Compiled by Marty Stempniak

Bringing together disparate health systems with long legacies,different cultures and independent doctors can be a tall task.

In today’s age of hospital consolidation, these trails have beenblazed, and peers at health systems across Texas are willing toshare their insight from past mergers and acquisitions deals.

Texas Hospitals recently spoke with four health system leadersabout how they approached some of the most common painpoints that pop up during mergers and acquisitions.

Jeff Puckett is chief operating officer of CHRISTUS Health, Dallas, an international faith-based organization, which recently brought aboard Good Shepherd Health System, Trinity Mother Frances and the Trinity Clinic, all in Northeast Texas, and altogether has 15,000 physicians on its medical staff and 45,000 associates.

Lee Turner is regional vice president, mission integration of Covenant Health System, a faith-based, clinically integrated network in Lubbock, which recently acquired Grace Health System.

LaVone Arthur is chief strategy officer of Baylor, Scott & White Health, Dallas, which itself is the product of the megamerger between Dallas-based Baylor Health Care and Temple-based Scott & White Healthcare, creating the largest nonprofit health system in Texas.

Steven Foster is president and CEO, Patients Medical Center, CHI St. Luke’s Health System, Pasadena, which is the product of Catholic Health Initiatives’ acquisition of St. Luke’s Episcopal Health System, in Houston.

How did you go about integrating the disparate physician staffs?

Turner: It is just being respectful, listening, not trying to move too fast. Leveraging the things that each organization does well, being interested in incorporating those into best practices where it makes sense, and being very attuned to what new physicians are telling us and saying. It’s not about dictating on day one, ‘You’re ours now and, here, do this.’ That doesn’t work. Physicians are part of organizations in which they see themselves as having a great deal of autonomy, and it’s important for us to recognize that.

Arthur: We have governance councils that were set up early on that included physicians from across the enterprise. Those efforts actually came together, organically, because we are all in Texas. It wasn’t two groups of strangers; they had worked together in different professional organizations. Just getting them around the table was very helpful. Our physicians are scientists at heart, so it was easy to engage them in improvement initiatives, using data and sharing best practices. If you approach things with the patient’s best interest as No. 1, doctors will come together.

Foster: You have to be in front of this with open and transparent communication and multiple touchpoints along the way. That’s particularly true with physicians. With the merger of CHI and Dignity that’s occurring now, there are several talking points that we send to our physicians via email. Just having those candid conversations with your physicians, and the more touchpoints the better. The most common complaints I will get from physicians are “I was never asked for my opinion about these mergers,” or, “I don’t know enough about it, so it’s got to be negative.” No information means they’ll create their own story to fill in the blank.

What about merging technology and workflows?

Puckett: We have not been big believers in rapid integration of IT within CHRISTUS because of the
potential for creating big challenges. There have been a few situations where we moved quickly to implement something because it had a very big upside, or they had a crisis in a specific area. But we have generally believed that you want to understand all of the implications of doing that, and it’s one of those areas of going slow to go fast later on. We have not been big believers of slamming in our systems from the get-go because of the risk that it poses.

Arthur: It takes organizational energy to make big system changes, and so you want to do it responsibly and very carefully. It’s also a big financial investment. We planned it out so that we maximize the benefit of our current product and all of the development and training that went into it before we start implementing a new and different one. Other things we did much more quickly. Our financial suite was implemented immediately. We went to a single human resources platform, which took a couple of years because it’s not just the technology. It was all of the common job descriptions, compensation methods, benefits. The EHR piece is one of the bigger challenges and is specifically being rolled out in a very thoughtful manner. It’s disruptive to your clinical enterprise, and we wanted to be thoughtful.

Foster: You have to start any M&A discussion with the right people at the table, including your clinical team. I’m surprised when I hear a clinical team wasn’t asked to be part of these technological platform discussions. Normally, IT and finance individuals are at the table. But getting clinicians, even a physician champion, engaged in these initial conversations is key because they’re going to ask questions that may have huge downstream impacts. Certainly, clinicians are not required in every conversation, but having them at the table sends a message to your clinical staff that they have a voice, and one of their peers is associated with the initiative.

What about key performance indicators and goals? How do you get both organizations on the same page?

Puckett: First thing you’ve got to do is understand their definitions and what data are available because everybody’s data are different. We have a good balanced scorecard and dashboard for operations and finance. Incorporating new organizations into those reporting systems is something that you have to do quickly in order to have the management capabilities you need moving forward. You have to make sure you’re talking about the same thing in the same way, and so getting the right definitions down on the front end is really critical.

Turner: Covenant Health is certainly very metric-driven in terms of key outcomes. We pay very close attention to those metrics and are beginning to have some consistent alignment with the rest of the Providence St. Joseph network and Grace is now part of that integration. Our Covenant Health Partners, which is a quality and safety organization that includes both Covenant and Grace physicians, as well as independent practices, bundles together shared savings which are then allocated back to physicians when they help themselves and us meet certain quality and safety metrics. They also extend to many other areas such as financial performance, community engagement, patient satisfaction, and goals for foundations and philanthropy.

Foster: The difference in my two previous M&As: Community Health Systems imported its metrics onto the acquired organization in Oklahoma City. That contrasts with the CHI and Dignity merger, which is still somewhat undefined. It’s probably more appropriate in this instance if the two organizations get together and redefine those critical success factors and metrics collaboratively. For example, CHI currently has what we call our “Living Our Mission Metrics,” and those cover the full gamut of key performance indicators: quality, service to the vulnerable and poor, safety and finance. Our guiding metric is providing quality health care to the whole person while creating healthier communities. Metrics of the newly forming company are still unknown to us. But we have created councils that are going to look at what the new metrics should be once this new company is formed. I like that approach, because you’re taking the best of both organizations.

How do you address the faith-based and distinct cultural differences in these transactions?How do you address the faith-based and distinct cultural differences in these transactions? 

Puckett: Catholic health care systems have a unique set of challenges when dealing with a Catholic organization, and that is essentially making sure that the acquisition or the merger follows ethical and religious directives. We talked from the very beginning about those issues. With Trinity Mother Frances, this was not a problem, because they were already Catholic. With Good Shepherd, we did have to go through that process and make sure that, postacquisition, they were going to operate like a Catholic hospital and adhere to the ethical and religious directives. We believe that enhances care and we haven’t seen any negative side effects whatsoever. 

Turner: That’s very much a hot topic. It is of great interest to those who provide oversight to our health care organizations because Covenant Health is part of Providence St. Joseph, which is a Catholic entity. You have to go about things in a different way, but I think if you can fundamentally answer appropriately the question of whether the partnership serves a greater good, then I think it’s reasonable to pursue. There are lots of other checks or balances, and in our case, we would look at their policies and make sure there’s nothing a for-profit entity has in its directives that would be incompatible with ours in terms of social issues. We would have to look at their social commitments, policies and procedures, and we do, even when affiliating with another not-for-profit or faith-based entity. We don’t take anything for granted and that’s part of our due diligence process. 

Arthur: This is a very important issue that needs to be addressed very early on in the discussions. Several merger and acquisition discussions have been terminated due to the inability to reach agreement around faith-based issues. In our case, once we determined that there was mutual benefit of bringing these two organizations together, one of the issues that we were very concerned about was culture compatibility. So, we did a culture audit. We went to an outside organization, and they did a series of interviews and surveys of our governance, management team, employees, physicians and stakeholders. They basically came back and said here is where you have strong similarities in culture, and here is where you have differences. At the end of the day, we were more similar than different