The Ripple Effect of Consolidation: Q&A with Donna Padilla and Paul Bohne

During the past few years, healthcare has seen a significant spike in mergers and acquisitions, whether it’s small hospitals being acquired, or large health systems (and even payers) joining to form mega-sized organizations. Although this has meant more disruption for the industry, it has also presented new opportunities for growth, say Donna Padilla and Paul Bohne of Witt/Kieffer

Recently, healthsystemCIO.com spoke with Padilla and Bohne about what they expect to see in terms of consolidation in 2018 and beyond, the skillsets that will be in high demand, how CEOs and other leaders are looking to build internal pipelines, and what will be expected of CIOs in the future. They also talk about what the M&A trend means for independent hospitals and how some are looking to leverage partnerships to remain viable.

Kate Gamble:  2017 was a year that saw a great deal M&A, particularly with the recent or impending mergers of large organizations. How do you think this will impact the industry going forward?

Donna Padilla:  Continued consolidation will mean fewer but larger organizations with centralized operations and more complex and matrix-like structures. For executives, it can mean new opportunities but also disruption. Jobs are created while others are lost or changed. When positions are centralized or “systematized” it requires executives to re-evaluate their roles, their relationships with colleagues, and how they fit into their organizations as a whole.

 

Gamble:  Do you think this trend will continue in 2018 and beyond?

Padilla:  I do. The consolidation that’s happening goes beyond traditional mergers and acquisitions. Providers, insurers, and related organizations are looking for strategic partnerships to increase their patient bases, find efficiencies, and expand their offerings. (PwC’s 2018 healthcare trend report talks about the need for “cross-sector collaboration.”) This includes looking for ways to work more closely with traditional vendors and suppliers, as well as retail chains and even companies like Apple and Google who are focusing more on healthcare. From a technology perspective, consolidation makes sense to help drive opportunities related to data optimization, cost sharing, telehealth, precision medicine, and so on.

 

Gamble:  What new leadership roles do you believe might come about as a result of these mergers?

Paul Bohne:  New titles are cropping up all the time. We’re seeing more regional and system-level roles for certain functional areas and service lines. Jobs that would reflect this would be, for example, Regional Chief Executive or Regional Medical Officer, or titles such as System Chair, Oncology or CFO for Senior Care. One client recently created the role of Senior Vice President, Consumer Medicine and Innovation. In IT, titles that reflect consolidation include Associate CIO, Regional CIO, System Vice President, Technology, and System Chief Health Information Officer. Consolidation in IT is also giving rise to shared positions such as a Project Management Officer.

The career advice for executives is to pay attention to these changes. Your next job title might be something that you’ve never heard of before.

 

Gamble:  What trends do you think we’ll see with independent hospitals – do you see more of them looking to affiliate or form relationships that allow them to remain independent?

Bohne:  There are understandable reasons that some organizations want to remain independent — legacy missions and cultures are powerful, and relinquishing strategic control and local governance is a scary leap. There have been markets where the forces of payment change, increased competition, and consolidation have not been as accelerated – now all provider systems have felt that pace accelerate. Access to capital, leveraging IT platforms and expertise, and organizational scale and resources that support population health will continue to be drivers for those evaluating partnerships. In addition, interoperability of clinical information systems is an important consideration. In some cases, it may mean merging, in others it may be other partnership models.

Independent organizations are looking for creative partnerships that give them benefits and services they can’t manage or afford themselves. Many independent children’s hospitals and cancer centers are independent, for example, and have strong brands that allow them to succeed on their own, but they are still partnering with other care and service providers to extend the “continuum of care” and to take advantage of economies of scale and cost-sharing when possible.

 

Gamble:  What opportunities does consolidation present for physician and nursing leaders to advance in organizations?

Padilla:  Clinical leaders in general are in great demand because of the movement towards value-based and patient-centered care. Our firm is expanding to better support physician recruitment at the emerging leader level in addition to the most senior positions. And in speaking with Hillary Ross, who heads our Information Technology practice, I know that CMIOs, CNIOs, and other clinical IT leaders will continue to be in demand. Those are great fields to be in – MDs and RNs with expertise in IT (and of course the leadership skills mentioned above) will find plenty of career opportunities. Also in demand will be expertise in data analytics, biomedical and research informatics, precision medicine, and more.

 

Gamble:  How will organizations look to develop their own pipelines for leadership, rather than having to recruit from outside source?

Bohne:  We’re hearing directly from healthcare CEOs and CHROs that they are more concerned than ever about their internal talent pipelines for leadership, and that they are committing more resources to succession planning and talent recruitment. They’re offering leadership courses, coaching and mentoring, stretch assignments, etc. just to keep good people moving up in their organizations. Millennial executives in particular seem to value career growth opportunities. (See our recent survey report on millennial executives for more on this.) Some of the qualities that our clients tell us are increasingly important for executives include: adaptable, collaborative, communicative, emotionally intelligent, resilient, visionary. These have always been important, but they are critical now.

 

Gamble:  What are the key skill sets you believe CIOs will need to have to succeed in 2018 and beyond?

Bohne:  For CIOs specifically, the soft skills around leadership and vision are so important. We’ve spoken about this with Hillary and others in our IT practice. There is the expectation for CIOs and health IT leaders to be more strategic thinkers and advisors to their CEOs and boards. Technology is viewed as critical to enable the strategic goals of the organization. Thus, the CIO is a contributing leader who now sits at the senior leadership table. CIO roles are highly strategic as well as operational. The skill set for health IT leaders has grown to the point that the soft skills are just as important as the technical expertise in most roles.