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A New Sheriff in Town

December 1, 2008
by Daphne Lawrence
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For CIOs on both sides of a hospital merger, fast evolving dynamics require copious amounts of communication

Glenn galloway

Glenn Galloway

In these difficult financial times, many believe hospital mergers will soon be on the upswing. And for CIOs on either end of a merger, navigating the waters and protecting their position — and staff — takes a thoughtful and careful approach. Sometimes, though, no matter what a CIO does, the new dynamic will just not work and the only answer is a graceful exit.

“To some degree, I think the acquiring CIO really has a lot of pressure on them to establish credibility quickly,” says Glenn Galloway, founder and CEO of Healthia Consulting in Minneapolis. “Whereas the other CIO can wait and see how it goes.”

Mike Balassone, CIO of West Virginia University Hospital based in Morgantown, W.Va., which acquired two community hospitals at the same time back in 2005, experienced that pressure right away. “They wanted to know what our intentions were,” he says. “Were we going to come in and say, ‘I think it's really nice that you use Meditech (Westwood, Mass.), but that's too bad, you're about to use Epic (Verona, Wis.).”

The acquiring CIO, says Galloway, needs to listen to the issues of the acquired CIO and team, and paint a picture of what's going to happen, at least in the short term. “And you come back and say ‘Here's what I told you and here's what happened.’ Even if it's not exactly what happened, that should be acknowledged too,” he says, adding that it's important not to sugarcoat the future. “You don't have to paint a bleak picture, but it does have to be honest.”

Balassone says he was honest and up-front with the CIOs and staffs of the two acquired hospitals. “I wasn't there to say, ‘I think it's really great that you guys have been providing service to the hospital for 10 years and now you're going to do it our way.’” He says the approach he took was, ‘Let's talk about it.’

That talking took the form of entire days spent at the two new hospitals. “We walked the floors and did a lot of meet and greets,” says Balassone, adding that getting on the floors also helped him learn the physical environment. “People realized we were ‘a part of,’ not just the folks from out of town.”

Not too long into the process, Balassone says the staffs took part in a middle-ground, two-day retreat that brought everybody together. “Their first introduction was the golf course, so it was social as well as professional,” he says.

Rich temple

Rich Temple

Galloway agrees with Balassone's approach to fostering good communication. “I think it boils down to respect for the other culture and what they've done,” he says. He also says another good strategy for the acquiring CIO is to talk about the experience of other acquisitions and, if possible, bring those past acquisitions into the dialogue.

But once the initial dialogue has been opened, what must a CIO do to get the acquired staff members on board? “The part that was important for me was to convey truly a sense of collaboration in getting to the end point,” Balassone says.

For Rich Temple, former CIO of Denville, N.J.-based St. Clare's Heath System, that initial sense of collaboration kept him sticking around to see what would happen when his four-hospital system was acquired by Denver-based Catholic Health Initiatives (CHI), the nation's second largest Catholic health system. But in the end, after six months, Temple decided to leave. (Temple is currently chief information and business intelligence officer of AristaCare Health Services in South Plainfield, N.J.)

Like many in his position, going from the relative autonomy of his old shop to the new constraints of a large network proved to be too much of a culture change for Temple. “The regional CIO was a great person and there was no issue there,” he says. “It's just that I was used to going in and being the visionary, and as long as I didn't blow my budget, I could do what I needed to do.”

For CIOs of acquired hospitals, that loss of autonomy means hewing to a whole new set of standards and chain of command. The greater distance from decision-making, as well as a new set of approvals and standards, takes some getting used to.

But most agree there is an upside. “Though it was a little bit challenging because it was harder to get from point A to point B,” Temple says, he “really did buy into the notion that being able to have these standards is going to ultimately work to all of our advantages.”

Galloway says CIOs on both ends need to understand that losing autonomy often goes hand in hand with gaining additional funding.

“Sometimes the smaller community hospitals that get acquired are languishing a bit anyway,” he says, “and you're injecting some new technology and creating opportunities for the people who do want to make a difference.”

The same goes for the IT staff, often cited as a big concern for the CIO in any merger. Those new opportunities are one way to prevent a mass exodus when the merger news is announced “There are probably some cool things they're doing that can be leveraged across the other organization,” says Galloway. “You really should make a big deal out of it and recognize them for it.”

That's exactly what happened at St. Clare's, which had a track record of success with its Kansas City, Mo.-based Cerner implementation. CHI was re-deploying Cerner at five of its systems and Temple was excited about sharing what he and his team had already accomplished. “We had done a really good job on our Cerner implementation and they were going to need to tap into our talents in that regard,” says Temple, recalling how he touted those opportunities to his staff. “My IT staff took a lot of pride in making a difference in people's lives at St. Clare's, and being part of a larger organization affords you the opportunity to make a difference on a much grander scale,” he says.

While the early talks are going on, CIOs may wonder about the image they project. Many say the adage, ‘shine, but not too brightly,’ is a prudent approach. Temple says he didn't want CHI viewing St. Clare's as just another acquisition. “I wanted to come across as non-threatening, but I wanted to make sure we were on their radar screen,” he says.

Finally, when all else fails, there's always money. Galloway says complicated retention plans are generally unnecessary. However, he says, “Sometimes you do have to invest in saying, ‘Look, you don't necessarily know us or trust us, but we do need you to stay during this period of time, and we'll reward you,” with rewards coming in the form of more money or a better position.

But there may come a time when the CIO realizes the new arrangement is not going to work out. At what point does a CIO walk away? For some like Rich Temple, no matter how well the merger goes in terms of IT, it all comes down to personal vision.

“An opportunity presented itself where I could really build something,” he says, referring to his new position at AristaCare. But what if that new position hadn't presented itself? “I had a very supportive (new) boss, the organization liked me and I think they wanted to keep me around. But my world was sort of closing in a little bit around me in terms of the ability to do the kinds of things I wanted to do.”

At West Virginia, for Balassone, his CIO's exit came down to an IT issue. The parent hospital network decided that both acquired hospitals should have the same enterprise IT solution, and the only solution the network would consider was from the two incumbent vendors. “From the CIO perspective,” Balassone says, “one sort of won and the other lost.” It came down to which CIO's system chosen.”

In the course of this process, one of the CIOs decided to leave. Coincidentally, the departure came after six months — the same duration Temple stuck around St. Clare's.

And while a CIO is waiting to decide whether or not to resign, dealing with a staff can be tricky. According to Galloway, CIOs need to consider their reputation because how they make an exit speaks volumes. “You've worked with people for years, and you've hired them,” he says. “You have to take a personal stake in that and do the right thing. You need to stay long enough to make sure your staff has a smooth transition.”

Galloway says once CIOs determine the situation isn't for them, their actual departure should be swift, within a year at most.

Keeping a staff motivated during that period is not easy, but according to Galloway it comes with the territory. “That's the tough thing about being a leader,” he says. “You've got to lead. And if you can't lead, then you shouldn't be there.”

Healthcare Informatics 2008 December;25(12):26-33

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