Making a Merger Work
Dameka Miller and Trinity Health plan the work, work the plan
Mergers just aren’t what they used to be. Twenty years ago, the combination of one hospital with another, perhaps in the same or neighboring town or city, was news. Today, news is when one IDN merges with another to form a national entity spanning half the country and comprising a couple of hundred inpatient facilities and hundreds more outpatient locations.
But regardless of how many facilities are involved, the keys to successful integration remain the same: Communication and transparency.
Trinity Health headquartered in Livonia, Michigan, is itself the result of the coming together in 2013 of two national Catholic health systems – Trinity Health and Catholic Health East. Since then, the organization has continued to grow, and today comprises 93 hospitals and 109 continuing care programs in 22 states.
Up for the task
Director of Supply Chain Management Dameka Miller is well-suited to help orchestrate those mergers and acquisitions from a supply chain perspective. Brought up in the Trinity Health system as an intern and purchasing agent at one of its smaller hospitals, Miller’s career has spanned supply chain, change management, consulting (for Trinity Health and Deloitte Consulting) as well as a regional director role with Premier. She assumed her current position with Trinity Health in 2015.
Just as Miller’s professional career has matured, so too has the integration strategy of Trinity Health.
“Trinity Health’s Integration Management Office is centralized and coordinates all integration activities across the organization now, because it is far more effective than working in silos, function by function. Ten years ago, separate teams worked independently to integrate their respective functions at the new organization.”
With a permanent staff, the Integration Management Office has worked to establish a standardized methodology for mergers and acquisitions, Miller explains. For each integration, a comprehensive plan is posted on a central site, which both sides (Trinity Health and the new facility or facilities) can consult throughout the integration process. This helps guide the success of the joining organization’s full transition to standard platforms, processes, policies and procedures used by Trinity Health in serving individuals and whole communities, says Miller. “I have transparency into other functions on which I might be dependent. For example, if IT implementation is delayed, I can see that immediately.”
If she were to suggest a step-by-step integration process for others to follow, it might be the following:
Step 1: Communication planning
“I spend a lot of time thinking about who needs to know what at the right time,” says Miller. “You really have to think about that – as well as what it is you’re communicating.” Internally, who needs to know what the IDN is about to embark on? What does the new facility or system need to know about Trinity Health’s operating model from a supply chain perspective, and what should both sides expect of each other in this new model?
Step 2: Integration planning
Integration planning involves all the tactical and logistical details that need to be ironed out when incorporating a new entity into the organization. Those include contract changes, group purchasing affiliation, distribution, staffing and governance.
Step 3: The first 90 days
“This goes back to communication planning,” says Miller. “I have built regular, weekly or biweekly, scheduled touch points with the new site into my plan, so we can talk through challenges and barriers. Those first 90 days determine how well we will mesh our operations and where we might have to work on our relationship.”
Step 4: ‘Are we forming, storming or norming?’
Where does the integration stand after that first 90 days? To be “forming” means both sides understand the relationship and how they will work together, says Miller. “Storming” means resistance is coming from either end – Trinity Health or the acquired facility or IDN. The question then becomes, “How do we work through that?” And by “norming,” Miller means the merger is proceeding smoothly – all systems are normal.
Demonstrating the value
Demonstrating the value of the merger or acquisition is an essential part of the integration process. That means demonstrating Trinity Health’s value proposition to the new organization, and making sure all stakeholders know the value of becoming part of Trinity Health’s supply chain.
“Regardless of the size of the merger or acquisition, two things need to be known in order to plan for a successful supply chain integration,” says Miller. “First, it is critical to understand the general operating characteristics of the incoming organization’s supply chain operations, such as current ERP system, GPO, distributor arrangements, staffing, etc. You also have to take a really close look at where the potential synergies lie for reducing expenses. Identifying the synergies in mega-mergers involving different GPOs becomes more complex. In nearly all cases, you will need a third party to lead decisions regarding the new organization’s GPO selection process.
“Integrating a system of hospitals adds another level of complexity when compared to the integration of a single hospital,” she adds. “Larger mergers require more focus on integrating people and culture, and require considerably more care and planning with regard to the new organization structure, as well.
“Supply chain teams at single hospitals can be very lean, so we focus on welcoming them into the organization and making sure they have the appropriate support,” she continues. “For example, a single hospital may not have an dedicated analyst accustomed to handling large amounts of data, or the supply chain director may wear multiple hats, so managing the details of an integration can be overwhelming. When integrating single hospitals into a large system, it’s important to understand the resource capacity and skill set of the incoming team so you can determine how to fill any gaps early in the integration process.”
A governance model with defined levels of accountability is the foundation of an integrated supply chain, says Miller. “You need clearly defined roles and responsibilities, and everyone needs to know where they stand in the supply chain operating model. When we onboard a system, we orient them to that governance and operating model so they understand the services we provide and what they can expect.
“Trinity Health has a proven model that sets the tone for how we work together. When we acquire another organization, we always begin by including key stakeholders in our governance structure. This, along with the breadth of our shared services support and data infrastructure, is key to integrating Trinity Health’s supply chain.
“Underestimating the time, resources and expertise required to facilitate integrations makes for rocky transitions,” says Miller.
“There will always be unexpected barriers, bumps and roadblocks. It helps immensely when people are able to give their thought and time resources to forecasting and planning for these, but that isn’t always possible. That’s when we rely on our collective experience and expertise – and on individual agility and flexibility.
“They are enormous benefits at those moments.”