Acquisition activity in both the home health and hospice sectors continues to outpace activity in other healthcare sectors, with a record number of transactions in recent years.
With so many new partnerships in play in the heavily regulated healthcare field, and so many people, processes and policies coming together in new workstreams, the integration progress can be daunting. Providers can quickly start to feel like they have more pieces to fit together than a jigsaw tournament.
Integration becomes even more challenging when the acquisition involves both acute and post-acute care entities, such as the acquisition of a hospice system by a hospital system.
“The regulatory requirements are so different for each that it can be mind-boggling,” said SimiTree Clinical Consulting Senior Manager Judy Connelly. “The hospital system acquires the hospice system and then wonders why there’s no consistency in practice, why one is losing money and one is not.”
The SimiTree edge
Financial and clinical diligence set the initial course for successful integration. As an industry leader in post-acute diligence and integration services, SimiTree brings the advantage of full clinical, financial and operational expertise, helping both sides of the transaction better understand unique variables.
Although each merger or acquisition is unique, SimiTree consultants say some basic elements are common to all. Here are their Top 10 Tips for successful integration.
1. Communication is key.
Focus on both external and internal communication. Be prepared to roll out external press releases to key publications, partners, associations, and the community, but give careful attention to internal communication for an easier and faster integration.
Mitigate rumor, uncertainty and fear with joint town halls, FAQs, and leadership messaging that includes clear information about how the change will impact employees and what will be expected of them.
“Speak in reality-based terms about changes,” said Lisa Brochey, one of the interim managers SimiTree fields to provide leadership to organizations during times of transition. “Include all teams and be clear and transparent. Focus on the why of everything, because knowing the rationale fosters adherence and buy in,” she said.
Ongoing support will be needed after the initial flurry of announcements. Strive to address continuing emotional response to change, SimiTree consultants say, with regular touchpoints built into the integration schedule.
“When facing change, normal human behaviors are fear, anger and confusion. Understanding and addressing those emotions is crucial for success,” said Laura Wilson, Managing Director of Operations Consulting for SimiTree.
2. Plan for employee retention.
Integration is a risky time for retention. Many post-acute leadership roles require regulatory knowledge, making it crucial to plan for retention prior to closing the deal. Determine whether retention bonuses will be offered and develop a contingency staffing plan for any departures.
“Make certain key talent can see the role they will play in the integrated company,” said SimiTree Managing Principal Eric Scharber, who heads Talent Solutions. “One of the keys to retention is a clear career trajectory.”
An integral part of integration is the alignment of bonus structures and incentives. SimiTree financial consultants work with organizations to review and develop compensation models to entice key talent to stay and make organizations more competitive in attracting new talent.
3. Fill important roles with qualified interim leaders.
Unfortunately, even with great retention measures in place, acquisitions invariably lead to vacancies. Don’t leave important roles unfilled, with other leaders doubling up to handle responsibilities, and don’t prioritize filling the vacancy quickly over filling the vacancy with the right leader.
SimiTree offers a stable of qualified interim managers ready to step into key administrative, financial or clinical management positions with transitional leadership, including roles requiring knowledge of complex regulations and other unique factors driving the market.
Additional transitional support is available from the SimiTree Growth Solutions team. Specifically oriented to sales, marketing and growth, the Growth Solutions teams devotes up to 100 hours per month to an organization, depending on size and specific needs, to keep sales and marketing functions moving forward at high performance levels and pave the way for a smooth transition to new leadership.
4. Structure the new organizational chart.
Give careful thought to structure of the integrated organization, establishing clear lines of reporting and accountability, and set it out in a new and detailed organizational chart. Make certain all employees receive a copy so there is no confusion.
“Many agencies seem to overlook this part, even though it is essential, and as a result the lines of accountability can become blurred,” said SimiTree Principal Rob Simione.
5. Establish a baseline and track performance against targets.
Revenue efficiencies are factored into the valuation and will continue to play an ongoing role during integration. With investors eager to see performance, this is vital information.
SimiTree consultants recommend building on the financial analysis conducted as part of due diligence to set up key metrics across the organization. Decide how value will be captured, and how growth and profitability will be measured. Financial experts at SimiTree can help. They’re also available to help with budgeting and financial forecasting for the integrated company, offering a thorough understanding of revenue drivers and market dynamics.
6. Know your market.
The SimiTree Market Analysis Platform (MAP) gives visibility into critical market characteristics. MAP helps clients track patient movement between competitors and referral sources, determine high value referral sources and demonstrate to potential partners the value the agency brings to the relationship. It also helps agencies determine the viability of new lines of service or expansions into a new community.
MAP is the newest of SimiTree’s renowned data analytics products, praised by clients for ease of use and customizable functionality. It complements the SimiTree Financial Monitor, the industry leader in benchmarking and financial reports.
7. Make certain your IT is up to the task.
Integration requires a host of thorough IT diligence covering areas such as hardware, network, security, technology collaboration and data sharing. SimiTree offers project management to oversee the IT complexities which must be addressed during integration, offering full support services that include interim staffing.
“Critical IT assessment will give the decision-making tool to help organizations plan how to best leverage resources and platforms that align with successful integration,” said SimiTree Director of IT Consulting Aldin Fauni.
8. It’s a good time to outsource.
Investigate the benefits of outsourcing to avoid disruption of the revenue cycle during integration. SimiTree offers full revenue cycle management services, everything from insurance verification and eligibility to document management and cash posting. Our coding and OASIS review services are topnotch, and our Live QA services offer clients the opportunity to expedite quality review.
SimiTree says integration also presents the opportunity to consider outsourcing some other functions, such as QAPI, to free staff to handle other responsibilities.
9. Build a culture of excellence, trust and accountability.
Preventing financial loss and ensuring quality outcomes doesn’t happen by chance. SimiTree consultants recommend soliciting insight and input from team members to build a culture of excellence and accountability for the new company.
“It not only creates a sense of value, but it’s also where some of the best ideas and suggestions come from,” Brochey said.
Trust building is a key component of successful integration, SimiTree consultants say, and requires listening and acting on employee pain points. They recommend an anonymous employee survey conducted by the retention strategists at SimiTree.
Some uncomfortable one on one conversations may also be required. “Address employee discomfort directly to avoid frustration or avoidance tactics,” Brochey said.
And don’t be afraid to demand accountability, even in a staffing shortage, Connelly added.
“We can’t be afraid to expect accountability,” Brochey said. “There are people who want to do excellent work, clinicians who came to home health and hospice because they want to provide great care. Those high performers will leave if they don’t feel they’re working in a culture where excellence and accountability are valued.
“If you want to keep your high performers, build the culture to keep them,” Connelly said.
1O. Start building your new leaders from within.
The value of employees with industry-specific knowledge is inestimable. A strong organization will work hard to create and retain them, with robust leadership development that includes regular coaching and directing, mentoring, opportunities for professional development and career advancement, and strategic access to high level leadership. SimiTree can help, providing the guidance needed to assess needs, develop training programs and develop an ongoing culture that promotes growth and retention.
Reach out to us for help.
SimiTree provides complete post-close integration services to ensure success. Work with us during the pre-closing phase to identify key operational changes which may be required after the transaction so that your organization can launch effective operations from Day 1, with interim leadership in place as needed.
Our home health and hospice industry expertise sets us apart as leaders in post-close integration. We understand what it takes to develop successful plans for peak performance during integration and sustainable performance beyond.
Use the form below to reach out to us to learn more.