“We have a collaborative culture; it’s one of our system’s core values. But it takes us far too long to make decisions.” A health system CEO made this comment at a recent meeting, giving voice to a dilemma many system executives are no doubt facing. Of course, leaders want their teams to collaborate—in any important decision, we want to hear different voices, consider diverse points of view, and incorporate various areas of expertise.
On the other hand, collaboration takes time, which we don’t have right now.It also can add complexity, be the enemy of clear direction, and muddy accountability. This CEO went on to make an essential connection: “My concern is that this protracted decision making isn’t just a process problem, but that it’s showing up in our results.
Take performance improvement—we all quickly agreed we need to cut costs, but it’s taking far too long for us to act, and I fear we’ll have trouble holding the new line over time.” She further mused
“I wonder if this problem is, at least in part, due to how we make decisions. We don’t make them quickly enough, they aren’t clear enough, and we don’t have the most effective system of accountability.”
On one hand, traditional hospital culture is rightly grounded in the safety, hierarchy, and tradition of a do-no-harm world. But on the other hand, today’s economic, technological, and competitive environments require an approach to operations, revenue, and growth that has the aggressiveness of a Fortune 50 company. This should not be an either-or situation. Health systems can uphold a culture of safety while also fostering nontraditional values that will drive the organization assertively toward the future – all while committing to change.
Big, industry-shaking acquisitions including Oakland, Calif.-based Kaiser Permanente’s purchase of Danville, Pa.-based Geisinger, could redefine healthcare delivery with an eye toward value. Regional deals, such as Detroit-based Henry Ford Health’s planned joint venture with Ascension Michigan and St. Louis-based BJC HealthCare’s plan to acquire Saint Luke’s Health System to create a $10 billion organization, have also made waves.
There were 18 hospital and health system transactions announced in the third quarter, up from 10 transactions over the same time period in 2022, according to Kaufman Hall’s third quarter M&A report. Financial pressures with inflation catapulting staffing and supply costs, and reimbursement rates growing much more slowly, have forced some systems to look for a buyer while others aim to increase market share.
Academic health systems are also seeking community partners at a higher rate than in the past, according to the Kaufman Hall report.
But not all announced deals have gone according to plan.
The Federal Trade Commission is scrutinizing deals more closely than ever before to ensure costs don’t increase after an acquisition in some cases. In other cases, the two partners aren’t able to agree upon the details after announcing their plans. The dissolved merger between Sioux Falls, S.D.-based Sanford Health and Minneapolis-based Fairview Health Services fell apart amid contention in Minnesota, and West Des Moines, Iowa-based UnityPoint Health’s plans to merge with Presbyterian Healthcare Services in Albuquerque, N.M., was halted without a publicly stated reason.
Will there be more or fewer health system deals in the next three years?
Seth Ciabotti, CEO of MSU Health Care at Michigan State University in East Lansing, thinks so, at least when it comes to academic medical centers.
“There will be more consolidation to mitigate risk,” he told Becker’s. “I believe we are heading down a path of having only a dozen or so non-academic medical centers/health systems being left in the near future in the U.S.”
Mark Behl, president and CEO of NorthBay Health in Fairfield, Calif., has a similar outlook for the next three years.
“I suspect we will see more mergers and acquisitions with a continued desire to grow larger and remain relevant,” he told Becker’s. “Independent regional health systems will fight for relevance, and sometimes survival.”
And health systems won’t be the only buyers. Private equity, health insurers and non-traditional owners are on the hunt for health systems. General Catalyst has strengthened its healthcare presence recently and announced it plans to acquire a system in the near future.
“I believe that over the next three years, the landscape of acquisitions, divestitures and joint ventures will continue to reshape the healthcare industry,” said Dennis Sunderman, system director of HR M&A, non-employee and provider services at CommonSpirit Health, told Becker’s. “Current and proposed legislation, the continued evolution of ownership groups, nonprofit, for profit, and private equity, and the drive to hire and retain exceptionally talented teams, will lead to new innovations and an enhanced focus on the associates affected by the transaction.”
Health systems will need to optimize their operations to expand their value-based care efforts and digital transformation, including telehealth and remote patient monitoring services. Not all systems have the expertise and resources to fully make this transition, but with the right partners and strategic alignments, they can accelerate care transformation.
“There will likely be more collaborations and partnerships to expand services and increase access versus brick and mortar acquisitions,” said Cliff Megerian, MD, CEO of University Hospitals in Cleveland. “Innovative thinking is critical for success and quite frankly survival in our industry, so health systems should already be investing in growing in-house expertise dedicated to ideating new models of care, but in three years, these efforts should be producing tangible results.”
Michelle Fortune, BSN, CEO of Atrium St. Luke’s Hospital in Columbus, N.C., pointed to recent collaborations between Mercy, Microsoft and Mayo Clinic as examples of how health systems can partner on important initiatives such as improved data sharing, generative AI, digital transformation and more.
“I expect to see an increase in collaborations and connections between health systems to a degree that has never existed before as part of the focus on bringing the right care to people across the full continuum, when and where they need it,” she said.
Kaufman Hall sees more minority ownership deals ahead, which allows the smaller system to maintain near-autonomy while benefiting from the resources of a larger system.
“Health systems are also engaging in creative transaction structures that allow partners to maintain their independence while building strategic alliances that enhance access to care,” the report notes. “Announced transactions in Q3 included [Charlottesville, Va.-based] UVA Health’s acquisition of 5% ownership interest in [Newport News, Va.-based] Riverside Health System as part of a strategic alliance design ‘to expand patient access to innovative care for complex medical conditions, transplantation, and the latest clinical trials.'”
The nation’s largest retailer and its largest insurer announced a 10-year partnership to bring together the collective expertise of both companies to provide affordable healthcare to potentially millions of Americans. Set to start next year with 15 Walmart Health locations in Georgia and Florida, the collaboration will initially focus on seniors and Medicare Advantage (MA) beneficiaries, and will include a co-branded MA plan in Georgia. Walmart Health Virtual Care will also be in-network for some UnitedHealthcare beneficiaries. Plans for future years involve expanding the collaboration across commercial and Medicaid plans, as well as including pharmacy, dental, and vision services.
The Gist: We have long wondered if this powerhouse pairing was in the works, as this kind of partnership makes a lot of sense for both parties. While Walmart has reportedly been considering an insurance company acquisition for years, and more recently been dabbling in its own insurance efforts, partnering with UHG provides the retailer with a share of the upside potential of getting into the insurance market without having to fully commit to entering that complex business. And given that 90 percent of Americans live within 10 miles of a Walmart store, and more than half of Americans visit a store every week, Walmart provides UHG with low-cost healthcare access points all over the country, especially important in markets where United’s own Optum physician network is not (yet) present.
IS YOUR CULTURE holding you back? Are the signals you are broadcasting as a leader, creating the culture you want—you need?
Culture experts Jeff Grimshaw, Tanya Mann, Lynne Viscio, and Jennifer Landis say in Five Frequencies that to make a good culture great, leaders must deliberately transmit strong and steady signals. Leaders create culture for better or worse, through the signals they are consciously or unconsciously broadcasting over five frequencies. To change a culture, you need to broadcast a strong, steady signal on each of these frequencies:
Their Decisions and Actions
Example is everything—especially when it is inconvenient and costs you something. If it is truly a “value,” what are you willing to pay for it? Think in the long-term. “Go long-term greedy.” “This can mean avoiding ethical shortcuts, hiring people smarter than you, delegating more, and helping prepare high performers for success beyond your team.”
What They Reward and Recognize
Reward the behaviors you want to see more of. “You are responsible for the dysfunctional behaviors that so bother you.” Everyone brings their emotions to work. “Understand and leverage the emotional algorithms that motivate your people.” Understand that it is all relative, scarcity and timing matter, and everyone appreciates being appreciated.
What They Tolerate (Or Don’t)
“Leaders are ultimately defined by what they tolerate.” Be sure the boundaries are clearly defined as well as the consequences. And don’t make excuses because you don’t want to feel bad or you can’t hold a particular star performer accountable, or because it’s really no big deal. It’s all-important, and consistency is vital.
What you tolerate or don’t tolerate is a balance. “When you decide to become more tolerant of some things (like where people work), you must become, if anything, less tolerant of other things (like the work not getting done). As Harvard professor Gary P. Pisano puts it:”
A tolerance for failure requires an intolerance for incompetence. A willingness to experiment requires rigorous discipline. Psychological safety requires comfort with brutal candor. Collaboration must be balanced with individual accountability.
How They Show Up Informally
When you show up, you “bring the weather.” People notice a leader’s tone, mood, and focus. They are weather in any organization. What do kind of weather do you bring?
When considering how you show up, the authors advise you to relinquish your raft. They introduce the concept with a story:
A traveler on an important journey comes to a raging river. It seems there’s no way to cross. And that’s terrible news because this is an important journey. Fortunately, she spots a rickety old raft on the bank, off in the brush. With trepidation, she pushes the raft into the water, hops on, and amazingly, uses it to reach the other side. She’s able to continue her important journey. She thinks: I may encounter other raging rivers down the path, so I must keep this raft. So she carries the raft on her back as she continues her journey. It’s a heavy raft, and it slows her down. When fellow travelers point this out, she’s incredulous: “You don’t understand,” she says. “If it wasn’t for this raft, I wouldn’t be where I am today!” And she’s right. That’s literally true. The problem is: If she doesn’t put down the raft, she may not get to where she needs to go on her important journey.
It’s your baggage. It’s your reactive tendencies that may have worked for you in the past that are no longer getting you where you need to be. Reactive tendencies like going with the flow, control, the need to be the hero, or being overly protective of your ego, eventually bring you diminishing returns.
Their Formal Communications
Formal communications don’t work on their own, but they serve to reinforce the other four frequencies. Approach your communications as a story to make it memorable. And say it over and over. “Go past the puke point because that’s often the turning point where employees are just starting to truly get it.”
Have a backstory. Know where you came from. “Look for stories of people demonstrating the behavior you want to see more of, especially when it’s not easy for them to do so.” Fill the communication vacuums. “Don’t push your people to the black market.”
Know, Feel, Do
To establish a reliable culture, you need to measure where you are and where you need to go. The authors call it Know, Feel, Do: what employees know, what they feel, and what they do.
The authors advise us to work backward and forwards. Looking forward, they ask, “What is the culture that makes this outcome possible and probable? What will employees consistently KNOW? FEEL? DO?” Looking at each of the five signals, what will you need to broadcast to your employees in each of the five signal areas?
It is also necessary to look backward and see where your current culture came from. What did each of the signals contribute to your current culture? It will help you to know what to change in order to close the gap from where to are to where you want to be.
Vaccines from the U.K., U.S. and China are sprinting ahead in a global race that involves at least 197 vaccine candidates and is producing geopolitical clashes even as it promises a possible pandemic escape route.
Driving the news: The first two candidates to reach phase three trials — one from the University of Oxford and AstraZeneca, the other from China — both appear safe and produce immune responses, according to preliminary results published today in The Lancet.
A vaccine from Moderna, the U.S. biotech firm, is heading into phase three trials after similarly encouraging initial results.
There are at least 16 other vaccines currently in clinical trials in Australia, France, Germany, India, Russia, South Korea, the U.K., the U.S. and China, which is experimenting with a variety of vaccine types and has five candidates already in trials.
What they’re saying: Experts are increasingly confident that it’s no longer a question of if but when vaccines will be available.
“Absolutely, for sure, we will get more than one vaccine,” Barry Bloom, a professor of public health at Harvard, told reporters today.
He cautioned that it’s not yet clear which vaccines will win the race and that we won’t know how effective they are in protecting against COVID-19 — and for how long — until after phase three trials.
Pressed on when a vaccine could be approved, Bloom said that while it seemed “utterly crazy seven months ago,” January was looking increasingly realistic.
Richard Horton, The Lancet‘s editor-in-chief, is more cautious: “If we have a vaccine by the end of 2021, we will have done incredibly well.”
Zeke Emanuel, chair of the Department of Medical Ethics and Health Policy at the University of Pennsylvania, splits the difference: “Seven months after we got the genome, to have three vaccines in phase three is literally unprecedented. If in six to eight months we get a license, that will be, again, totally unprecedented in world history.”
But, but, but: “Getting something approved doesn’t protect you from COVID,” Emanuel warns.
The challenges of producing, distributing and delivering a vaccine (particularly in two doses, as the Oxford vaccine requires) around the entire world are hard to even fathom.
Even distributing a vaccine in one country will require an unprecedented buildup of facilities, materials (like glass vials), personnel and protocols, assuming enough people are even willing to take it.
The global picture is even murkier. Several countries and pharmaceutical companies have committed to “fair and equitable” distribution.
In principle, that would suggest a vulnerable front-line worker in Uganda, say, should get the vaccine before a young, healthy person in the United States.
In practice, well … no one really knows.
The bottom line: “It’s very fragmented, and in some ways that’s understandable,” Horton says. “But the danger of that is that many countries will lose out and only the strongest country, the country with the most money, will win.”
If countries hoard supplies rather than prioritizing at-risk people elsewhere, Bloom says, “that should be a cause not just of global concern but of global shame.”
For now, governments are prioritizing their own populations.
The Trump administration is pouring at least $3.5 billion into the development and manufacture of three leading vaccine candidates, with the promise of hundreds of millions of doses should they prove safe and effective.
Even as the homegrown Oxford vaccine takes a global lead, the U.K. is hedging its bets by purchasing 90 million doses being developed by German and French companies.
The U.K. and U.S. have both also put in large pre-orders of the Oxford vaccine, though AstraZeneca says 1 billion doses will also be manufactured in India and distributed mainly to other low- and middle-income countries.
The WHO and EU are attempting to create a framework for distributing the vaccine globally, though the U.S. has declined to take part.
What to watch: Managing the largest vaccination project in history will clearly require global collaboration — but it’s also becoming a competition between rival powers.
“Six months from now, we will be in a situation where a few countries will have vaccines, and we believe those countries will be the UK, Russia, China and the US,” Kirill Dmitriev, the head of Russia’s sovereign wealth fund, told the FT.
Between the lines: Others are less certain Russia will be in that group, though Dmitriev says a vaccine bankrolled by his fund and developed by the state-run Gamaleya Institute will move into phase three trials next month.
“Basically other countries will decide, you know, which vaccine to buy … and who do you trust?”
— Kirill Dmitriev
State of play: There’s a clear lack of trust among the competitors.
According to the U.S, U.K. and Canada, hackers linked to Russian military intelligence have attempted to steal vaccine research in order to aid their own efforts.
The U.S. has also accused China of pilfering American research.
House Republican leader Kevin McCarthy will introduce a bill on Tuesday that would sanction foreign hackers attempting to steal U.S. vaccine research, according to a copy of the bill obtained by Axios’ Alayna Treene.
Zoom out: It will be a victory for humanity when the first coronavirus vaccines are approved. But the competition to obtain one early goes beyond national pride.
Vaccines will save countless lives, drive economic recoveries, and could provide rare opportunities to generate goodwill and influence abroad.
“There’s a huge soft power advantage to the U.S. ensuring that other countries can get the vaccine and protect themselves,” Emanuel says. The same would, of course, be true for China.
The bottom line: The race is on, but it won’t end when the first vaccine is approved.
Health systems have had to adjust to a lot of change in a short amount of time since the COVID-19 pandemic began.
Among the biggest changes they need to get comfortable with?
Collaborations with their rivals, said Intermountain President and CEO Marc Harrison, M.D., at Fortune’s Brainstorm Health virtual event Wednesday.
“I think that the opportunity is to get comfortable with the whole ‘frenemy’ relationship,” Harrison said. “Other industries recognize that an organization is both going to compete and collaborate with another organization, often simultaneously.”
Intermountain and the other system have co-branded drive-thru testing sites to eliminate redundancies, they share personal protective equipment numbers and they load level patients between systems. They have also “harmonized” clinical trials to ensure consistent criteria for all patients admitted to them, he said.
“I think that’s fantastic,” Harrison said, speaking during a virtual panel called Reinventing the Hospital. “We will compete in the future in certain areas but I’d love to continue to see this.”
The increasing level of collaborations amid the pandemic is also among the biggest changes Paul King, CEO of Stanford Children’s Health, has noticed since COVID-19 began its spread across the U.S.
“That is one of the silver linings of what we’ve seen with this crisis, particularly in the children’s hospital space. We’ve seen a level of collaboration, heretofore unseen, with the amount of sharing of best practices real-time,” King said. “The other outcome of this crisis is the idea of speed. We’ve been able to really stand up some capabilities that we would’ve said weren’t possible just 12 weeks ago. That level of collaboration is part of the genie we don’t want to go back in the bottle.”
HENRY KOTULA 