Creative Partnerships Mike Zdrodowski


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Benefits of a nonprofit board of directors establishing creative partnerships - presentation from the 2009 MPCA Annual Conference.

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Creative Partnerships Mike Zdrodowski

  1. 1. A Walk in the Wilderness Exploring the “River of Doubt” Linda Shively, President & CEO, Baldwin Family Health Care John MacLeod, President & CEO, Mercy Hospital – Cadillac Mike Zdrodowski, COO, Baldwin Family Health Care 231-745-2743 [email_address]
  2. 2. …in 2005 <ul><li>Baldwin Family Health Care </li></ul><ul><li>Lake and Newaygo </li></ul><ul><li>2005 budget of $14.3 million </li></ul><ul><li>Medical, dental, behavioral health and supportive services </li></ul><ul><li>100,000 encounters </li></ul><ul><li>FQHC since 1967 </li></ul>
  3. 3. …in 2005 <ul><li>Wexford Medical Group </li></ul><ul><li>Wexford and Missaukee </li></ul><ul><li>2005 budget of $11.4 million </li></ul><ul><li>Medical and specialty care </li></ul><ul><li>Ancillary services </li></ul><ul><li>50,000 encounters </li></ul><ul><li>RHC owned by hospitals since 1999 </li></ul>
  4. 4. Statement of Purpose and Expected Outcomes <ul><li>The Mercy Hospital Cadillac Board of Trustees evaluated strategic options related to the employed physician network. </li></ul><ul><li>This advisory group was formed to review the available options, to assess the associated benefits and risks from the hospital and the community perspective, and to obtain input and/or commitments from the relevant parties. </li></ul><ul><li>A recommendation will be made to the Board as to which option best fulfills the mission purpose and the financial requirements of Mercy Hospital Cadillac. </li></ul>
  5. 5. WMG performance mandates <ul><li>Clear direction has been given by the sponsor organizations that WMG must operate at breakeven. </li></ul><ul><li>There are two constants that must be observed in achieving this mandate: </li></ul><ul><ul><li>WMG must continue its open access policy. </li></ul></ul><ul><ul><li>WMG will receive no additional funding from the sponsors. </li></ul></ul>
  6. 6. Organization structure options <ul><li>Private practice model </li></ul><ul><ul><li>Convert the group to physician ownership </li></ul></ul><ul><li>Employed model </li></ul><ul><ul><li>Maintain current structure and relationship </li></ul></ul><ul><li>Federally Qualified Health Center model </li></ul><ul><ul><li>Obtain designation as federal grantee </li></ul></ul>
  7. 7. …we knew going into this… <ul><ul><li>Consistently high rate of merger and acquisition failure. Studies 30-40%, 60-70% </li></ul></ul><ul><ul><li>The risk of this partnership failing because the cultures of the partners could be incompatible </li></ul></ul><ul><ul><li>The process of combining is costly, complex and time consuming </li></ul></ul><ul><ul><li>Management would have to devote substantial efforts to the integration in addition to spending time on regular operational matters or other strategic opportunities </li></ul></ul>
  8. 8. <ul><li>Seeking partners, growth and the acquisition process was not new for Family Health Care. </li></ul><ul><ul><ul><li>1988 Baldwin Teen Health Center </li></ul></ul></ul><ul><ul><ul><li>1989 White Cloud -- Benson site </li></ul></ul></ul><ul><ul><ul><li>1999 Ashby Center </li></ul></ul></ul><ul><ul><ul><li>2000 White Cloud -- Wilcox Site </li></ul></ul></ul><ul><ul><ul><li>2002 White Cloud Pharmacy </li></ul></ul></ul><ul><ul><ul><li>2004 Grant site purchased </li></ul></ul></ul><ul><ul><ul><li>2005 New Grant site opened </li></ul></ul></ul><ul><ul><ul><li>2007 Great Lakes Family Care (Cadillac/McBain) </li></ul></ul></ul><ul><ul><ul><li>2009 White Cloud Teen Health Center </li></ul></ul></ul>
  9. 9. <ul><li>Pre-Conditions </li></ul><ul><ul><li>We believed that new challenges in a changing environment were on the horizon –shrinking resources, new market demands, and different patient needs. </li></ul></ul><ul><ul><li>Family Health Care was determined not to spend it’s share of the Community Choice Michigan “wind fall” but was determined to invest it in our future. </li></ul></ul><ul><ul><li>Board completed a similar due diligence and analysis stage described by Munson/Trinity and decided our investment in the future would be a partnership with Great Lakes Family Care. </li></ul></ul><ul><ul><li>The model of partnership that made sense for both parties was the acquisition model. </li></ul></ul>
  10. 10. <ul><li>This partnership was different from our past history: </li></ul><ul><ul><ul><li>Large (gaining 150+ employees) </li></ul></ul></ul><ul><ul><ul><li>Not a “fire sale” </li></ul></ul></ul><ul><ul><ul><li>Both organizations had long organizational histories (40 years and 20+ years) </li></ul></ul></ul><ul><ul><ul><li>Both organizations had deeply imbedded, strong cultures </li></ul></ul></ul><ul><ul><ul><li>Geographic challenges – Cadillac is 45 miles from Baldwin and the workforce is spread across 95 miles and eleven locations </li></ul></ul></ul><ul><ul><ul><li>Initially the HRSA Project Officer was concerned due to history of other health center failures with acquisitions </li></ul></ul></ul>
  11. 11. <ul><li>Despite these challenges, </li></ul><ul><li>we embarked on the adventure! </li></ul>
  12. 12. <ul><li>Corporate Culture </li></ul><ul><ul><ul><li>Common beliefs, values, tradition and world view </li></ul></ul></ul><ul><li>Creation of a sustainable joint corporate culture plays a decisive role in the success of a partnership </li></ul><ul><ul><ul><li>Meshing two corporate cultures may be the biggest challenge in any integration </li></ul></ul></ul><ul><ul><ul><li>Key task is convincing the involved employees of the strategic reasoning for the partnership </li></ul></ul></ul><ul><ul><ul><li>Integration processes are associated with hardship for individual employees </li></ul></ul></ul>
  13. 13. <ul><li>Communication </li></ul><ul><ul><ul><li>“ Always in the wilderness, friends proclaim their presence; a silent advance marks a foe” </li></ul></ul></ul><ul><ul><ul><li>Signaling cooperative intentions is crucial to understanding the other side’s perceptions, avoiding hostile assumptions and making early agreements that become the foundation for trust </li></ul></ul></ul><ul><ul><ul><li>In nearly every study of failed mergers or alliances, miscommunication or lack of communication is one of the primary culprits </li></ul></ul></ul><ul><ul><ul><li>Effective communication is vital in a major change initiative </li></ul></ul></ul><ul><ul><ul><li>Support through training and accountability </li></ul></ul></ul>
  14. 14. <ul><ul><ul><li>Communications Plan </li></ul></ul></ul><ul><ul><ul><li>A. All-staff meeting </li></ul></ul></ul><ul><ul><ul><li>B. Weekly Updates </li></ul></ul></ul><ul><ul><ul><ul><li>1. Transition Team Info </li></ul></ul></ul></ul><ul><ul><ul><ul><li>2. Leadership Open Letter </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>a. Q&A Process </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>b. Plan for Face Time </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>-Why did we do this? </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>-Jobs – still have one? </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>- Who’s my boss? </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>- Time frame </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>- Work groups </li></ul></ul></ul></ul></ul>
  15. 15. <ul><ul><ul><li>C. Leadership Road Show </li></ul></ul></ul><ul><ul><ul><li>D. Patients & Community </li></ul></ul></ul><ul><ul><ul><ul><li>1. Enhanced Benefits to Patients </li></ul></ul></ul></ul><ul><ul><ul><ul><li>2. Media </li></ul></ul></ul></ul><ul><ul><ul><li>E. Employee Focus Groups </li></ul></ul></ul><ul><ul><ul><li>F. Board Communications (Talking Points) </li></ul></ul></ul>
  16. 16. Diffusion of Ideas Not Static! Synergy
  17. 17. Ingredients Needed to Merge Two Cultures <ul><li>1. Emphasize complementary strengths </li></ul><ul><li>Integration stage – when shifting, focus on resources and don’t forget the reasons behind the partnership – combining the strengths of each partner </li></ul><ul><li>Concentrate on integrating the best aspects of each partner not arguing over whose way of doing things is better – find common ground </li></ul><ul><li>Leadership must constantly emphasize the strengths of each organization if they expect their direct reports to do the same </li></ul><ul><li>Emphasize new possibilities and new perspectives --- vision for the future </li></ul>
  18. 18. <ul><li>2. Common Mission </li></ul><ul><li>Engagement of all staff in the newly emerging organization and mission </li></ul><ul><li>Our strategy: Development of corporate values that are used as behaviors to accomplish the mission and vision ---all staff participated – all generated ideas of ideal organization, drilled down to common themes, themes identified as values, then established as corporate values. </li></ul>
  19. 19. <ul><li>3. Realignment of roles and responsibilities </li></ul><ul><ul><li>Issues of how to divide work and power are complex </li></ul></ul><ul><ul><li>Better to hammer out agreements about the division of responsibilities beforehand, then live up to those commitments </li></ul></ul>
  20. 20. <ul><li>4. Trust </li></ul><ul><ul><li>Any time two groups are brought together, both must juggle competing loyalties, distinct cultures, and lack of rapport at the same time that the workload increases because of the integration </li></ul></ul><ul><ul><li>Trust does not exist between organizations, it occurs between people </li></ul></ul><ul><ul><li>Trust can be established only through experience and time when people take pains to ensure that they deliver what the other expects </li></ul></ul><ul><ul><li>Time must be provided so trust can flourish </li></ul></ul>
  21. 21. <ul><li>5. Acceptance </li></ul><ul><ul><ul><li>In a partnership between two organizations, both must accept the uniqueness of the other organization and the differences from each other </li></ul></ul></ul><ul><ul><ul><li>If either partner cannot comprehend that its way of doing business is not the only way and appreciate the approach of the other organization, the resulting friction will doom the combination </li></ul></ul></ul><ul><ul><ul><li>The partnership is strengthened by honoring traditions while “taking leave of some things” </li></ul></ul></ul><ul><ul><ul><li>Issues of grieving and loss of prior organization and work life </li></ul></ul></ul>
  22. 22. <ul><li>6. Forgiveness </li></ul><ul><ul><ul><li>In most successful partnerships, both sides work intensely to fulfill their end of the deal </li></ul></ul></ul><ul><ul><ul><li>But in reality neither partner full understands what it’s getting itself into </li></ul></ul></ul><ul><ul><ul><li>Rarely does the collaboration play out exactly as it was envisioned </li></ul></ul></ul><ul><ul><ul><li>There will be mistakes </li></ul></ul></ul><ul><ul><ul><li>Whether those mistakes are greeted with recriminations or flexibility could determine whether the partnership gets bogged down, reach it’s full potential or fails </li></ul></ul></ul>
  23. 23. <ul><li>7. Unselfishness </li></ul><ul><ul><ul><li>Unselfishness means doing what’s best for the organization (patients) regardless of the consequences for a particular department or individual, i.e., transfer of resources to a different department </li></ul></ul></ul><ul><ul><ul><li>Be alert for “turf protection” not in line with the best interests of the new organization </li></ul></ul></ul><ul><ul><ul><li>Role modeling – leaders who are poor partners themselves do nothing to inspire collaboration in their followers </li></ul></ul></ul>
  24. 24. <ul><li>Without these ingredients, partnerships that began as a “merger of equals” or a building of “strength upon strength” can degenerate and distract from the business at hand. As with a partnership between two people, an organizational alliance that lacks these key elements is worse than no alliance at all. </li></ul>