Healthcare organizations are rapidly developing new alliances. A key factor is the relationships between leaders.
We don’t know of a healthcare organization that is not contemplating at least one new relationship with another organization. Described below are several forms of strategic linkages that are under development:
• A strong community health system is affiliating with an academic health system. The two organizations will become part of the same regional health alliance. They will reduce total costs in supply, revenue cycle, IT, decision support. The community hospital will get a leg up in its process of developing population health expertise and approaches. The community hospital will also gain access to new sub-specialty services that will be delivered locally. There will be an equity investment and a board-level linkage connecting the two organizations.
• A large physician organization that occupies a large geographical footprint, and has substantial expertise in population health, is receiving an equity investment from a health system that has lagged behind its competitors.
• Two well-established leaders in population health, one in the East and one in the West, are working together on new approaches through a joint venture.
• A health system has decided, not just to be a health system but also to be a vendor. It will offer services (such as population health and/or health plan services) to other peer health systems.
• Several organizations are working together to meet state-legislated changes that relate to population health management.
• In a market not known for payer-provider cooperation, one payer and one health system are beginning to share information and strategies for reducing per member per month costs in key disease groups.
• Several health systems with independent histories are coming together a regional care delivery network.
• Working together, three physician groups can develop more sophisticated and effective care for a specific population.
We know of more than one set of organizations that fit each of the examples described above. In other words, many new relationships are being assessed and/or implemented.
The specifics of these new relationships vary. Many of the considerations in forming these relationship also vary, for example:
• Together we can provide a broader range of services.
• I’m behind and you are ahead, but I can provide you with scale.
• We can leverage the fact that we have the same EHRs, or the same consultant, or …
• Our service areas are near one another but don’t overlap much.
• Our physicians (numbers, specialties, cultures, …) complement yours.
• Our competitor has just developed a potentially game-changing offering. The best way we can match it is to team with another organization.
• I don’t have the balance sheet to invest in the next generation of changes.
• We don’t have the skill set to deliver what we need.
One has to be impressed with the range, scope and variability in these new relationships. However, what they usually have in common is
• the key leaders get along with each other personally,
• they are looking for a “win/win”, and
• they share a common vision of how and when to change.
This is not a small thing. We see leaders passing up (otherwise highly promising) relationships between organizations when these basic ties between the leaders are not present. We see potential new arrangements being stopped at the 11th hour with statements such as, “I just can’t get comfortable with him.” Or, “I don’t see her working for the good of the whole.”
We would argue that this is not just a case of, “I would like to work with my friends”. There is a solid, “Darwinian” rationale for leaders to work with those they trust personally. Other leaders further down in the two organizations also develop personal trust more quickly when the top leaders have trust. A common vision can be turned into common initiatives and an action plan. In times when no one knows the future, strategies need to change; and an alliance between leaders can provide a “stickiness” to the new relationship as it goes through hard times.
Obviously, as new relationships are formed, the basic rationale must be in place (lower costs, adding services, enhancing quality, competitive positioning, positioning for value-based payments, more effective alignment and integration, …). And, the two organizations must be a good strategic fit. Understanding the relationship between leaders is also a good criteria.
If a potential relationship begins without key leader involvement, we recommend involving them and assessing the key leader relationship before moving forward.
In assessing leaders’ relationship as a criteria for moving forward, we suggest asking these questions:
1. How durable is the personal relationship between the key leaders? How well do they know each other? Is either likely to leave his/her position soon? Does each leader have the power within his/her organization to deliver what is envisioned?
2. Is the nature of the relationship understood well enough by all? Is it essentially a relationship of equals, or a customer-vendor relationship, or …?
3. Is the common vision sufficiently developed? Is it articulated and shared by others within each organization? Is there (or will there be) sufficient buy-in by those who will implement the initiatives?