An Overview of the HIMSS Mergers & Acquisitions Technology Framework. A Resource Update for Senior Executives

Transcription

1 An Overview of the HIMSS Mergers & Acquisitions Technology Framework A Resource Update for Senior Executives

2 Speakers Barry Blumenfeld, MD, MS Principal BHB Clinical Informatics Greg Wolverton CIO ARcare

3 Industry Outlook Healthcare Mergers & Acquisitions

4 Industry Outlook: Mergers & Acquisitions 88% of senior healthcare executives surveyed expected to pursue M&A in the next 12 months (GE Capital Survey summer 2012) Regardless of whether or not the Affordable Care Act is implemented smoothly or there are any delays, I think the industry has viewed this as a trend where more efficient, more consolidated is going to win out in the long term, so we ve seen a fair amount of consolidation plays across the healthcare sector -Darren Alcus President and CEO Key 2014 growth strategy is M&A, Healthcare Finance News, Stephanie Bouchard, 12/4/2013

5 Industry Outlook: Mergers & Acquisitions $143.3 billion in healthcare M&A took place in 2012, one of the highest volumes recorded in a decade Merger and acquisition activity was robust in 2012, continued in 2013 and the outlook for 2014 is also strong. A wave of consolidation has occurred across the industry as organizations position themselves for an uncertain future. Further, some unusual relationships emerged during the year that may indicate a trend of mega-mergers, especially in the hospital and managed care sectors. We expect merger and acquisition activity to continue at a steady pace through the rest of the year and into William Hanlon III Principal Healthcare M&A Activity Highest Since 2007, Report Finds, Health Informatics, Rajiv Leventhal, 11/18/2013

6 Industry Outlook: Mergers & Acquisitions (The) healthcare sector in North America is one of the leading industries for potential M&A activity. Healthcare experienced a 20% increase in forward P/E compared to June I think what we re seeing - at least in marketplace data - is there is a continuing degree of M&A activity, not only in U.S., but also globally The healthcare sector has to learn to do more with less. We see decreased reimbursements across the vast majority of the healthcare landscape and a fundamental increase of cost. Added to that, increasing technology costs, and you ve got a market going under tremendous consolidation. There have been a larger number of hospital mergers in the last 24 months and several company mergers seen just this summer (of 2013). -Bill Baker Partner, Healthcare Transaction Services Forecast: Healthcare M&A to increase Healthcare Finance News, Kelsey Brimmer, 8/28/2013

7 Industry Outlook: Mergers & Acquisitions Growth in Number of Healthcare M&A deals Q Q And in deal value $60,000,000,000 $50,000,000,000 $40,000,000,000 $30,000,000,000 $20,000,000,000 $10,000,000,000 $0 Q Q We re starting to see now that organizations are looking at their goals and objectives and what they re trying to accomplish. If there is a specific element or a specific need, we re starting to see partners align around that particular need and create unique relationships to solve those particular problems. -Kit Kamholz Managing Director Mergers, consolidations and partnerships Healthcare Finance News, Kelsey Brimmer, 11/10/2013

8 Mergers & Acquisition Technology Framework Flow Chart and Overview of the 6 Phases

9 M&A Technology Framework Unprecedented change in the healthcare industry results in unique discussions related to partnerships, mergers, and acquisitions among healthcare entities Due to the pervasiveness and long term cost of healthcare information technology there is a need to understand technology implications before, during, and after a merger and acquisition. The framework is intended to serve as a guide to identifying and securing the strategic role technology places when organizations combine their resources. Primary Audiences (role) C Suite Executives IT Director/Project Leads that would be involved in implementation/conversion processes Primary Audiences (site) Health Systems (small, medium, large) Medium to Large size physicians practices Health IT Vendor Firms

10 Merger & Acquisition Technology Framework Vision, Leadership & Goals Analysis & Due- Diligence Stakeholder Management Planning Execution and Change Management Planning Business & Operational Readiness Define Vision Articulate business case for change Articulate current state/future state expectations Articulate success criteria Consider impact of strategic objectives across IT initiatives Assess application portfolios Assess infrastructure(s) Inventory IT contracts Assess life cycle requirements for all systems Stakeholder identification and analysis (include unions, physicians) Identify internal change agents change ambassadors Develop stakeholder management plan (including issue tracking and resolution planning) Define new behaviors Develop change management plan including plans for cultural harmonization Develop high level project timelines Define project performance metrics Define workflow teams and structures Define as is process and workflows Conduct organizational risk assessment Develop Issue Tracking Methods Articulate high level workflow expectations Define pre M&A leadership team roles and responsibilities Assess Inflight Projects Assess IT leadership Assess Culture Related to IT Engage in financial assessments and modelling Analyze workflow and integration implications of M/A Define survey and engagement forums Develop governance structures Develop resource plan, including Internal and external staffing needs Define adoption metrics Define team roles and responsibilities (internal and external) Develop high level training plans Communication Conduct operational impact analysis Conduct job impact analysis Create new job roles & responsibilities Assess factors that may impact scope or timing of M/A or M/A projects Define target audiences and engage key stakeholders Assess information needs Define key messages and appropriate channels Determine appropriate timing for messaging Develop feedback mechanisms Explore the use of social media Develop FAQ s

11 Vision, Leadership and Goals The 1 st stage of the M&A Framework deals with the genesis of the interaction and consists of identifying the parameters at the home institution for the discussion. Without these parameters, the organization face IT related challenges throughout the discussion and will not be aligned with the business terms needed for success. The list below represents the activities to be completed during this phase. Define overall and IT Vision Articulate business case for change Articulate current state/future state expectations Articulate success criteria Articulate high level workflow expectations Define pre M&A leadership team roles and responsibilities

12 Analysis and Due Diligence The 2 nd stage of the M&A Framework deals with the work to be performed before the proposed merger, acquisition or contractually defined partnership. This phase provides the basis for an informed agreement and sets the stage for work that begins once the M/A is executed. The list below represents the activities to be completed during this phase: Consider impact of strategic objectives across IT initiatives Assess application portfolios Inventory IT contracts Assess life cycle requirements for all systems Assess infrastructure(s) Assess IT leadership Engage in finance assessments Analyze workflow and integration implications of Merger/Acquisition Assess impact of M&A timing Assess factors that will impact post M&A projects

13 Stakeholder Management Planning The 3 rd stage of the M&A Framework usually occurs immediately after execution, and deals with identifying and engaging appropriate stakeholders to govern the work. This phase may begin earlier in the process and generally runs the length of the project, then transitions into ongoing oversight work. The list below represents the activities to consider: Stakeholder identification and analysis Identify internal change agents Develop stakeholder management plan Define survey and engagement forums Develop governance structures Assess training needs Develop resource plan

14 Execution & Change Management Planning The 4th stage of the M&A Framework deals with the planning for M&A execution and the correlating change management. This phase is closely aligned with stakeholder management planning, as well as business and operational readiness. The list below represents the activities to consider: Define new behaviors Develop change management plans Develop high level project timelines Define project performance metrics Define adoption metrics Define team roles and responsibilities Develop high level training plans

15 Business and Operational Readiness The 5th stage of the M&A Framework deals with the business and operational readiness for change. This phase closely aligns with the execution and change management planning stage. The list below represents the activities to consider: Define workflow teams and structures Define as is processes and workflows Conduct organizational risk assessment Develop issue tracking methods Conduct operational impact analysis Conduct job impact analysis Create new job roles and responsibilities

16 Communication The Last part of M&A Framework deals with communication, the cornerstone of all change. Communication, while note a phase per se, aligns with all other phases and is a continuous focus throughout the process. The list below represents the areas to consider in each phase: Define target audiences and engage key stakeholders Assess information needs Define key messages and appropriate channels Determine appropriate timing for messaging Develop feedback mechanisms Explore the use of social media Develop FAQ s

17 Example Goodall Hospital/Southern Maine Medical Center Merger & its Integration with MaineHealth

18 MaineHealth Member and Affiliate Facilities One piece of the larger puzzle, Booth Bay Register, Lynda Clancy 9/6/2012

19 Example On January 1 st, 2014, Southern Maine Medical Center merged with Goodall Hospital, continuing as Southern Maine Health care(smhc), a member system of MaineHealth, an integrated healthcare system SMHC is now the fifth largest health care system in the state, with 46 locations in York County Prior to the merger, Goodall Hospital struggled financially The reason is because it s small-scale compared to what you need to be today. The scale and scope of our large organization will enable us not only to do things better, but to be more cost-effective which in the long-run will be a good thing for folks in the community. - Ed McGeachey, President/CEO of SMMC on the need for the merger Southern Maine Medical Center, Goodall Hospital to merge in 2014, Jennifer Feals, SeaCoast Online,10/17/2013

20 Example General Considerations The eight MaineHealth hospitals have transitioning from a loosely affiliated federated model to a more tightly integrated system model IT became a system service, where there is now one IT department across all of MaineHealth. The department provided services to all facilities, and shared a single management structure. When IT Matters: Improving Care Delivery and Patient Outcomes through Technology CHIME Case Study, January 2013

21 Example Technology Considerations The merger of SMMC and Goodall hospital was achieved in 2 phases In January 2013 the 2 entities were connected under a single holding company known as Southern Maine Healthcare Care (SMHC), a member of the MaineHealth, an integrated healthcare system On January 1 st, 2014, SMMC merged into a single entity, SMHC The 1 year period allowed for a more extended analysis of the IT implications of the merger, with analysis corresponding to phases 1 and 2 of the M&A framework occurring prior to the formation of the holding company and during the intervening year. When IT Matters: Improving Care Delivery and Patient Outcomes through Technology CHIME Case Study, January 2013

22 Example Technology Considerations "one patient, one record" system o $150 million technology upgrade, the largest-ever capital investment in health care in Maine Epic EHR system involving ambulatory records, practice management, inpatient and revenue cycle applications Infor software Enterprise Resource Management system When IT Matters: Improving Care Delivery and Patient Outcomes through Technology CHIME Case Study, January 2013

23 Example Cultural Considerations Central Billing Office Customer service for all customer billing questions handled by the CBO, and system-wide policies set for collections, payment reminders, etc. Affected hospitals autonomy and how they chose to conduct business in their locales Contact with CEOs and CFOs of various organizations in the system increased. One of the hospital CEOs said Now you re talking about touching our cash. People get very serious about changes when the changes started to touch their money. When IT Matters: Improving Care Delivery and Patient Outcomes through Technology CHIME Case Study, January 2013

24 Example Cultural Considerations Single Billing Office When you go to a single patient statement, it forces us to be consistent in a wide variety of practices. It got us to look into things like HIM [Health Information Management] policies, the need for a consistent free care policy, collection and bad debt policies, and more. You have to think about the whole MaineHealth system upfront, and this has force a lot of business change organizationally. Mike Kasabian, Director of Business Application at MaineHealth When IT Matters: Improving Care Delivery and Patient Outcomes through Technology CHIME Case Study, January 2013

25 Example Leadership Considerations The CIO spent more time with senior leadership in strategic discussions, increasing awareness of where healthcare is going, understanding what s needed to support an accountable care organization or a patientcentered medical home. The transition was looking beyond managing and operational oversight of a large IT shop to focus on the business of medicine. When IT Matters: Improving Care Delivery and Patient Outcomes through Technology CHIME Case Study, January 2013

26 Help Us Improve the Framework We are looking for case studies and other examples of M&A activity to incorporate into this framework Submit your case studies and suggestions here:

27 Questions Learn more about HIMSS Mergers & Acquisition Technology Framework: Thanks for your time and consideration!

28 Merger & Acquisition Technology Framework Vision, Leadership & Goals Analysis & Due- Diligence Stakeholder Management Planning Execution and Change Management Planning Business & Operational Readiness Define Vision Articulate business case for change Articulate current state/future state expectations Articulate success criteria Consider impact of strategic objectives across IT initiatives Assess application portfolios Assess infrastructure(s) Inventory IT contracts Assess life cycle requirements for all systems Stakeholder identification and analysis (include unions, physicians) Identify internal change agents change ambassadors Develop stakeholder management plan (including issue tracking and resolution planning) Define new behaviors Develop change management plan including plans for cultural harmonization Develop high level project timelines Define project performance metrics Define workflow teams and structures Define as is process and workflows Conduct organizational risk assessment Develop Issue Tracking Methods Articulate high level workflow expectations Define pre M&A leadership team roles and responsibilities Assess Inflight Projects Assess IT leadership Assess Culture Related to IT Engage in financial assessments and modelling Analyze workflow and integration implications of M/A Define survey and engagement forums Develop governance structures Develop resource plan, including Internal and external staffing needs Define adoption metrics Define team roles and responsibilities (internal and external) Develop high level training plans Communication Conduct operational impact analysis Conduct job impact analysis Create new job roles & responsibilities Assess factors that may impact scope or timing of M/A or M/A projects Define target audiences and engage key stakeholders Assess information needs Define key messages and appropriate channels Determine appropriate timing for messaging Develop feedback mechanisms Explore the use of social media Develop FAQ s