Creative Partnerships Mike Zdrodowski

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]

…in 2005
Baldwin Family Health Care
Lake and Newaygo
2005 budget of $14.3 million
Medical, dental, behavioral health and supportive services
100,000 encounters
FQHC since 1967

…in 2005
Wexford Medical Group
Wexford and Missaukee
2005 budget of $11.4 million
Medical and specialty care
Ancillary services
50,000 encounters
RHC owned by hospitals since 1999

Statement of Purpose and Expected Outcomes
The Mercy Hospital Cadillac Board of Trustees evaluated strategic options related to the employed physician network.
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.
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.

WMG performance mandates
Clear direction has been given by the sponsor organizations that WMG must operate at breakeven.
There are two constants that must be observed in achieving this mandate:
WMG must continue its open access policy.
WMG will receive no additional funding from the sponsors.

Organization structure options
Private practice model
Convert the group to physician ownership
Employed model
Maintain current structure and relationship
Federally Qualified Health Center model
Obtain designation as federal grantee

…we knew going into this…
Consistently high rate of merger and acquisition failure. Studies 30-40%, 60-70%
The risk of this partnership failing because the cultures of the partners could be incompatible
The process of combining is costly, complex and time consuming
Management would have to devote substantial efforts to the integration in addition to spending time on regular operational matters or other strategic opportunities

Seeking partners, growth and the acquisition process was not new for Family Health Care.
1988 Baldwin Teen Health Center
1989 White Cloud -- Benson site
1999 Ashby Center
2000 White Cloud -- Wilcox Site
2002 White Cloud Pharmacy
2004 Grant site purchased
2005 New Grant site opened
2007 Great Lakes Family Care (Cadillac/McBain)
2009 White Cloud Teen Health Center

Pre-Conditions
We believed that new challenges in a changing environment were on the horizon –shrinking resources, new market demands, and different patient needs.
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.
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.
The model of partnership that made sense for both parties was the acquisition model.

This partnership was different from our past history:
Large (gaining 150+ employees)
Not a “fire sale”
Both organizations had long organizational histories (40 years and 20+ years)
Both organizations had deeply imbedded, strong cultures
Geographic challenges – Cadillac is 45 miles from Baldwin and the workforce is spread across 95 miles and eleven locations
Initially the HRSA Project Officer was concerned due to history of other health center failures with acquisitions

Despite these challenges,
we embarked on the adventure!

Corporate Culture
Common beliefs, values, tradition and world view
Creation of a sustainable joint corporate culture plays a decisive role in the success of a partnership
Meshing two corporate cultures may be the biggest challenge in any integration
Key task is convincing the involved employees of the strategic reasoning for the partnership
Integration processes are associated with hardship for individual employees

Communication
“ Always in the wilderness, friends proclaim their presence; a silent advance marks a foe”
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
In nearly every study of failed mergers or alliances, miscommunication or lack of communication is one of the primary culprits
Effective communication is vital in a major change initiative
Support through training and accountability

Communications Plan
A. All-staff meeting
B. Weekly Updates
1. Transition Team Info
2. Leadership Open Letter
a. Q&A Process
b. Plan for Face Time
-Why did we do this?
-Jobs – still have one?
- Who’s my boss?
- Time frame
- Work groups

C. Leadership Road Show
D. Patients & Community
1. Enhanced Benefits to Patients
2. Media
E. Employee Focus Groups
F. Board Communications (Talking Points)

Diffusion of Ideas Not Static! Synergy

Ingredients Needed to Merge Two Cultures
1. Emphasize complementary strengths
Integration stage – when shifting, focus on resources and don’t forget the reasons behind the partnership – combining the strengths of each partner
Concentrate on integrating the best aspects of each partner not arguing over whose way of doing things is better – find common ground
Leadership must constantly emphasize the strengths of each organization if they expect their direct reports to do the same
Emphasize new possibilities and new perspectives --- vision for the future

2. Common Mission
Engagement of all staff in the newly emerging organization and mission
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.

3. Realignment of roles and responsibilities
Issues of how to divide work and power are complex
Better to hammer out agreements about the division of responsibilities beforehand, then live up to those commitments

4. Trust
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
Trust does not exist between organizations, it occurs between people
Trust can be established only through experience and time when people take pains to ensure that they deliver what the other expects
Time must be provided so trust can flourish

5. Acceptance
In a partnership between two organizations, both must accept the uniqueness of the other organization and the differences from each other
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
The partnership is strengthened by honoring traditions while “taking leave of some things”
Issues of grieving and loss of prior organization and work life

6. Forgiveness
In most successful partnerships, both sides work intensely to fulfill their end of the deal
But in reality neither partner full understands what it’s getting itself into
Rarely does the collaboration play out exactly as it was envisioned
There will be mistakes
Whether those mistakes are greeted with recriminations or flexibility could determine whether the partnership gets bogged down, reach it’s full potential or fails

7. Unselfishness
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
Be alert for “turf protection” not in line with the best interests of the new organization
Role modeling – leaders who are poor partners themselves do nothing to inspire collaboration in their followers

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.

Creative Partnerships Mike Zdrodowski

by MPCA on Sep 30, 2009

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Creative Partnerships Mike Zdrodowski — Presentation Transcript