Becker's Hospital Review

Save the date! Becker's Hospital Review 6th Annual Meeting — May 7-9, 2015 — Chicago. Please call 800-417-2035 to register. 10 Stringent FDA regulations may create the need for technology companies to establish partnerships with healthcare organizations. Having the ability to partner with healthcare organizations provides IT companies the clinical resources, perspective and knowledge that might not have otherwise been available to them, which will ultimately result in a better, safer product, Mr. Wallin said. Accessible and downloadable healthcare products can potentially very posi- tively influence population health. If hospitals and health systems can work with IT companies to develop products that focus on preventive care and tracking chronic conditions, the community could see great benefits. "At the end of the day, that's what everyone wants; to control admissions and lower costs," Mr. Wallin said. Infection control, especially in light of Ebola. Hospital infection con- trol and prevention programs discovered newfound fame in 2014, thanks in large part to the appearance of Ebola in U.S. hospitals and its subsequent transmission to two healthcare workers treating an Ebola patient. The pres- ence and transmission of the Ebola virus within U.S. borders steered the pub- lic eye toward the provider organizations' infection control efforts. It wasn't always positive: Ebola also brought attention to the staggering numbers of healthcare-associated infections that occur in U.S. hospitals annually (about 1.7 million, according to the Centers for Disease Control and Prevention). All of this did not shed a positive light on infection control and prevention in patients' eyes. "Ebola has heightened the awareness of how important in- fection prevention is," says Linda Greene, RN, infection prevention manager for University of Rochester (N.Y.) Medical Center, Highland Hospital and a member of the Association for Professionals in Infection Control and Epide- miology's consulting board and APIC's Regulatory Review Committee. The newfound attention being thrust upon infection prevention can yield positive results if hospitals seize the opportunity. Now is the time to invest in giving infection preventionists the resources — in terms of people, technol- ogy and funding — to be robust. Nurses can refocus on performing impor- tant daily tasks, like donning and doffing personal protective equipment, cor- rectly and effectively when dealing with infectious diseases. And the infection prevention team can collectively "watch each others' backs," Ms. Greene says, which is called for in Ebola guidelines but can be applied to other actions, like reminding each other to perform proper hand hygiene. "We're going to establish a culture in which infection prevention cannot be taken for granted," she says. "I think it really underscores how vitally impor- tant these programs are to the organizations, patients and the public." Demonstrating the value of M&A to consumers. Whether they are an acquirer, acquired company or an organization pursuing a potential deal, virtually every hospital and health system will be touched by the unfolding wave of healthcare M&A. Even if the system is not involved in a deal, consoli- dation among hospitals, health systems and physician practices can upend traditional market dynamics, leaving existing systems with new and bigger competitors. Take the merger between Downers Grove, Ill.-based Advocate Health Care and Evanston, Ill.-based NorthShore University HealthSystem, for instance. Overnight, two of the largest competitors in Chicago's metropolitan area be- came one of the largest systems in the country. That deal will create a 16-hospital system called Advocate NorthShore Health Partners, which will be the largest in Illinois and the 11th largest nonprofit system in the country. It would take several transactions to comprise a com- parable system, as there is not a single-step move that would rival the new 16-hospital system. Deals such as this dramatically and quickly alter the land- scape for other hospitals in a market. Going forward, those healthcare providers that are participating in M&A may have to worry more about satisfying a key stakeholder in their integra- tion arms race: the consumer. In the past year, dialogue about the value of healthcare M&A grew beyond the healthcare circle and became more tex- tured on a national level. The Wall Street Journal was one major newspaper to publish an ongoing series of op-eds about hospital M&A, for instance. Whereas leaders of hospitals, health systems or hospital associations have argued that the healthcare reform essentially compels them to consolidate, other expert voices have vehemently denied such claims and pointed to the ugly byproduct of increased prices. The debate over healthcare M&A won't end overnight, but hospitals seem to face increased scrutiny to prove the value of such deals and the benefits they provide to consumers. How will healthcare providers improve transparency in how they measure integration? It may help if leaders focus more attention on partners' capabilities rather than their financial attractiveness. That way, systems can point to tangible, "patient-centered" ways a deal improved care delivery rather than a balance sheet. Truly integrating systems. In the wake of consolidation, many execu- tives are beginning to realize their health systems are merely jumbled collec- tions of healthcare facilities with different strategies, distinct cultures, dupli- cate fundraising campaigns and varying reimbursement rates. Many have yet to achieve true "systemness." Research from Strategy&, formerly Booz & Company, shows many health system transactions aren't successful. In a study of hospitals acquired be- tween 1998 and 2008, just 41 percent outperformed their peers in operating margins and operating income. "They hadn't managed to find the synergies they had hoped for. It never took place, because it would've required some very difficult choices and they didn't have the fortitude to make those choices," says healthcare strategist Igor Belokrinitsky, partner at Strategy&. "Alliances and power base make it hard to make difficult decisions." However, disjointed health systems can find a silver lining in their stunted integration. In a parallel study, Strategy& found M&A strategies that leverage the distinctive capabilities of each of the partners are consistently successful. "Traditional integration approaches are primarily concerned with merg- ing assets to maximize synergy opportunities; they focus on the footprint, head counts, operations and cost reductions. In the process, organizations frequently end up destroying the unique capabilities they have acquired," the Strategy& report read. Health systems that haven't achieved true integration yet are presented with the opportunity to reevaluate and develop a clear integration strategy — with the benefit that stalled integration likely preserved their mutually reinforcing capabilities. To improve integration going forward, Mr. Belokrinitsky suggests laying out a roadmap with a strategy and end objective. He then advised starting with "no regret moves," the less crucial decisions that must be made to move for- ward. To make more difficult decisions, he suggests setting milestones and creating a temporary transformation office composed of both internal em- ployees and external project managers and consultants. The transformation office can act as an unbiased third party and drive integration. "One way around a shortage, if you can't increase supply, is to figure out how you can restrict demand. ACO-style models are all about preventing care in the first place." — Rob Lazerow, Practice Manager of Research and Insights with The Advisory Board Company

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