Key steps that help CIOs better manage M&A change
A recent article in Health Data Management by William J. Oliver, MD, identifies an issue increasingly facing healthcare CIOs—managing the information technology aspects of mergers and acquisitions.
Consolidation within the healthcare provider arena continues, and the trend appears to be accelerating. The associated M&A activities present a unique set of challenges for the organizations involved, especially for their IT functions. Regardless of the role in an acquisition—acquirer or acquisition target—CIOs and their IT staffs will be affected.
As pointed out in a recent article by Robin Norman, CFO at Virginia Hospital Center, effective culture change is a critical aspect of successfully navigating M&A events. And the steps presented in the article also offer CIOs useful direction to CIOs who are seeking to achieve culture change.
Here’s what those steps could resemble for IT professionals coping with the stress of mergers and acquisitions.
Define the vision
M&As occur in various forms—mergers, acquisitions, affiliations, collaborations and more—each with a unique set of structures and challenges. Defining and understanding the vision for the resulting organization is synonymous with building a puzzle (for example, it helps to build the frame first before attempting to determine where all the individual pieces fit). Jon Burns, SVP and CIO at the University of Maryland Medical System emphasized this importance, stating, “M&A events are inherently traumatic. The absence of information, including a defined vision, creates a vacuum, which will be filled by personal perceptions. To achieve true organizational alignment, clear definition and communication of the vision for the resulting organization is essential.”
Establish the goals
Oliver’s article in HDM noted that goal planning is essential. Absent clear definition of measurable goals, there is little chance to determine when, or if, M&A integration has been successfully achieved. An interesting aspect associated with goal establishment is noted by Lynn Vogel of Next Wave Health Advisors: “Too often CIOs involved in an M&A event get prematurely wrapped up with detailed technology decisions. First and foremost are the organizational goals, from which other sub-goals, such as technology direction, should flow.”
Set the culture
Successful organization integration is predicated on setting a desired culture, either from one that already exists or from a new one to be created. President and CEO of LRGHealthcare, Kevin W. Donovan, recognizes the importance of setting the culture as LRGHealthcare and Speare Memorial Hospital form the Asquam Community Health Collaborative. “Blending two organizations into a single culture is challenging, no matter how well their visions are aligned,” offered Donovan. “Culture stems from the employees who live it, and two groups may approach the same goals from totally different perspectives.”
Existing organizations will have functioned under their respective governance structures and processes. The resulting organization will need to designate which of those existing governance structures and processes to follow or implement new ones. Geisinger Health System has established a robust approach to IT governance with its SVP and CIO, John Kravitz, commenting “Geisinger relies on an IT governance process that focuses on addressing the information processing need, rather than debating a particular technology or system. All IT decisions are predicated on their fit with the organization’s strategic vision and plan, and include active c-suite involvement.”
The new organization will need to define or redefine new IT roles, responsibilities, and structures, evaluating optimal fits for those roles, and in a version of professional musical chairs, some individuals will be left standing when the music stops. Laura Smith, CIO of UnityPoint Health, has dealt with such restructuring challenges. “Besides the obvious stress on staff morale, restructuring can be detrimental to IT operations and support if not well executed. Having a clear vision for the staffing required to support the post-integration systems and process needs is essential.”
Determine technical standards
Although time consuming, and perhaps politically and economically sensitive, determining the resultant application and technology portfolios may be the least traumatic of the dimensions to be addressed. Having experienced multiple M&A events, Gundersen Health System’s CIO, Rose Ann Laureto, has first-hand knowledge of such challenges. “A smooth transition of technologies is important, but not the most difficult or vital concern. It’s more critical to fully understand the cultures and build upon the combined strengths of the teams,” she says.
Compassionately deal with the 'square pegs'
Despite all the best efforts and intentions, some people, processes and technologies just may not fit the new environment. HIT executives will need to dedicate efforts to facilitate their graceful exit. Judy Kirby, CEO of Kirby Partners, notes that such exits can even be beneficial to those exiting: “Once the fear of change caused by career disruption is faced, most individuals, with support from their current organization, successfully transition into new opportunities. They frequently find their new position not only has more responsibility, but is a better fit with their skill set and career aspirations.”
Although culture is a critical aspect of any M&A event, it is not the sole determinant of success. All of these dimensions need to be thoughtfully considered and addressed. Navigating through these challenges is significant and can be facilitated through the involvement of individuals with prior M&A experience. CIOs need to consider the experience aspect as they manage the IT M&A event.