A large hospital system was planning a major facility and service line expansion. The plan included a new Heart Hospital Tower, including site selection, adjacencies, work flow, and a space program. As part of the service line expansion, the hospital recognized it needed a strategy that more closely aligned itself with its cardiovascular physicians. Given the size and scope of the project, there was substantial risk involved. Financial forecasting and business modeling were critical.
Paragon Health was retained at the start of the project because of their extensive experience in business planning, new facility planning, service line management and integration/partnership issues, and hospital physician alignment. While the project was incredibly complex, the primary threat to the success of the project was not related to the building, it was developing a comprehensive strategy that got all of the parties involved aligned around a shared set of objectives.
A New Heart Tower or a Tower of Babel?
The biblical story of the Tower of Babel is analogous to what happens in many integrations and service line expansions. All the parties involved speak a different language and have different agendas. Grand strategies degenerate into personal preoccupations discussed around the water cooler and opportunities are lost. This expansion had all of the makings of a cardiology “Tower of Babel”.
The grand strategy involved aligning the objectives of four practices into that of the hospital system – a large physician group and three smaller groups. The larger practice wanted to be employed by the hospital, but the three smaller groups did not. This presented a big problem. How would the larger practice being employed by the hospital adversely affect the smaller groups? Would it still make sense for these smaller practices to pursue any kind of a partnership with the hospital at all? “What’s in it for us?” was the question on the minds of all the stakeholder groups. Within these groups, key individuals were even more fragmented in their disparate agendas.
Paragon Health entered the project determined to bring these competing agendas together and align all of the stakeholders around a compelling business model. They started by creating a detailed work plan that was presented to the hospital and to all of the practice groups. This work plan included a detailed timeline of all of the activities and critical decisions that needed consensus.
“Our cardiovascular program grew beyond expectations because of the meaningful and measurable strategy…” -VP CVS
Paragon spent extensive time with stakeholder ground and key individuals developing an understanding of what everyone wanted and where common ground could be found. Each group had a different business model, and different goals. It quickly became evident that getting all of them on the same page would take different strategies and tactics for each group. There was no “silver bullet” that was going to work in this situation.
As Paragon sought to bring these groups together, business strategy and a financial model were developed that created a compelling case for everyone involved. The model took into account an extensive amount of internal and external data and created the basis around which individual agreements could be made.
Getting Everyone Aligned Around Service Line Objectives
Paragon structured a broad co-management agreement that included all of the physicians. This agreement gave everyone a “seat at the table” and a comfort level that the interests of all involved were protected. It also gave the smaller practice groups the assurance that they would not be “kicked out” or treated as “second class citizens”. Everyone had a say and a stake in the performance of the service line.
“…facilitated the design and implementation of a sustainable physician integration…” – Hospital CEO
Within the umbrella agreement that covered the whole venture, Paragon structured individual agreements to meet the needs of the individual groups. The largest cardiology group in the market, with 16 cardiologists, became employees of the hospital system after four months of negotiations. The smaller practices did not become employees, but had partnership agreements with the hospital. In one case, a group with three MDs was seeking to have the hospital acquire its echo business and provide services as a “provider based” clinic at the existing practice site. Paragon was able to help this group and the hospital come to a win-win agreement. Another group had an interest in expanding its practice and was able to structure an agreement where the hospital helped them recruit more physicians so they could continue to grow.
Service Line Results from an Aligned Hospital-Physician Group
The success of the plan gave the board comfort in the overall direction of the program and to give approval for the major capital investment required to build the new heart facility which was the final component of the plan to differentiate the service line from its competitors.
“…excellent due diligence assisted in bullet proofing our projections….our actual financial performance exceeded budget…” - Hospital CFO
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