Mergers and acquisitions (M&As) have become the norm in our industry. Most health systems and hospitals have been, or will soon be, involved in an M&A as we move into the era of “super IDNs.” At the end of the day, none of us are going to stop this activity from occurring, so what can we do to be successful?
During a panel discussion at the 2017 Healthcare Supply Chain Summit entitled, “What provider supply chain executives should know about M&As: The Good, Bad and Ugly,” three seasoned experts in healthcare M&As shared their best practices and lessons learned -Nancy LeMaster, VP of Supply Chain Transformation at BJC HealthCare; John Berger Executive Director of Finance Shared Services at Piedmont Healthcare; and Karl Blomback, Corporate VP for Hackensack Meridian Health.
What was evident from their presentation was the need for supply chain, accounts payable (AP) and finance to collaborate throughout the M&A process — from the due diligence phase on through integration and into post M&A activities, when in most cases the hardest work begins. Piedmont’s John Berger describes supply chain as “the tip of the spear.” He explains that if issues related to supply chain data, systems and processes are not addressed early on in the M&A planning, they will snowball and impact everything else downstream — through AP and into the general ledger. Berger urged supply chain teams to bring their financial counterparts with them on the M&A journey so that all parties can ask questions and help plan collaboratively for the future state of their organization.
Collaboration is a two-way street, so the AP and finance team must also be willing to share their insights and learnings with supply chain during the M&A process. Vendor spend was one area where Berger stressed the need for information sharing. Berger notes that when the AP team is analyzing the acquired or merged organization’s spend data, they must alert the supply chain team to any issues they uncover, such as vendor compliance issues or contract disputes, so that supply chain can plan accordingly.
Nancy LeMaster, from BJC Healthcare, urged organizations to not only look at data and technology but also people and processes. Ensuring that you consider corporate culture and change management as you evaluate the new organizations is a key success factor, according to LeMaster.
Hackensack’s Karl Blomback recommended reducing disparate systems wherever possible to reduce confusion. A single item master, billing master and charge master were instrumental in driving success within his organization. A strong focus on the item master was recommended by Blomback as it drives billing and revenue for hospitals.
Stay tuned for future blog posts on the role of supply chain in healthcare M&As. In the meantime, read Matt Houston’s blog post: Healthcare providers and suppliers: Your silos are costing you money to learn more about the importance of finance and supply chain collaboration.