Title of brochure
Provider Restructuring
Opportunities to Achieve
High Performance
2
Health care providers      increasing. States are
across the United States   mandating closures and
face harsh economic   ...
Accenture’s approach to provider
restructuring is grounded in a
fundamental philosophy—when
the condition is critical, the...
Providers’ distinctive                    optimization, operational focus             prevailing conditions, they cannot g...
Whatever restructuring choice or             3. Executing the restructuring plan
    choices prove to be appropriate, they...
Accenture works with clients to
identify restructuring options and
criteria for prioritization via a
thorough understandin...
Accenture helped guide the health
system’s management away from
potentially costly deals.




Market, operating and financ...
Figure 2. Overview of a typical provider restructuring program, including typical timelines
Estimated 3-6 Weeks           ...
Accenture worked with the health
system’s management to develop
and present a thorough review of
the situation, looking at...
These models are based on extensive
experience working with hospitals and
other health care organizations to
improve profi...
About the Accenture Institute                 About the Accenture Innovation                About Accenture
for Health & P...
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Accenture Innovation Center Health Provider Restructuring

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Accenture Innovation Center Health Provider Restructuring

  1. 1. Title of brochure Provider Restructuring Opportunities to Achieve High Performance
  2. 2. 2
  3. 3. Health care providers increasing. States are across the United States mandating closures and face harsh economic consolidations. Yet the realities. State and demand for patient federal reimbursement services of improved and special funding quality and at lower levels are being cut cost continues to grow. back. Competition from traditional and nontra- ditional providers is 3
  4. 4. Accenture’s approach to provider restructuring is grounded in a fundamental philosophy—when the condition is critical, the most powerful medicine available is the best prescription. To overcome such complex challenges and achieve high performance, providers need to consider new strategies and innovative approaches. Every aspect of provider operations—including strategy, finance, organizational struc- ture and services—can benefit from a thorough analysis to determine optimal approaches for moving forward. With market conditions so hostile that some providers are concerned about their very survival, it may not seem appropriate to focus on high performance. Yet Accenture’s approach to provider restructuring is grounded in a fundamental philosophy—when the condition is critical, the most powerful medicine available is the best prescription. 4
  5. 5. Providers’ distinctive optimization, operational focus prevailing conditions, they cannot grasp capabilities in achieving and market strategies. When these current and future opportunities. Their high performance factors work together, they drive actions are limited as they are uncer- For Accenture, the term high perfor- sustainable growth. tain where to refocus, how to change mance has a precise meaning: the or how to manage the potential upheav- enduring or sustained out-performance The research further shows that hospi- als of any significant action. It’s a set of an organization relative to ``its tals and hospital systems on the road of circumstances that all too easily can peers, across business and economic to achieving high performance have lead to business failure. cycles, often across generations of a strategic vision, a willingness to leadership, and as measured by widely embrace change and outstanding So in any hospital-in-crisis situation, accepted performance metrics. It’s a execution skills. there is a need to consider fundamen- definition demonstrated in reality, and tal strategic options, including a list tested and validated through ongoing Accenture professionals help providers of possible restructuring approaches: Accenture High Performance Business move toward these positive outcomes. consolidation, affiliation, merger, acqui- research. This insight is infused into sition, alliance and remissioning. This all of Accenture’s work with clients The pursuit of high last possibility refers to a situation where across multiple industries. performance the current operational purpose of a The volatile health care delivery and hospital unit or facility is no longer High Performance Business research funding environment means that pro- sustainable, but an alternative presents into the health care provider sector in viders can easily find themselves with a viable future. the United States reveals two funda- the need to restructure to address new mentals for success: improved patient market, economic or political conditions. outcomes and business excellence. When providers are out of sync with Improved patient outcomes are achieved through enhanced clinical quality and customer satisfaction. Improved busi- ness excellence comes from financial 5
  6. 6. Whatever restructuring choice or 3. Executing the restructuring plan choices prove to be appropriate, they Finally, Accenture professionals provide will essentially be a means to the same comprehensive support throughout the end—adding value to the enterprise and restructuring implementation phase: the stakeholders it serves. assessing readiness and establishing timelines; preparing communication Accenture helps US providers analyze plans; providing Project Management and make restructuring decisions, and Office support; and establishing track- then works with them to help them ing and measurement processes. achieve interim and long-term objec- tives by transforming the systems and Provider restructuring creates a transfor- processes that underlie every facet of mational route away from inappropriate their performance. strategies and blocked growth paths. Teaming with a provider, Accenture A typical provider restructuring project addresses the operation holistically to consists of three key phases: create an integrated series of solutions 1. Establishing the restructuring to help them move toward high framework performance. This means using the 2. Conducting the restructuring and three-phase restructuring sequence redesign planning to address strategies, structures and 3. Executing the restructuring plan other factors that contribute to per- formance in each domain and to the 1. Establishing the restructuring overall performance of the enterprise. framework During this phase, Accenture works The three phases of with clients to identify restructuring restructuring in action options and criteria for prioritization ”Unbundling“ a flagship hospital via a thorough understanding of inter- to enable it to succeed nal and external factors. The internal Due to a lack of clear corporate strate- analysis establishes the hospital’s finan- gic direction and funding, the flagship cial, strategic and operating goals. The hospital in a multi-hospital system saw external analysis evaluates current and its position diminishing, because it was future political, economic and market funding losses elsewhere. environments. From here, the team sets a guiding strategy. Throughout this Accenture professionals evaluated the phase, Accenture professionals facilitate impact of alternative operating struc- decision making and communication. tures on the flagship hospital’s market, operating and financial position; eval- 2. Conducting the restructuring uated various independent management and redesign planning and governance models; and modeled With a guiding strategy in place, the hospital’s financial performance Accenture provides tools to redesign as a stand-alone provider, including and refine the financial, strategic and determination of its financial rating. operational models associated with the recommended restructuring option. Figure 1 shows areas that are reviewed and assessed to create an appropriate operating model. This phase includes the identification of possible risks or barriers to progress, and relevant solutions. The Accenture team helps facilitate the required action plan and helps implement team development. 6
  7. 7. Accenture works with clients to identify restructuring options and criteria for prioritization via a thorough understanding of internal and external factors. Figure 1. Target operating model Organization/ Staffing Processes/ Customers/ Applications Markets Target Operating Model Facilities/ Products/ Locations Channels Technology Financials 7
  8. 8. Accenture helped guide the health system’s management away from potentially costly deals. Market, operating and financial anal- In the process of reviewing potential market with a key center of excellence yses indicated that the flagship hospital opportunities, Accenture was asked to in cardiac care. The other served a grow- could succeed as an independent pro- support the evaluation of a number of ing suburban/rural, mixed economic vider. So the Accenture team designed proposed deals. Accenture carried out market. Neither was meeting current a platform for its restructuring on that the financial modeling that included a or future strategic or financial goals. basis. Accenture then developed the cost-to-close analysis; an alternative Hospital officials wondered if a new hospital’s baseline strategic plan as an use analysis with a focus on remission- replacement site between the two exist- independent provider, prepared work ing to non-acute services; and a patient ing sites would support more modern plans for the restructuring and conver- migration analysis that determined the facilities and resources while continu- sion, supported external relationship contribution margin of potential volume ing to meet combined service needs. development, oversaw the transition of shifts from one facility to another. clinical and nonclinical operations and This initiative helped guide the health To help them determine the right strat- ran the Project Management Office. system’s management away from egy, Accenture conducted internal and potentially costly deals. external market analysis, defined the Evaluating deal options in a nature and characteristics of an opti- state-wide health care system Stay with two old facilities or build mum future operating model and A large integrated health care system one new one? prepared market demand models and recognized that opportunities existed It’s a familiar issue: long-established financial forecasts to test feasibility. to support and strengthen health care hospitals in antiquated facilities. in its state by reviewing the strategies Accenture professionals worked with A service-line model, site selection for acute care entities in its system. two hospitals in this situation. One model, and financial feasibility hospital served an urban, low-income model helped hospital officials decide on a future delivery model based on full information. 8
  9. 9. Figure 2. Overview of a typical provider restructuring program, including typical timelines Estimated 3-6 Weeks 2-6 Months 6-18 Months Timing: I. Establish Restructuring II. Conduct Restructuring III. Execute Restructuring Plan Framework and Redesign Planning Activities 1. Set Directional Strategy 1. Develop and Implement 11. Prepare Team Charters and 1. Commence Execution Phase 2. Conduct Portfolio Analysis Change of Control Priorities Key Decisions 2. Define and Implement 3. Undertake Market Projections 2. Identify Early Integration 12. Analyze and Define Target Readiness Assessment Program 4. Establish Financial Goals and Business Risks Operating Model 3. Deploy Employee Program 5. Define Top-Level NewCo 3. Undertake Cost-to-Close 13. Assess Gaps, Impacts and 4. Deploy Customer Program Leadership Analysis Interdependencies 5. Build Integrated Environment 6. Establish Operating 4. Conduct Alternative Uses 14. Develop Team-Level 6. Prepare Integration Events Benchmarking Analysis Integration Plans Program and Logistics 7. Prepare Financial Projections 5. Conduct Prioritization 15. Plan and Manage Customer 7. Test Integration 8. Plan Decision Criteria Analysis/Modeling Experience 8. Conduct Dress Rehearsals Development 6. Review Financial Scenarios 16. Plan and Manage Employee 9. Execute Integration Events 9. Establish and Launch 7. Conduct Capacity Planning Experience 10. Conduct Synergy Tracking Communications 8. Plan and Implement Synergy 17. Develop High-Level 11. Transition to Business-as- 10. Mobilize and Launch Management Organization Usual Program Management 9. Define and Implement Risk 18. Plan and Manage Culture 11. Develop Redesign Guiding Management Transition Principles 10. Create Integration Teams 19. Update Redesign Integration 12. Prepare High-Level Redesign Roadmap Integration Roadmap Program Management Office (PMO) Value Creation and Integration Enablement Teams 9
  10. 10. Accenture worked with the health system’s management to develop and present a thorough review of the situation, looking at numerous options to preserve health care in the community. Enabling objective decisions contribution margin analysis; a five- This end-to-end approach ensures around facility losses year P&L model for all entities including continuity throughout all stages of A regional health center, part of a a five-year cash flow analysis; and a the process, from diagnosis through to $2+ billion health system, had been cost-to-sell analysis. stakeholder management. Accenture sustaining losses of more than $10 professionals, onshore or offshore within million a year for the past 10 years. As a result of the findings, the health Accenture’s Global Delivery Network, Although it was a financial drain on system and the regional health center are cocreators who team with client the system, numerous stakeholders were able to make an objective decision personnel, listening as well as talking, felt that the health system’s mission to close the facility. Accenture contin- absorbing as well as imparting knowl- was to serve its community, therefore ues to work with the health system edge. The working relationships they the system should do everything pos- leadership as they move forward. build and the trust they earn produces sible, including supplementing a losing a solid, provider-wide alignment of entity, to preserve that mission. A collaborative approach strategic purpose and shared agreement All of Accenture’s provider restruc- around tactics and objectives. Accenture worked with the health turing activities are supported by deep system’s management to develop and industry knowledge about the US health A pragmatic approach present a thorough review of the situ- care environment and health care pro- Because the political, economic and ation, looking at numerous options to viders’ issues. As a restructuring project marketplace threats confronting health preserve health care in the community. moves from diagnosis, conceptual care providers are often dangerous and The options reviewed included a finan- planning and review of options, to urgent, Accenture has developed a num- cial and environmental overview of the implementation of redesigned organi- ber of models to fast-track the analyses last 10 years of operational performance; zational structures and capabilities, required to get to accurate diagnoses a cost-to-close analysis; an alternative Accenture professionals are able to and plans. use analysis; a patient migration and provide broad experience and relevant knowledge while working as committed members of a collaborative team. 10
  11. 11. These models are based on extensive experience working with hospitals and other health care organizations to improve profitability and market posi- tion by planning and implementing new organizational structures. The expertise includes first-hand experience of the end-to-end hospital remission- ing process, operational focus on the critical outcomes that help achieve high performance, and the proven ability to link restructuring with economic and market value. Accenture’s provider restructuring is a proven approach for providers to con- front and overcome many of today’s tough challenges. In addition, it is a highly focused approach to help pro- viders identify and implement future options that can create real and last- ing value. The result is that providers do more than just survive—they move toward high performance. 11
  12. 12. About the Accenture Institute About the Accenture Innovation About Accenture for Health & Public Service Value Center for Health Accenture is a global management The Accenture Institute for Health & The Accenture Innovation Center for consulting, technology services and Public Service Value is dedicated to Health provides innovative resources outsourcing company. Combining promoting high performance in the health and recommended actions for achieving unparalleled experience, comprehensive care sector and in public service delivery, high performance in the health care capabilities across all industries and busi- policy-making and governance. Through industry. The Center, part of the Accenture ness functions, and extensive research research and development initiatives, Institute for Health & Public Service on the world's most successful compa- the Institute aims to help health care Value, produces industry-leading white nies, Accenture collaborates with clients and public service organizations deliver papers and hosts engaging client to help them become high-performance better social, economic and health workshops and roundtable discussions. businesses and governments. With outcomes for the people they serve. Its The Accenture Innovation Center for approximately 177,000 people serving home page is www.accenture.com/ Health, combined with Accenture's clients in more than 120 countries, the healthpublicservicevalue. deep health industry experience, offers company generated net revenues of exceptional reach, speed and flexibility US $21.58 billion for the fiscal year to help clients achieve high performance. ended August 31, 2009. Its home Its home page is www.accenture.com/ page is www.accenture.com. innovationcenterforhealth. To find out more about how provider restructuring can help your organiza- tion achieve high performance, please contact: Joe Lemaire +1 973 301 6280 joseph.m.lemaire@accenture.com John Strauss +1 312 693 4368 john.h.strauss@accenture.com Roger Allaire +1 617 488 7825 roger.allaire@accenture.com Jim Pizzo +1 312 693 4564 james.j.pizzo@accenture.com Dave Gaydosh Copyright © 2008, 2009 Accenture +1 917 452 4090 All rights reserved. david.p.gaydosh@accenture.com Accenture, its logo, and High Performance Delivered are trademarks of Accenture.

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