Strategic Planning | DGA Experience

Experience

Strategic Planning

Merging Two Community Hospitals

Client Profile: A 200 bed community hospital and a 25 bed critical care access hospital serving a common service area Project Type: Mergers, Acquisitions and Collaboration Challenge: To analyze and validate a contemplated merger between two hospitals serving the same community and similar service areas. After several years of discussion, the hospitals had developed a preliminary memorandum of understanding outlining the organizational framework of a potential affiliation. The larger hospital offers a full range of primary and general tertiary healthcare services and maintains a large, diverse medical staff. The smaller hospital provides basic critical access services and maintains a small osteopathic medical staff of mostly primary care physicians. The hospitals sought identification of revenue enhancement and cost saving opportunities, as well as advice and recommendations pertaining to the organization, management and medical staff structures, and other aspects of the definitive agreement. DGA Solution and Results: DGA worked with the client to define the areas to be evaluated in relation to the merger. These included governance and management structure, medical staff integration, clinical programs, operations and use of capital resources and financial/economic outcomes. DGA then developed a detailed understanding of the two organizations and the proposed affiliation structure through a review of documents and data and by conducting in-depth interviews with key board, management and medical staff stakeholders. Each of the core areas were then evaluated within the context of the potential affiliation structure. More detailed analysis was devoted to unique challenges of the affiliation, including:

Medical staff credentialing and integration
Department-specific operational efficiencies and cost savings
The development of financial estimates for annual capital investment for facilities and infrastructure
Potential incremental operating expenses
Potential incremental savings

DGA's validation process resulted in specific recommendations and supporting analyses for each of the core affiliation areas. The affiliation was successfully implemented and the projected benefits realized.

Pursuit of an Integrated Delivery System Strategy

Client Profile: A regional insurer in a competitive Mid-Atlantic market Project Type: Financial Feasibility and Modeling; Mergers, Acquisitions and Collaboration and Strategic Planning Challenge: To support the insurer in defining a new, strategic approach to financing and delivering healthcare through the creation of an Integrated Delivery System (IDS). The health plan sought strategic planning services with financial projections for acquiring and integrating a provider network—physicians, hospitals, and ancillary providers—with its insurance operations to create a regional IDS. DGA Solution and Results: DGA worked closely with a client project team to plan an approach to forming the IDS. After first identifying opportunities, we determined the costs of acquiring the necessary IDS components and the impact of having those components. We assessed how these acquisitions would affect insurance operations given improved care mechanisms and a new model of integrated delivery. More specifically, DGA worked with the health plan to:

Identify optimal approaches to pursue regional clinical integration through health plan physician acquisition, employment, and other methodologies
Quantify the investment required to obtain the various components of an IDS, including the acquisition of a strategically important health system
Develop prospective financial analyses for each entity based on historical performance, projected utilization, and various other market considerations
Determine the impact of the proposed IDS on health plan utilization, payment rates, and membership, including how the creation of the IDS affects relationships with other providers in the market
Articulate a new approach to operating the acquired health system within an overarching IDS vision, more generally.

Conclusions from these analyses were integrated into an implementation plan, which DGA developed in conjunction with health plan leadership. We formulated conclusions and provided the necessary analysis to support a board decision. The board approved the health plan’s effort to acquire the health system and creation of an IDS.

Medical Staff Planning for an Expanding Community Hospital

Client Profile: Community hospital associated with a major teaching hospital Project Type: Medical Staff Planning and Community Need Challenge: To determine medical staff needs for the hospital over a five year horizon as it transitions from its current facility to a new, larger facility with enhanced clinical capabilities. Develop implementation strategies by specialty to meet these medical staff needs and financial estimates to fulfill the plan. DGA Solution and Results: DGA worked with the hospital to estimate the optimal size and specialty profile for the new facility medical staff, based on the strategic and programmatic objectives for the new hospital. Physician gaps were identified at the specialty level for the five year planning period. Through assessment of the current physician landscape in each specialty and discussion with hospital management, implementation strategies were selected to fill each physician need, including alignment with existing practices, new practice development and employment. DGA developed high level financial estimates for the medical staff plan based on the strategy, specialty, and timeframe for each identified need.

Developing a Hospital-Physician Alignment Initiative for a Rural Medical Center

Client Profile: 100-bed rural hospital in New York State Project Type: Physician Engagement Strategy Challenge: To develop a shared strategic vision and plan for hospital-physician alignment, including clarification of the specific business model(s) the hospital should pursue in key specialties. Changes in policy and reimbursement had contributed to declines in the size and satisfaction of the voluntary medical staff. Existing practices lacked the resources and the risk tolerance to recruit and employ new physicians. Certain specialties were under-represented. Hospital leadership concluded that it must be more proactive in developing the medical staff. DGA Solution and Results: In collaboration with our strategic partner, Bader & Associates, Governance Consultants, we educated the board, physicians and senior management about the environmental pressures driving physician-hospital alignment. We helped them to understand the characteristics of successful integrated systems and the business model options for aligning hospitals and physicians, so that leadership would fully understand the strategic and financial implications of the alignment options. To develop a strategy for physician-hospital alignment, DGA spoke with members of the board, physicians, and senior management about their goals for alignment, including those for specific specialties and hospital service lines. We then developed a recommended plan, including a vision and preferred organizational model that will ensure that the medical staff of the future meets the needs of the hospital, the community, and potential regional partnerships. We developed consensus and support among key stakeholders, including the Board and physician leadership, for the optimal strategies. The result was high-level consensus among administration, medical staff, and board, on an alignment initiative, leaving the hospital ready for detailed due diligence, business planning, and implementation.

Comprehensive Assessment of Physician Community Needs

Client Profile: Multi-hospital system serving a population of 1.2 million Project Type: Medical Staff Planning and Community Needs Challenge: Conduct specialty-specific community physician need assessment to support the client’s physician recruitment initiatives. The client’s strategic plan identified a recruitment goal of 113 physicians in various specialties over a five year period. The client’s intent was to structure financial assistance arrangements, when necessary and appropriate, to support selective recruitment efforts while complying with federal guidelines for community need determination. DGA Solution and Results: DGA conducted 15 separate specialty-specific community need studies requested by the client. Our standards-based methodology resulted in a finding of physician deficits in all of the studies conducted. Based on our findings, the client is proceding with physician recruitment efforts. Financial assistance is being provided to support recruitment in selected cases. We also prepared a policy document and methodology to guide the future assessments of community need for physicians, in order to maintain compliance with federal regulatory guidelines. This document has been adopted by the system’s board of directors as the guiding instrument in on-going physician recruitment efforts.

Medical Staff Planning for a Regional Referral Center and a Hospital under Construction

Client Profile: A mid-Atlantic regional healthcare system anchored by a 400-bed acute care regional referral center, with construction underway for a new 100-bed acute care community hospital Project Type: Medical Staff Planning and Community Need Challenge: Assist the client to determine its medical staff needs both for its expanding role as a regional referral center with several clinical centers of excellence, and for the opening of a new 100-bed hospital in a rapidly growing adjacent community. DGA Solution and Results: DGA conducted a comprehensive quantitative analysis of the services area’s overall need for physicians, and a qualitative assessment of the System’s internal physician resource needs based upon strategic goals, clinical program needs and physician staffing requirements for the new community hospital. We employed extensive physician and management interviews and surveys to better understand perceptions of community and hospital need and to confirm strategic initiatives and program priorities. We utilized existing inpatient utilization projections for the new hospital to estimate physician staffing requirements. Within the flagship hospital, targets for specialty-specific physician recruitment were developed for each of the new Centers of Excellence as well as other existing clinical programs. The recruitment targets took into account estimated deficits in community physicians, as well as specific program needs and expected physician retirements. We laid out specialty-specific recruiting priorities by year for a five-year planning period for both hospitals, with over 156 physicians. In addition, DGA estimated annual physician development costs (salary subsidies less revenue offsets) based on the recommended recruitment schedule. As a result of this engagement, the client has initiated an aggressive recruitment effort that is based upon a comprehensive physician development blueprint.

Assessing The Stand-Alone Strength Of A Rural Community Hospital

Client Profile: Rural, independent community hospital Project Type: Strategic Planning; Financial Feasibility & Modeling Challenge: To determine how this stand-alone hospital could create a strong position from which to move forward, whether on its own or as a merger partner should that become necessary. The hospital faces minimal competition and enjoys a strong position with payers. Senior leadership was concerned that this situation could change, given major shifts in the health care market nationally. In the event the hospital needed to merge in the near term, leadership wanted to be sure that it would do so from a position of strength. DGA Solution and Results:DGA conducted a thorough analysis of the Hospital’s strategic position, including a review of the competitive landscape, migration patterns to metropolitan hospitals, local demographic trends, and the hospitals financial position and status with payers. Combined with input from the hospital’s stakeholders, this assessment revealed that the Hospital would likely maintain its strong position going forward. DGA then developed an "independence dashboard" for the Hospital to review quarterly. The dashboard addresses the Hospital's market position, financial situation, physician relationships, population health management readiness, and leadership. This dashboard will enable the Hospital to monitor its position going forward, evaluate whether its situation and “independence quotient” is changing, and ultimately, determine whether it should seek out a merger partner.