Health systems continue to invest significant time and resources in designing, negotiating and implementing various types of partnerships and affiliations. The complexity of the partnership portfolio, the level of investment made, and changing business objectives all suggest that health system leaders should regularly evaluate existing and new partnerships to ensure that they're achieving their goals -- focusing specifically on structure, process and outcomes.
A new white paper from The Chartis Group, "Are Your Partnerships Achieving Your Goals," attempts to provide a strategic framework for health system executives to evaluate their partnership strategy.
"Maintaining a diversified partnership portfolio has become a core skill set and business model used by leading health systems to support critical elements of their strategy," said Chris Regan, Chartis director and co-author of the paper. "The level of investment and dependency placed on partnerships requires health system leaders to regularly evaluate existing partnerships in the context of changing market conditions and their evolving strategy."
WHAT'S THE IMPACT
Specifically, the paper provides a five-step process for the evaluation of health system partnerships.
The first is to profile the existing partnership for evaluation. The elements that will be profiled will depend on the nature, duration and objectives of the partnership. At a minimum, the profile should include a summary of the strategic rationale and goals for the partnership; the specific terms, conditions and commitments made, and the status of each; progress to date in relation to the overall goals and specific quantitative and qualitative metrics established to gauge the success of the partnership; an evaluation of the respective contributions to date and satisfaction levels with relationships between and among the partners; and a summary evaluation of the success of the partnership.
The second step is to reassess the current and projected market environment. The organizations involved should determine where competitive vulnerabilities exist and what it will take to be successful in the future. The assessment should take into account projected changes in demographics, socioeconomic conditions, physician provider requirements, payer model and pricing reforms, consumer expectations and evolving technologies, among other factors.
Step three is to refresh the organizational goals and objectives, and re-evaluate existing partnerships. Based on the information gleaned from step two, leadership should summarize its overall assessment of the partnership's performance and update the goals and criteria for the partnership's future success.
Next, based on those results, leadership should consider ways the partnership can evolve. Alternative structural or operational approaches may be appropriate; a different governance or management model could better align the partners' interests.
The fifth and final step is to define the preferred path forward, then act on it. In cases where changes are desired, it's important to identify the next steps in a timely manner. Even if the decision is to stay the course with modified objectives, the organization should reaffirm the current partnership model and course of action. A plan of action should specify the timing and resources required for any recommended changes in the partnership models or strategies.
THE LARGER TREND
Even though M&A activity has slowed in recent quarters, health professionals don't expect the slowdown to last, anticipating more consolidation activity in the year to come. In 2018, Definitive Healthcare, which provides data and intelligence to healthcare providers, tracked 803 mergers and acquisitions and 858 affiliation and partnership announcements, and it expects the trend to continue.