Prioritizing Standardization During Health System Mergers and Acquisitions

Consolidation in the healthcare arena continues to quench the thirst of hospitals and health systems considering all paths toward growth. In the ever-changing healthcare industry, a strategic opportunity to increase efficiencies, control costs, and expand services through M&A activity has caught the attention of leadership in many provider organizations.

Offering the potential to reach economies of scale, consolidating health systems also provides inherent benefits to patient care and quality. In theory, by increasing the number of services and expanding patient access to care, larger provider organizations can better manage the continuum of care. Improved coordination of care should result in lower costs to the organization and patients – yet this is not always proven in practice.

Mergers and acquisitions of hospitals and health systems are major transactions, and have many moving parts. If consolidation is not planned and executed effectively, turbulent results can amplify inefficiencies that inspired leadership to pursue M&A activity in the first place.

Perhaps the most important element of success in the new partnership is prioritizing standardization of operational policies and practices. Combining multiple hospitals or health systems typically brings along the baggage of varying operating practices and policies at the facility or department level. Aligning workforce policies and applying them at the enterprise level is critical for newly managed health systems.

With labor costs accounting for more than half of an organization’s budget, standardization of staffing and scheduling practices hold the key to realizing significant cost savings. Along with damaging the bottom line, misalignment of policies across the system can be equally destructive to the quality and continuity of care, as well as staff morale.

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Creating a workforce plan by conducting an operational assessment of the health system’s current state of labor management can reveal critical areas of opportunity to fully realize the expected outcomes of the merger. Highlighting the changes needed to achieve the organization’s ideal state and prioritizing initiatives helps leadership implement staffing and scheduling practices to promote consistency, efficiency, and productivity. Conducting such an analysis identifies realistic savings opportunities resulting in strategic realignment and can lead the cultural shift through a smoother transition.

When health systems merge and consolidate with multiple facilities within the same metro area, one of the most effective ways to control costs, improve coordination of care, and ensure practices are being applied and routinely monitored across the system is to implement a centralized resource management center (RMC). Serving as a communication hub that collaborates with clinical leaders to manage staffing needs against patient demand, this group is tasked with managing and enforcing policies and practices in order to support rapid and objective recommendations to clinical leaders regarding staffing decisions. A properly positioned resource management center is the conduit through which all other strategies can be enacted.

Bringing together multiple hospitals or health systems is more than a union of facilities, staff, and services under one name. Operating procedures and culture must be heavily considered. Streamlining practices such as schedule periods, open shift and float staff policies, contingency staff scheduling procedures, overtime and PTO policies across all departments within the system can have a significant impact on an organization’s staff, patients, and their bottom line – working to achieve the outcomes they expected from the consolidation.

MORE: The Hidden Costs of Overtime

Jackie Larson

Jackie Larson
Jackie Larson is president of Avantas, a provider of workforce management technology, services, and strategies for the healthcare industry.

Jackie Larson

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