Strategic Partnerships Mergers and Acquisitions

Where is your health system on the journey to systemness?

October 31, 2019 7:08 pm

For healthcare organizations, 2018 was another record year for mergers, acquisitions and affiliations, but many new health systems created over the past decade have failed to achieve their goals of growth and efficiency.

To gauge your system’s progress, ask these questions:

  1. Are our current organizational structures and operating mechanisms achieving the clarity, ownership and alignment that leaders need to drive strategic outcomes?
  2. Are we optimizing our physical and virtual infrastructure to ensure our organization is providing patients the right care in the right location at the right time?
  3. Is our organization delivering a consistent patient experience that maximizes patient loyalty and is differentiated in our market?

If the answer to any of these questions is no, it’s likely the organization has failed to become a truly integrated healthcare delivery system. Hospitals, clinics, medical groups and other entities may be combined under a single corporate umbrella, but they are not fully aligned to take advantage of the clinical, operational, strategic and financial strengths of each organization. The combined entity more closely resembles a holding company of assets, not a fully integrated operating company.

As economic and competitive pressures continue to build for all healthcare organizations, every health system leadership group must consider whether it can survive as a “holding company” — or whether it must work to become a true “operating company.” The journey to full system integration may present new calls for innovation.

The three lenses of systemness

The concept of an operating company can mean different things to different stakeholders, and the quality of systemness exists on a spectrum between poor alignment and robust integration. To understand where a health system sits on the spectrum, leaders should examine the organization from three points of view.

The leadership view. In the journey to systemness, the right balance of ownership and accountability between local managers and system leaders is critical to achieving strategic outcomes. However, poorly designed organizational structures and operating mechanisms often create ambiguity about which leaders own which outcomes. Weak leadership structures also can lead to inefficient competition for scarce resources. In an operating company, the organizational chart is a streamlined matrix that visibly aligns local managers with system-level leaders. Decision-making authority and accountability are clearly defined across the enterprise. There is also a well-structured and widely accepted system of operating mechanisms, including local and system-level oversight committees and quarterly business reviews, to ensure alignment of system operations with strategic priorities and drive enhanced performance through clear accountability.

Organizational leadership roles often transform as a system evolves along the integration spectrum. Where there were once redundant roles across the organization as each business unit pursued its own vision and strategy, leadership roles are frequently centralized in an integrated delivery system. Instead of focusing on a legacy geographic region or business unit, leaders should consider a systemwide view of their service and asset portfolios. This transition requires leaders to adapt to a rapidly evolving landscape, and it calls for the development of new skill sets and thinking about the system as a whole.

The patient view. In many ways, the most important lens of systemness is the eye of the patient. Ideally, patients can move between care locations easily, and transitions between levels of care (ambulatory, inpatient, post-acute, etc.) feel seamless. True integrated delivery systems put the patient at the center of all decision-making. They focus on using operating efficiencies, technology and other tools to provide the highest quality service with the fewest touches. Successful systems also take a calculated approach to service-line integration, rationalization and growth. They balance local service offerings with regionally centralized high-complexity capabilities while strategically choosing whether to own or partner for essential services.

Integrating clinical operations with a patient-centric view is critical to establishing your system as a provider of choice. However, well-defined integrated clinical pathways are extremely challenging to create. In less integrated organizations, patients are often sent outside the system due to longstanding historical referral relationships, get conflicting answers about locations of care or receive bills from numerous organizations.

The system view. What does your system look like to managers and the care team? In an operating company, front-line team members rely on support services that are consistently provided throughout the enterprise. Regardless of care location, standardized policies and procedures establish a common set of expectations that create a single patient experience. Care delivery, technology and operations are integrated and streamlined, creating the platform for staff to move throughout the system as needed. While optimizing the physical and virtual infrastructure of a system takes time, it is essential that leaders balance the pace of change for stakeholders. Consistently communicating the system integration vision is essential to gaining support for changes and ultimately achieving cultural integration. 

Innovating a realistic plan

As health systems form, and disparate operational, strategic and financial mechanisms and cultures meld, it is important to build an operating plan with the system’s long-term vision in mind. Absent a constant North Star, the outcomes and impact of immediate priorities will lose meaning and often momentum. To help overcome this risk, successful health systems focus initially on foundational elements that lay the groundwork for both short-term gains and long-term success. Key elements can include:

  • Setting clear system integration goals and guiding principles
  • Creating common balanced scorecards/dashboards
  • Hardwiring common operating and leadership mechanisms
  • Creating a consolidated leadership structure
  • Establishing multifaceted mechanisms for constant stakeholder communication

System integration is not for the faint of heart. With difficult decisions to be made and new challenges around every corner, it takes relentless pursuit to achieve the vision and a constant focus on stakeholder engagement to be successful. Leaders should periodically take a step back from day-to-day operations and review their progress toward becoming the system they set out to become. 


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