IT Dilemmas of the Newly Merged
Snapshot
One of the first decisions that merging organizations must make is what to do with legacy information systems, and the answer isn’t always obvious. Standardizing around a current system, interfacing two disparate platforms or starting over with a third solution all have benefits and drawbacks for physicians and staff.
The majority of hospital board members will participate in a merger, acquisition or affiliation during their years of service. While they will face numerous decisions throughout that process, one of the most complex considerations is the fate of each entity’s information technology system.
The choices used to be easier: the acquiring party’s IT prevailed and replaced the partner’s system, or both entities kept what they had, developed interfaces and kicked the integration decision down the road.
Today, it’s more complicated. What now motivates mergers — creating larger health systems that span the continuum of care, becoming more efficient through internal consolidations and increasing the value of care— also influence the IT decision. So does geography. A health care system that acquires a hospital in a new market and two organizations that form a strategic partnership in the same market will make different decisions.
For boards, the overarching goal should be positioning the new entity for success and adding value to patient care, regardless of the technology.
In some cases, standardizing the entire enterprise on a single electronic health record and a common administrative system can facilitate these goals. But health care leaders pause when they consider the sizable, and often recent, investments in IT and the prospect of dumping both the capital investment and the months of hard work getting clinicians accustomed to it.
Still, “if you want to get to a consolidated future state, it almost begs the question: How else would you do it besides move to a single solution,” asks Paul Murphy, a partner with Encore, a Quintiles Co., Houston.
But the logical choice isn’t always realistic. Whether one side of the merger is required to accept the IT choice of its merger partner, or the merged entity starts over with a new direction for IT across the organization, it comes down to telling a workforce to learn how to do its work on computers all over again. “Ripping out a clinical system affects every physician, every nurse, every technologist; it’s a huge organizational disruption,” says Peter Zazzara, a vice president with Cornerstone Advisors Group, Georgetown, Conn.
Merger Motivations, Priorities
The circumstances of a merger sometimes signal a clear choice of IT direction. “If the newly merged organization has a lot of capital, a lot of resources at its disposal, that’s one of the things that would make the decision easier,” says Jared Rhoads, former IT consultant with CSC Healthcare Group and now graduate school student.
Conversely, the organization being acquired “may have been capital-strapped, and that’s why they’re interested in being acquired at this point — and maybe they haven’t spent as much money getting to where they need to be from an IT perspective,” Zazzara says. “When that exists, sometimes the decision [to replace] is pretty easy.”
If the acquired organization becomes part of a regional or national health care network and doesn’t share a location or patient population with another member health system, there is less emphasis on a combined clinical IT platform because the organization is not interacting daily with the others, Murphy says. It’s more of a business arrangement, for which financial and analytics systems will have to be brought together at some level. For mergers in the same market, however, consolidation discussions “have to start by understanding what the motivation was behind the merger in the first place,” he says.
In a local merger, boards of both organizations likely envisioned uniting enterprises that long operated independently, with a branding and marketing emphasis on that integrated state, says Rhoads. The vision can’t be achieved unless facilities from each side of the merger can be regarded as different locations of the same organization as opposed to retaining individual identities or clearly different care and work environments.
Another idea behind consolidation is the synergy that two organizations create through efficiencies of scale and combined health care strengths, says Aaron Carlock, managing partner with Huron Consulting Group, Chicago. “And by having one system and getting things more standardized, whether it’s the workflow or just the way data are being tracked and stored, you’re able to drive a more robust and efficient analytics environment. Analytics is a really big deal now, and it becomes a bigger deal [in the future].”
Not all mergers place the same value on having a single clinical information platform. Cone Health, a six-hospital network in North Carolina, decided to replace a long-standing EHR at Alamance Regional Medical Center with the network’s EHR within a year of acquiring that hospital in May 2013. It also installed its administrative IT at Alamance Regional at the outset. “There’s a really strong business case to be made for merging business systems first,” says Steve Horsley, chief information officer of Cone Health. “If you think about running the organization, and acting like one organization, you need to have consistent pay practices, consistent benefits, consistent policies and procedures. And, [as for] economies of scale, that comes [with] materials management.”
In contrast, a three-way health system merger in 2011 that became St. Peter’s Health Partners, Albany, N.Y., hasn’t yet led to a decision about the EHR systems at each of its legacy entities. Leaders felt it more important to first complete construction investments. However, St. Peter’s immediately launched an integration of its business IT systems, including the financial ledger, human resources management and supply chain, which senior executives deemed essential to behaving like the single entity it sought to become by merging.
The Case for Common Clinicals
To Horsley, the case for clinical IT integration at Cone Health boiled down to supporting reductions in care variation. “If you can reduce that unnecessary variation, you can standardize practice,” he says. And as the organization makes progress on that goal, “every time you make a process improvement, you only have to make it once. If you’re maintaining two systems, and you’re making a process improvement in a workflow, now you have to figure out how to do it twice.”
Cone Health’s decision to replace Alamance Regional’s highly competent IT system reflected leadership’s belief that a common record was vital to achieving the economic benefits of scale expected from the merger. “We’re in a world where we have to provide value, and we have to look for ways to reduce cost,” Horsley says. “So, when we approach something like a merger or acquisition, we first start asking the questions: What’s right in the eyes of the patient, how can we provide the best patient care and how can we get the economies of scale?”
After working through multiple options for merging clinical IT and narrowing the choice to a few viable alternatives, the health system leadership went to the medical committee and said that Cone would live with whatever the physicians decided. The option to move to Cone’s Epic Systems platform “might have been a working presumption, but we needed to vet that and say, ‘Is that really the right decision?’ ”
In the late 1990s, Alamance Regional had been an early adopter of Sunrise Clinical Manager, an EHR from Eclipsys Corp., which merged with Allscripts in 2010. Physicians “were quite happy with it,” Horsley says. “They’ve had it for many years, have customized the heck out of it, and were quite familiar and comfortable with it. So, to go in and just tell those physicians, ‘Hey, we’ve got a better system for you,’ I’m not sure it would have been appropriate or accurate.”
Cone Health’s leaders couched the issue in the context of what ultimately was right for patient care, for the business, and then asked what made sense. “And I think the combination of the ability to have one chart for our patients, ease of access to information and the business reasons led us to the path to say, ‘Yes, it is appropriate for us to move to Epic at ARMC,’ ” he says.
Besides the anticipated efficiency benefits of reducing care variation, Cone Health will save substantially on IT operating costs. “By reducing the [number] of systems we support, i.e., get it to one electronic medical record, we have freed up a lot of resources that can work on innovative strategic initiatives,” Horsley says. “Just on the EMR alone, we anticipate an $8 million savings over five years.”
Synching Finance and HR First
In Albany and nearby Troy in upstate New York, the merger of St. Peter’s Health Care Services, Northeast Health and Seton Health aimed to link complementary services into a care continuum, leveraging the strengths of each and either adding to or altering the use of facilities according to that plan. With two hospitals from different merger partners a half mile from each other in Troy, St. Peter’s Health Partners converted St. Mary’s into an ambulatory care facility and launched a $100 million building program that included revamping and expanding Samaritan Hospital to absorb the additional capacity.
With that backdrop, integrating IT for health care operations would have been a “huge disruption” in the fledgling effort to bring together three distinct health care cultures, says Jonathan Goldberg, vice president of information services and CIO. “Replacing your health information system certainly impacts the organization more than anything you could do.” A survey of 70 key leaders produced resounding agreement that an integrated IT system was justified and wanted. “But at the same time, they also said to us, ‘We have no idea how we’re going to do it.’ ” Tossing a giant system implementation into the existing mix of projects and stresses seemed burdensome and ill-timed.
To complicate matters, “we didn’t think that either of the systems we currently have was the one we could see going into the future,” Goldberg says. So, instead of having a portion of the health network familiar with a computer system that would be expanded to the rest, the entire network would have to implement a new clinical IT foundation.
Management acted quickly to expand the computerized enterprise resource planning platform of St. Peter’s Health Services across the network within 18 months of the merger launch. Creating one general ledger and consolidating human resource functions and policies were essential, Goldberg says. “Trying to do finances out of three systems would have been quite a challenge. And when you get to the HR side of things, we were managing almost 13,000 employees through multiple HR systems with different pay practices.”
From a practical standpoint, Encore’s Murphy says that administrative IT projects are less ominous and provide a way for the merger to ease into networkwide initiatives before getting to the hard stuff. “You’re starting with an area that’s kind of behind the scenes, where you’re not dealing with voluntary physicians and people whom you don’t want to scare off — you do it with employees who are going to do what you need them to do,” he notes. “Strategically, it may be an easier way to crack the nut before moving forward.”
As for moving forward to clinical IT at St. Peter’s, “to be honest, the businesses themselves are managing well with the systems they have,” Goldberg says. Nearly all the network’s patients stay with one hospital rather than moving among them, and their physicians are likely within the radius of the hospital they use.
Still, St. Peter’s executives have warmed to standardized clinical IT, he says, because they see the benefits of integrated information management, referral management and one-stop shopping for patients. “We want to get to a place where physicians, caregivers and patients can move around our health system, obtain the services they need and all be in one record,” he says.
But although Goldberg predicts more integration among fewer IT systems — both acute care and ambulatory — within three to five years, the focus likely will be on applications that enable what needs to be done “at a lower cost than a full rip and replace.”
Focus on Culture and Value
For boards, the overriding issue should be less about whether to merge IT or not, and more about giving the overall merger its best chance of success, Cornerstone Advisors’ Zazzara says. “If I’m a trustee, I’m looking for the financial value created.”
A lot of economies are created outside the EHR, he points out. Leveraging business, financial, referral and scheduling systems can accomplish such objectives as gaining supply chain leverage, consolidating call centers, having a better referral management system and keeping patient revenue in the network instead of leaking out. “To the extent that some of that is tangentially related to the clinical system, that might start to provide a reason to rip and replace [an EHR],” he says.
On the other hand, better care processes implemented uniformly can produce the savings and quality that the new models of care demand, and the engine that drives benefits is the EHR, Murphy says. “Moving to the integrated, single solution will enable better care coordination, because it’s been broadly demonstrated that the flow of information through a single technical environment is just easier, less costly and more timely than when they’re interfaced.”
That integrated state also translates into high satisfaction “when patients can access their information in a more consolidated manner through a single portal, and when their schedule of activities is managed in a single scheduling center, for example,” Murphy adds. “Those are things that are becoming more important as reimbursement starts to be based in part on patient satisfaction scores.”
In the end, mergers are not combinations of technology and facilities but, rather, combinations of cultures at formerly separate, large enterprises with a history of providing care their own way. “There are much, much bigger fish to fry than pure IT when considering a merger,” Zazzara says. “The human side of the merger is what dictates its ultimate performance. Those pieces become much, much more problematic when they’re not handled well.”
John Morrissey is a contributing writer to Trustee.
System Integration Creates Value
A well-designed IT integration strategy will help hospitals:
• standardize business practices and workflow to ensure consistency in areas such as pay practices, benefits, and policies and procedures
• improve analytics capabilities
• avoid unnecessary spending on new platforms, potentially freeing up resources
• improve physician engagement and alignment
• realize efficiency gains and help reduce care variation
• avoid or minimize disruptions
• leverage economies of scale to cut costs or achieve lower pricing in areas such as supply chain
• enable or improve patients’ access to their records through a portal
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Experts suggest taking a close look at a new partner's IT contracts. For more advice, read "Sunk Costs, Contracts and Meaningful Use".