Chasing a futurists’ view of the healthcare delivery system of the future must be viewed with ample scrutiny as health systems allocate finite resources into an uncertain future. Here's why.
In almost a daily ritual, today’s senior health system leaders read each morning about new and potentially transformative developments. Whether Amazon’s announced entry into healthcare, United/Optum’s acquisition of Davita Medical Group or the contemplated merger between CVS and Aetna, the US healthcare landscape is certainly undergoing changes that are beyond the more traditional horizontal (hospital to hospital) mergers.
Facing these potentially transformative, new or enhanced, competitors is not for the feint of heart.
The response of today’s prudent senior executives and boards of trustees should not be action for the sake of action. A further consideration is that most not-for-profit and health systems do not have the mission imperative or availability of excess capital to allow them the luxury of executing material moves designed to address ambiguous future threats without reasonable historical metrics as to the probability of success.
Clearly, the growth of narrow networks, new competitors, disruptors and consumer choice as a result of high deductible health plans require that senior health system leadership determine actionable mid- to long-term strategic plans that focus on ensuring their system’s respective sustainability.
These pressures, perhaps now more than ever, require health system leaders to evaluate their well-intentioned strategic transactions and strategic imperatives and objectives from both a mid-term foreseeable perspective and also a longer term perspective. Of 190 surveyed participants, 70% believe their organization’s merger, acquisition or partnership activity will increase within the next three years.
It may be asking too much for a strategic plan to attempt to ensure the long-term success where such plan relies on a long-term forecast or futurists’ view of how healthcare will be administered, reimbursed and sourced.
This author’s view would be to advocate that the focus of senior leadership be on achieving those strategic goals and objectives that strengthen the Triple Aims, the relevance/attractiveness with employers and payers and the convenience and connectivity with actual patients, both in terms of the digital ease of patient encounters (i.e., web and app based telehealth, scheduling/records and communication)and convenience of care delivery access points (e.g., urgent care, community based clinics, etc.).
Of the senior leadership responding in this year’s survey, more than 60% state the goal of their merger, acquisition and partnership activity is to focus upon the operational financial and care delivery efficiencies.
In closing, to paraphrase an old Texas football coach, sometimes the faster a team runs only puts them further out of position when they make a mistake.
In connection with senior leadership strategic planning and setting of goals and objectives, it would be prudent to keep a keen focus on positioning health systems with their key stakeholders in mind and on becoming/continuing as the healthcare delivery network of choice and a ‘must have’.
Chasing a futurists’ view of the healthcare delivery system of the future must be viewed with ample scrutiny as health systems allocate finite resources into an uncertain future.
The evolving U.S. healthcare landscape, perhaps more now than ever before, requires that health system executives possess varied and deep skill sets. Not only must executives navigate the changing political and macroeconomic landscape, including the repeal-and-replace uncertainty, but in execution of their well-intentioned strategic transactions, health system leaders must remain focused on the original strategic imperatives and objectives to help ensure long-term, sustainable success. Of 140 surveyed participants, 61% believe their organization’s merger, acquisition or partnership activity will increase within the next three years.
Commonly, a decision is made to move forward on an appropriate strategic transaction and then senior leadership assigns a multidisciplinary deal team to consummate such. The majority (74%) of surveyed participants cite both financial/operational and clinical/care delivery equally as the primary objective when deciding to transact. Prior to commencement, successful healthcare organizations will have gone through a lengthy strategic planning process, developed a list of strategic imperatives and had such approved by their board of trustees. Some of these strategic imperatives may include: the Triple Aim, relevance/attractiveness with employers and payers, alignment of incentives, ability to manage the resulting organization as a system versus a loose federation, and the stickiness and sustainability of the resulting system.
A breakdown in the deal consummation process that results in the strategic imperatives not maintaining primacy but being subordinated or ignored may result in a nice press release or closing ceremony but when measured by the test of time, the transaction may not deliver expected and necessary sustaining strategic benefits. This is exacerbated in complex M&A transactions and strategic partnerships. Such complex transactions cannot be managed in a manner similar to important but more routine operational or capital initiatives (e.g., construction of a new bed tower or implementation of a staff reduction initiative) facing healthcare organizations. Senior leadership must help ensure that the strategic benefits of a transaction do not become deemphasized due to deal fatigue, completion of task bias, arbitrary deadlines, and other pressures that work against the deal team obtaining optimal outcomes.
Healthcare leaders must help ensure that the strategic imperatives are effective guardrails of the deal team’s efforts and not lost in the difficult and dynamic transaction negotiation and consummation process. A successful approach focuses less on arbitrary timelines or goals and embraces an accountability process that monitors the deal progress and documentation to help ensure a true north heading. Effective leaders must remain laser-focused on the strategic imperatives and not allow completion and execution of the deal to subordinate the foundation of the original strategic mandate.