HCM-FPX5312_MusiKeti_Assessment 5-1
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Assessment 5: Completed Course Project
Keti Musi
HCM-FPX5312: Analyzing the Health Care Environment
Prof. Nowill
Capella University November 7, 2021
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Executive Summary
For my Analyzing the Health Care Environment course project assessment, I conducted an in-depth analysis of NewYork-Presbyterian Healthcare System and recommended evidence-
based strategies to address organizational challenges and opportunities in a dynamic environment
. The healthcare industry (i.e., hospitals and health systems) is undergoing consolidation, which refers to a continuum of affiliative relationships or partnership options (from joint ventures to mergers to full acquisitions). NewYork-Presbyterian has decided to pursue a merger and acquisition (M&A) strategy — which both represents a huge challenge and a valuable opportunity — as the one specific strategic initiative to (1) create operational, strategic, and financial value (i.e., to better economic performance through market share growth and cost-savings) and (2) provide great patient care, maximize value for patients, and improve patient outcomes.
Overview of NewYork-Presbyterian
NewYork-Presbyterian is one of the nation’s most comprehensive, integrated academic health care delivery systems, dedicated to providing the highest quality, most compassionate care, and service to patients in the New York metropolitan area, nationally, and throughout the globe. NewYork-Presbyterian encompasses 10 hospital campuses across the Greater New York area, more than 200 primary and specialty care clinics and medical groups, and an array of telemedicine services. NewYork-Presbyterian has four major divisions: (1) NewYork-
Presbyterian Hospital, (2) NewYork-Presbyterian Regional Hospital Network, (3) NewYork-
Presbyterian Physician Services, and (4) Community and Population Health. NewYork-
Presbyterian Healthcare System’s mission is to be a leader in the provision of world class patient care (i.e., high quality, fiscally responsible healthcare services that meet the needs and
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expectations of the communities they serve), teaching, research, and service to local, state, national, and international communities. However, NewYork-Presbyterian still has a huge potential in providing great patient care, maximizing value for patients (i.e., achieving the best outcomes at the lowest cost), and making its financial outcomes more sustainable. PESTLE Analysis of NewYork-Presbyterian
The healthcare sector is undergoing rapid technological advancement, an aging and diverse population, major disruptors, payment and reimbursement restructuring, health policy shifts, cost increases, and more (Bowen et al., 2009). However, NewYork-Presbyterian has been able to survive and flourish in the healthcare industry due to its viable long-term and short-term strategies, that enable it to be the leading healthcare system in providing outstanding patient care.
In order to better navigate and address the organizational challenges and opportunities inherent in
these dynamic environments, NewYork-Presbyterian looks for ways to provide great patient care,
maximize value for patients, and make its financial outcomes more sustainable, while not straying away from the core of their mission, vision and strategies (Child & Rodrigues, 2011). NewYork-Presbyterian has identified merger and acquisition, commonly known as M&A, as the one specific strategic initiative to accomplish both goals – improve patient outcomes and financial sustainability and resiliency outcomes.
Goal
Description
(1) Improve Patient Care
(2) Maximize Value for Patients
Expand patient access to care
Enhance the quality of care and outcomes for patients
Improve the quality of clinical care and doctor experiences
Expand service offerings (ex. add key service lines and physicians)
Diversify care delivery models to accommodate patients’ and communities’ changing needs and preferences
(3) Make Financial Outcomes More Sustainable
Achieve cost and care efficiencies (ex. increase bargaining power; spread fixed costs for technology and administration over a larger revenue base)
Boost profitability
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Enhance growth (ex. increase the number of customers and market opportunities)
Diversify revenue
Enhance ability to assume payment risks
Sustain or grow market share
Expansion, which can result from multiple causes, is of vital importance to ensure the continuity of businesses. Mergers and Acquisitions is one way of expanding businesses beyond the boundaries they originally operated in. Mergers and acquisitions are subjected to many internal and external factors, some which may result pursuing such an option a bad decision for the members of the company. NewYork-Presbyterian will need to conduct a proper and complete
analysis of these factors to ensure balanced evidence, reasoning, and options to make the most informed decisions about pursuing a merger and acquisition. The healthcare industry depends on evaluating existing and impending legislation, changes in market and economy, societal changes over time and technological advancement. To properly proceed through an M&A transaction, businesses commonly complete a full PESTEL analysis. PESTEL analysis is a strategic (i.e., situational, risk management, scenario planning) tool to help us understand the external macro-
environmental factors (beyond a healthcare organization’s control) that are impacting the operations and performance (and profitability) of the healthcare organization, and how the organization can either manage or mitigate the impact of these external factors (Rothaermel, 2017). The PESTEL Model includes six factors: Political, Economic, Sociocultural, Technological, Legal, and Environmental aspects of a company (Rothaermel, 2019). For healthcare organizations, like NewYork-Presbyterian, PESTLE analysis is an essential tool when considering a merger and acquisition. That’s because the best merger and acquisition strategies are developed in large part based on various external factors that may significantly affect NewYork-Presbyterian’s operational and financial performance (Markwell & Leigh-Hunt, 2016).
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PESTLE Analysis
Political Factors Effecting M&As:
Political factors are triggered by the relation with foreign government, political stability, and government intervention in economy. The Political environment impact on the healthcare industry performance is changing continuously mainly because of the changing government regulations. Tax legislation changes, consumer protection and employment regulations, insurance mandates, and impact of changing government funding to healthcare are all elements that could have an impact on the healthcare environment. These various factors affect mergers and acquisitions as companies will not risk its existence by entering into M&A activity during an unfavorable political environment, politically unstable environment, or when governmental intervention in business activities is more than desirable.
Economic Factors Effecting M&As:
Unemployment, inflation, interest rates, and credit availability are economic factors that both directly and indirectly affect the financial performance and operation of the healthcare industry. These economic factors define the future of an organization in a market where it is willing to invest, helping business organizations in deciding the price of its product and services, target consumer, and marketing strategy. Any of changes is these factors can change how the public is able to spend their money, impacting policy spending. Economic factors, irrespective of the size of business, play a very important role, and must be analyzed thoroughly before moving into a market. There have been cases in the past where this factor led to the closure
of healthcare organizations which underwent mergers and acquisitions.
Social Factors Effecting M&As
:
Socio-cultural factors (or issues) relate to the cultural differences or similarities (ex. beliefs, values, and norms) of people. Social factors affect the whole M&A cycle: pre-merger decision-making, negotiation and deal structuring, and post-merger integration. These factors generally become visible when the M&A (i.e., restructuring) is done and the day-to-day operations begin to proceed. Businesses often fail to notice or consider this factor at an earlier stage, as the initial primary focus is to maximize wealth. The primary reason for a M&A’s failure to achieve the promised value is cultural differences (i.e., the fundamental ways of working are so different and so easily misinterpreted). Therefore, it is the duty of the top management
to do a due diligence over this factor to avoid significant issues. Technological Factors Effecting M&As: Technological factors are a more contemporary challenge that a business encounters in its day-to-day operations and functions. Technological advancements (including the speed at which technology disrupts that industry) specific to hospitals and healthcare manufacturers plays a significant role in determining the factors that can impact NewYork-
Presbyterian long-terms operations and performance. A business must match
itself with constantly changing technologies in order to sustain themselves in
the market and to ensure their objectives are achieved. For established players, staying ahead of industry innovators and new agile startups is critical—and harder than ever. Fortunately for them, M&A can level the playing field and open the door to future game-changing transformations. Forward-thinking healthcare companies merge with or acquire companies
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with technological expertise they can then use to develop new offerings, redefine industry boundaries and drive top-line growth.
Legal Factors Effecting M&As: The law is another consequential factor, as it directs the way in which a company should conduct business under the guise of legislation. Legal factors (which involve antitrust laws, taxation policies, corporate social responsibility, intellectual property rights law, consumer protection laws, etc.) are of utmost significance as they ultimately decide the fate of the business which has been restructured as a new entity. These factors require due diligence (ex. books, assets, liabilities legal issues in past and pending ones) on the part of parties involved in the M&A transaction and conduct through research in the market they are entering. Such analysis would give a business a better idea that whether the objective behind this M&A is duly met or not.
Environmenta
l Factors Effecting M&As:
Environmental factors (which can be both controllable and uncontrollable) and are related to all types of physical environment, such as climate, climate change, weather, renewable energy, non-renewable energy, types of goods available, and the environmental laws which a business has to abide by to carry on its activity. Environmental factors question the conduct of a business in whether they are doing their activity in an environmentally friendly manner, as well as if and how they abiding to the various environmental legislation. Environmental factors play a very significant role in M&A. To avoid any post M&A hindrances, a business has to do a proper analysis of target company’s environmental factors and make a direct link between the segment they will be dealing in and the direct impact on it due to environment.
The trend of healthcare systems consolidation will likely continue due to financial pressures (i.e. in pursuit of cost efficiencies through scale and improved market position; gain access to clinical, strategic and financial resources; revenue diversification), growth of nonhospital care settings (i.e., more outpatient and virtual care delivery), the need for transformed care delivery (i.e. prevention/well-being, more specialized care), and the increasing presence of and opportunities for outside entrants and disrupters to the healthcare industry—all which have accelerated by the COVID-19 pandemic (Beckham, 2016). NewYork-Presbyterian’s Health System can strategically use M&A to transform their business model and innovate (through new capabilities, resources, and relationships). The PESTEL analysis allowed me to understand the diverse (external) macro-environmental factors – political, economic, socio-
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cultural, technological, environmental, and legal – that could have direct or indirect impact on the NewYork-Presbyterian Healthcare System’s (internal) decision to pursue a M&A in order to provide great patient care, maximize value for patients, and make its financial outcomes more sustainable in a dynamic, ever-changing healthcare environment. Markets for healthcare services present both opportunities and threats that influence NewYork-Presbyterian’s business operations, functions, and performance. By recognizing and understanding these external macro-
environmental factors, NewYork-Presbyterian can effectively capitalize on the most significant market opportunities for growth and expansion via M&A to strengthen its business model – specifically providing great patient total care, maximizing value for patients, and making its financial outcomes more sustainable. Exploiting such opportunities can mitigate the effects of many of the risks, threats or challenges to the NewYork-Presbyterian shown in this external analysis. PESTEL Analysis Continued
NewYork-Presbyterian (NYP) has identified merger and acquisition (M&A) as the one specific strategic initiative to improve patient outcomes and financial sustainability, and resiliency outcomes. As we continue to analyze diverse external macro-environmental factors – political, economic, socio-cultural, technological, environmental, and legal – affecting NYP’s goal of providing great patient care, maximizing value for patients, and making its financial outcomes more sustainable in a highly competitive healthcare environment, we need to identify the essential participants and stakeholders in the healthcare system and their vital role in identifying and resolving various challenges facing NYP in achieving its goals.
In the healthcare system, customers are patients pursuing different medical care services. Patients seek quality and affordable medical care services from various disciplines, including (1)
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primary care or routine medical care, (2) specialty care, (3) emergency care, (4) urgent care, (5) inpatient or hospital care, (6) surgery, and (7) research participants. This situation makes the patient care populace very complex as they seek diverse levels of (medical and social services) care from various providers and caregivers and have different health-related care goals. The external supply chains is typically decided based on the patient populace that is being served. The healthcare (internal and external) and hospital supply chain refers to the procurement and distribution of products (i.e., physical goods or supplies) and services to providers and patients. In healthcare supply chains, the principal participants include payers (e.g., government agencies and regulators, employers, or any other individuals), fiscal intermediaries (e.g., insurance companies, health maintenance organizations, pharmacy benefit managers), providers (e.g., hospitals, divisions, physicians, and facilities such as physician offices, medical and ambulatory surgical centers, and pharmacies), purchasers (e.g., resellers such as pharmaceutical wholesalers, medical-surgical distributors, product representatives, independent contracted distributors, group purchasing organizations) and manufacturers (e.g., drugs, medical device/equipment, hospital medical supplies, providers of information technology services and manufacturer of capital equipment) (Burns & Lee, 2008). An effective supply chain brings in the right materials (i.e., physical goods) and information at the right time, with the right amounts, to the right place, in the right condition in order for patients to receive quality care. This can have a direct impact on patient care by reducing risk and errors of unnecessary harm associated with health care, eliminating waiting times to treatments and for appointments and reducing the length-of-stay (i.e., improving the quality of care, increase efficiency, and providing more patient value (Singh, 2006). For example, the external supply chain for NewYork-Presbyterian’s primary care and multispecialty medical practice locations that provide outpatient clinic and routine appointments
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is different from the hospital locations where higher level of care (ex. emergency care and intensive care) is provided.
External world factors, particularly the socioeconomic status of the communities (i.e., population) served by the medical facilities (i.e., the setting and the broader environment), can greatly affect the quality of medical services and patient outcomes (i.e., enhance or inhibit the quality of medical services and patient outcomes) and have a direct impact the healthcare organization revenue and profitability. For example, a medical facility located in a low socioeconomic status (SES) community (i.e., low-income families and individuals) will primarily serve atients on Medicaid or other government assistance programs, meaning the billing and financial reimbursements for the services (i.e., fee-for-service) will be directly tied to these programs. Conversely, the medical facilities located at a high socioeconomic status (SES) community will be serving patients
with private payers or direct contracts with NewYork-
Presbyterian through the employers such as big corporations (i.e., more affluent people have more disposable income and can more easily afford medical care and a healthy lifestyle).
In the healthcare industry, competition (and external world uncontrolled factor) among organizations has long been encouraged as a mechanism to increase value, quality, and convivence of healthcare for patients, and reduce healthcare costs (Thomson, 1994). NewYork-
Presbyterian faces competition from several healthcare systems, including Mayo Clinic, Northwell Health, Mount Sinai, Cleveland Clinic, Memorial Sloan Kettering Cancer Center, St. Joseph’s Health, NYU Langone Hospital, and Montefiore. In order to remain competitive, healthcare systems have pursued two paths: (1) expansion through mergers with other systems and acquisition of satellite campuses in the service of achieving administrative efficiency, increasing bargaining power, diversifying revenue, and crucially, gaining the ability to act as
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their own insurers, and (2) making strategic investments and focused on ambulatory care and their traditional role as teaching hospitals (they steer well clear of the insurance business). In order to defend against competition and to improve their market positions relative, healthcare organizations form strategic partnerships or alliances. Strategic partnerships or alliances offer Healthcare organizations, like New York-Presbyterian, opportunities to expand their network, access and leverage expanded benefits of scale, access essential industry resources, offer excellent value for consumers as they shop for health care services, expand access to advanced medical care to improve patient outcomes, streamline processes, reduce costs, lead to innovation, and improve patient care (McCue et al., 1999). The type of external partnerships are (1) healthcare networks, (2) local businesses, (3) physician practices, (4) rehabilitation services, (5) laboratories, (6) nursing facilities, (7) pharmacies, and (8) accountable
care organization (ACO).
Many stakeholders that influence the processes and outcomes that occur in hospitals. Stakeholders are “…a person, group, or organization that has interest or concern in an organization” (Stakeholder, 2018). Healthcare organizations have both internal and external stakeholders, having unique but equal influence (Coombs & Holladay, 2012). However, internal and external stakeholders can also be affected by the hospital in very different ways. Suppose a hospital opens a new specialty that is not done in other facilities regionally. In the case, internal stakeholders may be impacted negatively in ways such as involuntary staff relocation or reassignment, overcrowded working areas, and decreased parking spots available due to the influx of patients. Conversely, patients (i.e., external stakeholders) will experience the positive impacts of the availability of a new service located close to home. Internal stakeholders are those who (1)
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operate within the hospital, (2) know the innermost workings of the organization, which puts them in a unique position to offer insight and expertise, and (3) participate in the strategic development of coordinating resources to fund and sustain an operation. An example of internal stakeholders would be hospital employees, managers, medical staff, the board of directors, and investors. External stakeholders are those individuals who (1) are not employed by the hospital but are impacted by or impact the organization’s performance and (2) influence the organization by driving service line decisions, which often affects the bottom line. Examples of external hospital stakeholders would be those who provide inputs (suppliers like insurance, pharmaceutical, medical equipment, office and hotel product, and service companies) and those who rely on hospital outputs (patients), competitors, regulators, special interest groups, and creditors (Wilston, 2019).
Laws and regulations are critical levers for governments to affect the quantity, quality, safety, and distribution of services in health systems. Therefore, healthcare organizations face more regulation than just about every other industry in the United States. They are subject to inspection, review, reporting requirements, and enforcement actions by many state and federal agencies, and they must follow numerous local, state, and federal regulations. The relevant laws and regulations that impact New York-Presbyterian’s healthcare system are (1) Affordable Care Act (ACA), (2) Health Insurance Portability and Accountability Act (HIPAA), (3) Health Information Technology for Economic and Clinical Health (HITECH) Act, (4) Medical Treatment and Labor Act (EMTALA), (5) Anti-Kickback Statute (AKBS), (6) Patient Safety and Quality Improvement Act (PSQIA), (7) Fraud and Abuse Laws, and (8) Medicare Access & CHIP (Children’s Health Insurance Program) Reauthorization Act.
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Market Data Analysis
Most healthcare organizations have merger, acquisition, partnership, affiliation, or joint venture (JV) in their strategy in response to an ever-shifting, increasingly competitive market (Bazzoli et al., 2004). These represent a continuum of approaches to collaboration among health care organizations, ranging from those that change the legal status of organizations (e.g., mergers
and acquisitions) to those that involve the pooling of only limited resources among partners (e.g.,
joint ventures) to those that are less formal and involve commitments of fewer resources than either mergers or joint ventures (e.g., alliances) (Zajac et al., 2010). Healthcare mergers and acquisitions (M&As) continue to rise. The scope and scale of M&A activity are changing as healthcare organizations seek to align for growth and access and position for new competitive value-based markets. The healthcare market data that needed to examine the challenges or opportunities related
to NewYork-Presbyterian’s strategic initiative of M&A to improve patient outcomes and financial sustainability and resiliency outcomes are (1) trend of the merger, acquisition, partnership, affiliation, or joint venture activity in the healthcare sector (ex. insurers, pharma and biotech, providers, and vendors), (2) forecast of the merger, acquisition, partnership, affiliation, or joint venture activity in the healthcare sector (ex. insurers, pharma and biotech, providers, and vendors), (3) trend and forecast in horizontal vs. vertical M&As, (4) the common issues in healthcare M&As, and (5) the effects of hospital M&As on costs and quality of care. The data will come from a variety of sources, including Kaufman Hall, Hammond Hanlon Camp LLC, S&P Global Market Intelligence, Global Healthcare Advisors, EY, Modern Healthcare, and American Hospital Association (AHA) Annual Survey.
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Data integration is a combination of technical and business processes used to combine data from disparate sources into meaningful and valuable information (Giannakos et al., 2019). There is no universal approach to data integration. Data integration isn’t a one-size-fits-all solution; the right formula can vary based on numerous business needs. Data integration methods
can be broadly categorized into three types: (1) manual (labor-intensive), (2) automated (APIs), and (3) engineered (custom APIs) (Giannakos et al., 2019). The approach that I would use to integrate data from multiple sources (from differing perspectives, across various disciplines, stored in different formats and varying levels of structure) is engineered (using APIs to create dataflows and enable integration automatically). The data extracted from the various sources would be consolidated into a single, cohesive data set, which would be located into a centralized system like a data warehouse or data lake. This is the foundation to produce effective, actionable business intelligence.
Market Data Analysis Continued
Primarily due to COVID-19’s impact, healthcare industry merger and acquisition (M&A) activity has remained robust in 2021, as organizations try to respond and build resiliency in the
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face of industry disruption, market shifts, and new market dynamics.
2015
2016
2017
2018
2019
2020
2021
0
20
40
60
80
100
85
71
80
69
71
62
34
Hospitals and Health Systems Total Transactions for Q1-Q3 Combined
Numner of Transactions
Source: Kaufman Hall Transactions Data (M&A Quarterly Activity Report: Q3 2021)
Furthermore, Bain & Company’s US Healthcare Trends 2021 report states that healthcare
organizations (including hospital groups) expect to do more M&A transactions, with 50% indicating that they were highly likely to make one or more acquisitions over the next two years. The M&A objectives are multifaceted – (1) increasing care access, (2) improving care quality, (3) driving efficiencies that lower costs, (4) taking advantage of economies of scale, (5) address heightened demand for digital health solutions (ex. telehealth), (6) revenue diversification (ex. service lines and new capabilities), (7) geographic expansion opportunities (establish market presence, access to new markets), (8) increase market share, and (9) improving staff satisfaction (Speziale, 2015; Ginter, Duncan, and Swayne, 2018).
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Healthcare organizations involved in mergers and acquisitions believe that hospital consolidation poses many benefits to not only the business and operations (i.e., operating cost reductions through economies of scale and scope) but also to patients and their communities (i.e.,
improve efficiency and access to care and quality of care at reduced costs) (Curfman, 2015; Ferrier and Valdmanis, 2004; Harris et al., 2000). However, research (from studies conducted by Harvard University, American Hospital Association, and many others) shows that healthcare industry mergers and acquisitions can have both a positive and negative impact on hospital performance, the quality of patient care, patient experiences, patient care coordination, patient outcomes (readmission and mortality rates after discharge), clinical process, and price of services
(Zulick, 2020). Evidence-Based Strategies
Evidence-based strategies are used to (1) enhance the skills and knowledge of the
healthcare providers in the organization and (2) solve decision-making problems in healthcare
organization (Echevarria et al., 2007). Evidence-based strategies are necessary to move a
healthcare organization from the “What will we do?” phase to the “How do we do it to achieve
the desired outcome?” which leads us to our evidence-based solutions to address organizational
challenges and opportunities in a dynamic environment (Schipper et al., 2015). In today’s
competitive and dynamic environments, evidence-based strategies need to be developed for
NewYork-Presbyterian (NYP) to maximize the potential it has identified from merger and
acquisition (M&A) – i.e., to improve patient care quality and outcomes and financial
sustainability outcomes. In M&A, it is critical to have a compelling strategic rationale and strong
pre- and post-deal management (i.e., proper integration planning and execution). Additionally, it
is critical to document the necessary strategies and initiatives that will help realize NewYork-
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Presbyterian’s (NYP) overall goal. From both the PESTLE analysis and Market Data analysis, it
is evident that competition (from consolidation and new market entrants) and technology
(particularly that digital transformation of healthcare) from external macro-environmental factors
are the main aspects that could directly affect NYP’s business operations, functions and financial
performance, impacting its ability to provide accessible, affordable, scalable and sustainable care
for patients. NYP should embrance competition and techological advances to drives relentless
improvements in access, quality and cost. Below are three evidence-based, innovative strategies
(which are interconnected and interdependent) to address NYP’s organizational challenges and
opportunities in a dynamic environment, allowing NYP to exploit all opportunities and mitigate
the threats or challenges it may face. These will be critical to ensure NewYork-Presbyterian’s
provide its patients and communities with high-quality, convenient and cost-effective care. 5.
During both integration and transformation phase, ensure that NewYork-Presbyterian
(i.e., the acquiring hospital) both transfers and receives managerial, clinical, operational
and technological expertise (at least 50%) to ensure that access, affordability, quality, and
experience are all improved. This will increase HYP’s changes to attract patients into
their ecosystem (versus the competition)—in a sense, encouraging patients to think of
NYP health system first for all their healthcare needs (i.e., provide a one-stop shop – in
term of breadth and scale – for the entirety of a patient’s healthcare encounters). 6.
Improve operational efficiencies associated with economies of scale, reduced administrative and overhead costs, improved integration of care, reduction or elimination of redundant services, shared costs for expensive IT infrastructures and purchasing, access to a robust network of system resources, equipment and facility upgrades to reduce
hospital operating costs (by 15%−30%) – savings that accrue need to be passed on to
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patients and their health plans, translating into average price decreases of hospital/medical services (by 6%−18%). In a competitive marketplace (where consolidation is increasing due to rising levels of M&A’s), taking a coalition approach (1)
helps NYP ensure the most efficient use of resources, (2) enables NYP to provide better patient care and service, achieve operational efficiencies, decrease patient care cost, and achieve differentiation, and (3) help fuel innovation and drive value-based care.
7.
Increase the quantity of care, enhance access to care (i.e., breadth of services), and
improve quality of care across the full continuum of care (by updating clinical operations
across a health system, implementing consistent best practices and enhancing the promise
of technology and data analytics), but decrease costs (due to increased scale). This will
enable NYP to deliver (1) broad access to health services, (2) high quality and efficiency
in the delivery of health services, and (3) match (and exceed) the level of competition to
the nature of the health services to improve health outcomes, while improving quality of
care and controlling costs.
Evidence-Based Recommendations
Below are specific recommendation solutions (based on relevant, sound, logical, and credible evidence) for each of the three evidence-based, innovative strategies identified to address the specific organizational challenges and opportunities that I originally identified.
Having a strategic integration planning and execution plan that aligns with the transaction’s strategic rationale (i.e., ensure NewYork-Presbyterian’s provide its patients and communities with high-quality, convenient, and cost-effective care) is critical are key success drivers for M&A transactions. Post-merger success will require (horizontal and vertical) integration across the continuum, all overseen by an integration management office (IMO)
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comprised of senior executives whose roles are clearly defined, aligned and supportive of the NYP’s mission and vision. The IMO will be an essential component of integration to ensure the coverage of all the bases, and nothing slips through the cracks throughout the integration process.
The first step will be to complete a holistic diagnostic review to understand an organization’s current state, identify the priorities and opportunities for organizational integration based on a set
of criteria for desired state, and develop a strategic roadmap (i.e., coordinated, and prioritized guide) based on the organization’s criteria. Next, functional integration teams led by appropriate executives from each organization will plan, coordinate, and facilitate initiatives in each key functional area. It will be essential that NewYork-Presbyterian creates a business plan of operational efficiency (BPOE) to ensure the long-term viability of any M&A transactions. Each functional department will need to develop a plan (using Lean and Six Sigma tools or methods) to identify areas of opportunity to reduce costs, decrease waste, improve operational efficiency (i.e., throughput), increase productivity, and unlock capacity by standardizing policies, procedures, equipment, and supplies; optimizing staff resources; aligning contracted support services; and exploring group purchasing options. Once the functional departments identify these cost-saving opportunities, the financial team will need to assess the step-change improvement plans for short-term results and long-term sustainability and achievability, then allocate resources to the efforts.
NewYork-Presbyterian’s operations are complex, highly variable, and deeply interconnected systems. NewYork-Presbyterian will need to use data science (both descriptive and predictive analytics), machine learning (ML), artificial intelligence (AI), natural language processing (NLP) and deep learning (DL), and advanced optimization algorithms to significantly
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increase the quantity of care, enhance access to care, and improve quality of care across the full continuum of care for a lower cost. NewYork-Presbyterian will need to invest in a developing a data lake (to collect, store, process, and analyze big data), building data science, data platform engineer, data architect, and data visualization designer teams, and intelligent (cloud computing) solutions that will enable that to make better medical/clinical, operational, and financial decisions.
Conclusion
The US healthcare industry – which is a collection of disconnected components (health
plans, hospital systems, pharmaceutical companies, medical device manufacturers) – is going
through a period of transition and transformation, which brings organizational challenges and
opportunities inherent in this dynamic environment. Increasing pressure to provide great patient
care, maximize value for patients, and make its financial outcomes more sustainable and resilient
is driving healthcare providers like NewYork-Presbyterian to pursue mergers and acquisitions to
create operational, strategic, and financial value, while not straying away from the core of their
mission, vision, and strategies. To properly proceed through an M&A transaction, a full PESTEL
analysis was completed for NYP to help it understand and mitigate the external macro-
environmental factors that could impact its business operations, functions, and financial
performance. Additionally, three evidence-based, innovative strategies were developed to enable
NYP to exploit all opportunities and mitigate the challenges it may face in a dynamic
environment. NewYork-Presbyterian faces a choice in a dynamic, ever-changing healthcare
environment: transform to be part of the future or risk being left behind. NewYork-Presbyterian
could leverage M&A for growth and expansion to transform to a healthcare ecosystem providing
accessible, affordable, scalable, and sustainable care for patients for the entirety of their
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healthcare needs (i.e., overall wellness encompassing mental, social, emotional, physical, and
spiritual health).
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keys-to-strategic-thinking-for-health-care-ceos
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