Palmetto State News 2018-2019 Issue 1 - Page 12

Almost three quarters of South Carolina hospitals are now parts of multi-hospital systems. The long negotiation process is over. Regulatory reviews have been passed. Legal documents are signed. Now what do we do?

Post-merger attention usually turns to consolidation of the traditional backroom functions, including such operations as:

Table 1 - Traditional Post-Merger Consolidations

(Primarily “Back Room” Functions)

-General finance & accounting functions.

-Enterprise risk management

-Internal audit

-Physician recruitment

-Group practice management

-Supply chain management

-Revenue cycle management

-Capital resource management

-Managed care contracting & management

-Marketing

-Human resources & benefit management

These functions generally appear on every actively expanding system’s merger checklist. If not the system’s first attempt, consolidation of these functions may be relatively straightforward and may be accomplished within the first six to twelve months post-merger. In some cases, large systems have decided to outsource one or more of these capabilities. Other usually consolidated functions, such as information technology, cybersecurity, back-up data centers and disaster recovery capabilities, and systemwide strategic planning may take longer to deliver their anticipated benefits of the merger.

But, the merger process is necessarily disruptive, so why not take full advantage of the unique opportunity it affords? Focus the organization’s attention by appointing a “Chief Restructuring Officer.” Give the new CRO adequate authority within the system to consider opportunities presenting themselves throughout the organization.

These functions generally appear on every actively expanding system’s merger checklist. If not the system’s first attempt, consolidation of these functions may be relatively straightforward and may be accomplished within the first six to twelve months post-merger. In some cases, large systems have decided to outsource one or more of these capabilities. Other usually consolidated functions, such as information technology, cybersecurity, back-up data centers and disaster recovery capabilities, and systemwide strategic planning may take longer to deliver their anticipated benefits of the merger.

But, the merger process is necessarily disruptive, so why not take full advantage of the unique opportunity it affords? Focus the organization’s attention by appointing a “Chief Restructuring Officer.” Give the new CRO adequate authority within the system to consider opportunities presenting themselves throughout the organization.

Maximize processes rather than just automating the existing ones. Consider new opportunities such as, for example, new information technology opportunities, cost-justified when applied over a larger patient population. Consideration should be given to new capabilities such as:

Table 2 – Potential I.T.-Driven Post-Merger Opportunities

-Implementation of predictive remit software, potentially including a larger payer universe due to multiple locations and states

-Case profiling across multiple hospitals for best practices. Done DRG-by-DRG, this can include both best clinical outcomes and most effective cost management.

-Implementation of new population health management tools, now more statistically reliable given the larger population.

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You've Legally Merged--Now What?

By Bradley King, MBA, CPA (retired)