The time has come to boldly return our attention to value-based care transformation. Serving as a value-centric enterprise is critical in the healthcare industry and is both necessary and doable. The public health emergency has expired, and the near-term challenges that accompanied our emergence from the pandemic can no longer serve as the rationale for delaying the pursuit of value.
The industry has changed forever, and as provider organizations attempt to transform themselves into value-centric enterprises, a set of essential functions will be necessary to serve as supporting catalysts. Leaders must study their market carefully to develop a clear picture of market demands. This clear understanding, followed by investing in defined critical capabilities while optimizing essential functions, will help generate the momentum needed to power value-centric enterprise transformations.
Background
Now more than ever, healthcare organizations are demonstrating the need to accelerate their growth strategy. While growth means different things to different organizations, a key component of growth is focusing on strategic affiliations, alliances, mergers, acquisitions, and partnerships with other healthcare entities. In creating these larger health systems, organizations will be poised to serve their populations by developing a comprehensive network of value-based care.
The accelerating scale of consolidation within the healthcare industry indicates that innovation and flexibility will be paramount when developing future strategies. Driving long-term organizational performance requires dedication to mission-aligned, profitable growth. Today’s leaders are positioning their organizations to capitalize on present and future opportunities to help drive improved systems of care and long-term financial success, while mindful that opportunities may come in nontraditional forms with unexpected partners.
As organizations evaluate their ideal systems of care—service line growth, financial affordability, and overall sustainability—growth fluidity is the capability that will help drive the goals of building a value-centric enterprise. The case study below exemplifies a growth fluidity success story—a joint venture of two healthcare systems committed to providing higher levels of care and medicine to the people in their communities.
While consolidation within the healthcare industry is not necessarily new, the size of deals and partnerships continues to expand, with organizations focused on partners with complementary service capabilities allowing for greater regionalization and coordination across the full care continuum.1 To regionalize care, create scalability, and improve financial performance, 45% of health system executives believe consolidation efforts will occur within their market service areas, with affiliations as the dominant method. By first determining their organization’s growth fluidity, they are enabling themselves to capitalize on present and future opportunities to drive improved systems of care, as well as long-term financial success.
Factors influencing growth fluidity include increased consumerism, reimbursement and payment reform, new and emerging technologies, and regionalization. As a best practice, organizations should consider each of these four factors. Differences will emerge depending on the market’s pace and the organization’s position within the market.
Achieving a higher organizational resiliency through inorganic growth requires careful planning and rigorous analysis, with the primary factors tied to increasing value for patients. An optimized partnership may lead to improved patient outcomes, increased efficiency, and enhanced innovation. However, a partnership requires diligence and continual attention to enjoy the greatest rewards.
Approach
When approaching growth opportunities, the best practice strategy for a growth-forward organization relies on the results of five key steps: Align, Design, Navigate, Integrate, and Optimize.
- Align – First, organizations must focus on several areas of alignment before considering the nuanced details of a growth opportunity. Organizations should consider why they are seeking a potential partner and what they hope to achieve through the partnership.
- Design – Once a potential partner has been identified, the two organizations should work together to jointly define guiding principles, the value proposition, and potential opportunities for the partnership.
- Navigate – To successfully launch into the Navigate step, a thoughtful and effective governance model should be deployed and additional stakeholders such as board members, clinicians, administrators, existing partners, and community leaders can then be engaged.
- Integrate – True execution of the partnership begins at the “Integrate” step, as the two organizations begin to execute the partnership plan to realize the opportunity.
- Optimize – An optimized, or value-centric, partnership helps create a more efficient business model while enhancing patient outcomes as exemplified in the following case study.
Case Study – Froedtert Health & ThedaCare Optimized Partnership
In October 2021, a small group of senior leaders from Froedtert Health and ThedaCare gathered in Fond du Lac, Wisconsin, a town midway between their two headquarters. During the initial meeting, the attendees began to get acquainted and articulate their motivation for pursuing a partnership. Through this conversation, it was revealed that both organizations had sought the right partner for several months and each had developed their own approach to finding the right partner.
ThedaCare and Froedtert Health created a value proposition based on six guiding principles that further clarify the partnership framework.
The six guiding principles include:
- Trust and Transparency
- Exceptional Quality
- Innovative Transformation
- Community Focus
- Value Creation
- Disciplined Execution
With these principles to guide the way, the group envisioned the various opportunities across their two organizations and prioritized a quaternary partnership and joint venture. The quaternary partnership is a three-way agreement among ThedaCare, Froedtert Health, and the Medical College of Wisconsin (MCW) to further expand services across the continuum while locally maintaining appropriate care. The joint venture intends to develop, own, and operate an acute care services division, which will initially include micro-campuses in the Wisconsin communities of Oshkosh and Fond du Lac. The micro-campuses will meet identified community healthcare needs through achievement of the quadruple aim within a new geographic market by focusing on quality, cost, and access to advance clinical integration. Through this partnership work, several lessons learned emerged:
- Keep the patient and community at the center of decision making.
- Develop intentional processes to promote anchored objectives and disciplined execution.
- Hold candid and transparent conversations so others feel valued and comfortable sharing feedback.
- Deliberately plan for and celebrate early wins. Any win is worth celebrating, often leading to bigger wins and immense success.
- Maintain openness for additional opportunities so as not to stifle growth.
As the trust grew across the two organizations, the CEOs decided to explore an even larger opportunity, announcing a letter of intent to combine in April 2023 and reaching a definitive agreement in September 2023.
Conclusion
When it comes to growth fluidity, healthcare organizations understand one key driver of long-term performance is a dedicated focus on appropriate growth, achieved both organically and inorganically, and horizontally and vertically. Now is the time for bold action to meet the needs of our local communities, broader markets, and the industry as a whole—in the near term, long-term, and distant future. When the aim is to enhance collaboration and help improve overall community health and access to services, a partnership can be a powerful option to pursue.
For more information on how we can help your organization achieve its strategic healthcare goals, reach out to a professional at FORVIS.
- 1“Hospital M&A Deal Volume Returns to Pre-Pandemic Levels as Systems Seek Out Complementary Services,” fiercehealthcare.com, July 14, 2023.