can still benefit with a merger strategy that
supports sophisticated process manage-
ment, data sharing, and a governance
structure that aligns leadership, clinicians,
and all stakeholders.
With the right framework and preparation,
mergers can achieve goals rapidly by
jointly leveraging clinical evidence and
analytics to accelerate benefits.

Four Pillars of a Pre-Merger Framework
With the right organizational framework,
legacy systems can quickly scale and align
value analysis and vendor management
capabilities to achieve desired supply chain
efficiency and scale.
Pre-merger, the executive steering
committee (comprised of the CFOs and
other members of executive leadership)
uses high-level data analysis to identify
its supply chain goal (e.g., 10 percent
savings target for supply chain costs).

A four-pillar framework will help the merger
achieve its stated goal:
1. Review Partnerships
2. Establish Goal-Driven Processes
3. Understand Organizational Structure
4. Line Up the Technology

1. Review Partnerships
Review both legacy systems’
partnerships to identify commonalities,
redundancies, and opportunities.

2. Establish Goal-Driven Processes
Establish effective process for the legacy
systems to reach goals together and align
communication to ensure both entities are
working towards same goal. Identify which
organizational level to make process
decisions (e.g., the facility, system, or
market level).

3. Understand Organizational Structure
Establish the culture—such as determining
a collaborative/interdisciplinary model
versus a more siloed approach.
Review the current teams’ skillset
and establish accountability for talks
post-merger.

4. Line Up the Technology
Consider post-merger technology challenges
(e.g., are both legacy systems on the same
enterprise resource planning software?).
To ensure clinical integration, data from
disparate software and platforms will need
to be translated into a common language.

Applying Evidence and Analytics to Healthcare Mergers
After establishing the four pillars for a
successful merger, the next step is
applying evidence and analytics to
achieve to following milestones:

MILESTONE 1
Provide an objective source of truth.
By coupling broader evidence with
organization-specific data, systems
establish a source of truth to guide
decision making.

MILESTONE 2
Identify product variation and overlaps.
Identify similar purchase patterns,
overlapping contracts for supplies,
equipment, and services.
Look at variation in products and consider
evidence-based research for product
decisions (e.g., does one product have
better outcomes and why?).

MILESTONE 3
Establish best practices around value
analysis governance.
Look at pricing, market share, and
contracting for ways to save (e.g.,
eliminate variation).

MILESTONE 4
Give clinicians the data they need to have
greater input in value analysis decisions.
Seeing internal outcomes versus national
outcomes gives clinicians the full picture
to understand the best product choices.
Start clinician conversations around
evidence including quality metrics,
customer feedback, safety, and more.

MILESTONE 5
Ensure alternative product options are
clinically superior as well as cost effective.
Use a market lens to make informed
supply chain decisions.

Legacy systems may have to plan their merger
without seeing one another’s specific data.
In this case, an analytics partner can create a
“black box,” in which blinded information from
both systems can be stored and analyzed
pre-merger.
As soon as the merger takes place, the
analytics partner can share findings and
recommendations to immediately start
realizing savings goals.

Supply Chain Clinical Integration
By establishing the four pillars for a merger
and applying evidence and analytics,
organizations prepare a pipeline that allows
them to move forward with supply chain
clinical integration as soon as the merger is
complete, taking action for instant wins.

Organizations can follow four steps to
implement supply chain clinical integration:
1. Research best-in-class value analysis programs.
2. Create processes to support a large health system.
3. Engage with corporate executives to communicate
the program
4. Conduct focused discussions with the appropriate
stakeholders

Following the four steps above, the clinical
integration process takes place in five phases:
1. Identifying opportunity
2. Analyzing and determining solution
3. Contracting activity to confirm solutions
4. Executing contracted solutions
5. Measuring results
(See Figure 1)

Figure 1: The five-phase clinical integration process.

A successful clinical integration process
has many positive impacts.
Financial and operational benefits
Clinical benefits>
>

Financial and operational benefits
Identifying
opportunities
for savings
and launching
clinical
integration
savings
Research and
analysis of
product
categories to
influence an
ongoing
purchasing
strategy
Aligning both
organizations
around a single
process and
request form
Significantly
reducing
manual labor
days
Establishing an
interdisciplinary
clinical
integration
process

Clinical benefits
Clinical integration
discussions around
quality outcomes
with a patient-
centric focus;
Identifying areas
with the most
opportunity for
negotiation and
improvement.
Developing clinical
product category
frameworks to
guide ongoing
discussions and aid
with decision
making.
Establishing a
review of quality
outcomes to ensure
desired outcomes

Making Healthcare Mergers an Opportunity to
Rethink and Improve Processes
Mergers seldomly deliver the level of
savings they might promise.
Their greater benefit may be the
opportunity to rethink and improve
operations of both organizations while
also achieving realistic savings with a
robust evidence- and analytics-driven
clinical integration process.

Making Healthcare Mergers an Opportunity to
Rethink and Improve Processes
By building a pre-merger framework and
engaging clinicians and empowering
them with data to make the best
decisions, post-merger organizations
can optimally prepare to deliver
improved outcomes while saving costs.

For more information:
“This book is a fantastic piece of work”
– Robert Lindeman MD, FAAP, Chief Physician Quality Officer

More about this topic
Link to original article for a more in-depth discussion.
A Healthcare Mergers Framework: How to Accelerate the Benefits
The Key to Healthcare Mergers and Acquisitions Success: Don’t Rip and Replace Your IT
Health Catalyst Executive Report
Healthcare Mergers and Acquisitions: Reducing IT Consolidation Expenses with a Data Operating System
Dale Sanders, Chief Technology Officer
Critical Healthcare M&A Strategies: A Data-driven Approach (Executive Report)
Tim Zoph, Client Executive and Strategist at Impact Advisors; Dale Sanders, Chief Technology Officer
The Top Three 2020 Healthcare Trends and How to Prepare
Health Catalyst Editors
Seven Ways DOS™ Simplifies the Complexities of Healthcare IT (White Paper)
Dale Sanders, Chief Technology Officer

Other Clinical Quality Improvement Resources
Click to read additional information at www.healthcatalyst.com
Hani cofounded Lumere in 2012. He provides strategic vision for the company and advises health
system executives on how to achieve the best clinical outcomes at an optimal cost. Under his
leadership, Lumere was named “one of 50 startups to watch in 2017” by Built in Chicago. Hani is a
frequent presenter and panelist on topics including evidence-based care, healthcare disruption,
physician engagement, process improvement and spend management. He previously served as a
consultant in McKinsey & Company’s healthcare practice, where he helped found the firm’s health
economics think tank, the Center for US Health System Reform. Hani holds BA, JD and MPH degrees
from Harvard University and was a Paul & Daisy Soros Fellow.
Hani Elias, JD, MPH

Other Clinical Quality Improvement Resources
Click to read additional information at www.healthcatalyst.com
Health Catalyst is a mission-driven data warehousing, analytics and outcomes-improvement company
that helps healthcare organizations of all sizes improve clinical, financial, and operational outcomes
needed to improve population health and accountable care. Our proven enterprise data warehouse
(EDW) and analytics platform helps improve quality, add efficiency and lower costs in support of more
than 65 million patients for organizations ranging from the largest US health system to forward-thinking
physician practices.
Health Catalyst was recently named as the leader in the enterprise healthcare BI market in
improvement by KLAS, and has received numerous best-place-to work awards including Modern
Healthcare in 2013, 2014, and 2015, as well as other recognitions such as “Best Place to work for
Millenials, and a “Best Perks for Women.”

A Healthcare Mergers Framework: How to Accelerate the Benefits

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Similar to A Healthcare Mergers Framework: How to Accelerate the Benefits

Similar to A Healthcare Mergers Framework: How to Accelerate the Benefits (20)

More from Health Catalyst

More from Health Catalyst (20)

Recently uploaded

Recently uploaded (20)

A Healthcare Mergers Framework: How to Accelerate the Benefits