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Always One Acquisition Away: Insights from CHIME 2014

Industry consolidation has been a recurring topic at several different healthcare events my colleagues and I have attended in recent weeks, and it has significant implications for healthcare information technology. So I’ve been thinking a lot about the subject, and mulling over what we’ve heard. In particular, I keep hearing the same few comments running through my mind from the CIO focus group I facilitated at CHIME 14:

illustration of four personas carrying puzzle pieces

“If some of the interoperability we had hoped for were in place, then these … monopolistic standards wouldn’t need to occur.”

“Everyone is one acquisition away from a hybrid [IT shop].”

“You need robust interoperability to push back on rip and replacement; if we had more robust data exchange, we could look at outcomes better, but it is not there yet."

Don’t get me wrong – the comments themselves didn’t surprise me. I had planned to ask for opinions on the role of interoperability in supporting mergers, acquisitions and other forms of healthcare provider affiliations. What struck me was the passion with which they were uttered, and the fact that I hadn’t said anything to elicit them – actually, I never even used the slides I’d so carefully prepared on the topic.

The group in question included 11 CIOs from integrated delivery networks (IDNs) across the US. Only one was a current HealthShare customer. Some of these organizations pursue aggressive “rip and replace” strategies when they acquire or merge with another organization, standardizing on the same instance of common EHR and revenue cycle solutions. Others support more local autonomy and diversity in the choice of information systems. All were involved in a wide mix of alliances ranging from the purchase of physician practices to mergers with other IDNs to investments in related businesses like health centers, to affiliations with community providers for the better delivery of specialty care.

The conversation that afternoon ranged pretty far afield from some of my initial questions, but ultimately settled around a few key themes:

  • For many, standardization is seen as a necessary evil. While some organizations have adopted standardization as a fundamental operating principal that goes well beyond information systems, others see it as an expensive and highly disruptive approach necessitated by the immaturity of information exchange capabilities within current EHRs. My colleague Ed Chung, himself a former CMIO within an IDN, did a recent poll that showed less than a third of his audience believed their existing interoperability capabilities would be an asset to them to support a merger. One of my focus group attendees indicated that if he believed he had the right interoperability in place, he would be hard put to find a business rationale for replacing the EHR in a practice or hospital that was delivering safe, high quality care.
  • The scope and shape of affiliation activity means IT diversity is the norm. At least half of the alliance activity described by participants represented partnerships, affiliations, or joint ventures that fell short of outright mergers or acquisitions. While these relationships were described as being “a heck of a lot easier” to put together, they don’t typically create the common governance necessary to standardize information technology. Several organizations were looking to invest in private health information exchange to support relationships beyond their traditional organizational borders. One leader described supporting operations during organizational alliances as “changing the tires while the car is moving.” She didn’t see mandated IT standardization as viable because continuous change means there will always be new systems coming in the door.
  • Information exchange is foundational to population health management Those supporting specialty populations such as pediatrics and oncology were particularly emphatic on the centrality of information exchange to the fulfillment of their missions. These organizations were less representative of traditional merger and acquisition activity, yet had strong affiliations with providers across a wide geographic area for purposes of care management. The comment from one of these CIOs is that population health management is about connecting teams and families to coordinate care, share knowledge, and facilitate consultations. For that, they have less need to standardize transactional systems like EHRs, instead, they need a customer relationship management (CRM) system and an HIE.

We’ll be sharing more about some of our other conversations on this subject over time. In the interim, I’ll be thinking a lot about one of the other key takeaway comments when I asked about how organizations beat the odds of failure when affiliating. The gist of the response was that you have to focus on the goals of the relationship. Makes sense – so we’ll focus on the aligning with the goals for interoperability in the context of industry consolidation.


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