Presentation delivered by Luis E. Taveras, PhD, Former Senior Vice President, Office of Integration, RWJ Barnabas Health at the marcus evans National Healthcare CIO Summit held in Pasadena CA, March 13-14 2017

1. Challenges of Post Merger Integration
March 2017
Luis E. Taveras, Ph.D.
Former Senior Vice President & Chief Information Officer

2. • General Information
• Day-1
• The Role of Information
Technology
• Summary
• Q&A
We will discuss the general state of the industry with a focus on how
the Information Technology (IT) organization is impacted throughout
all the phases of a merger or acquisition.
2

3. General Information
3

4. In 2016, deal making in the US Healthcare sector
continued though at a slower pace than prior years.
• 939 Deal
– 1.4% decline vs. 2015
– 14 megadeals totaling $42.5B
• 4 less than 2015
• $71.7B deal value
– 59.6% decrease vs. 2015
• Long-Term Care was most active sub-sector
– 337 deals (36% of deals)
– $14.4B (20% of total deals value)
• Physician Medical Group
– Largest deal value growth (~385%)
• Rehabilitation
– Grew most rapidly
Source: PricewaterhouseCoopers, LLC

5. Growth in
Excellence and
Lower Cost of
Care
Growth of Academic
Mission & Centers of
Excellence
Operational Effectiveness
Physician Growth,
Alignment and
Management
Strength & Development of
Brand & Reputation
The major drivers for hospital mergers are a search for financial and
geographic scale but there are many other underlying goals.

6. Positive
Organizational
Culture
Receptive &
Responsive
Senior
Management
Effective
Performance
Monitoring
Building and
Maintaining a
Proficient Workforce
Effective
Leaders Across
Organizations
Expertise Drives
Practice
Interdisciplinary
Team Work
All of these goals, along with the overall strategy of the new
organization will not be achieved unless there is a focus on culture.
6
Operations
Performance Factors

7. …and it’s not just the system of culture that is seen above the surface
but more importantly that which operates below the surface as a
series of influencers.
Behaviors
Assumptions
Perceptions
Beliefs
Visible Organizational Culture
“The way we
say we get
things done”
“The way we
really get things
done”
Influencers
Polices and Procedures
TraditionsStories
Feelings
Values
Unwritten Rules
7

8. Components for gaining change adoption
during the merging of two organizations
If done correctly, mergers and acquisitions can lead to the creation of a
new culture that can bolster the organization to high performance
levels never achieved by the merging entities.
• Change Management Guiding Principles:
– Understand cultural differences between the two
merging organizations
– Engage impacted personnel from both systems
(leaders and staff) early in the process – solicit
their input
– Different stakeholder groups have different
communications needs
– People’s engagement with communications
changes over the course of the integration
• Change management must be embedded in the
integration approach:
– Communications help provide understanding of
the vision for change - “Why it’s important” and
“What’s in it for me”
– Change Activities (Team Workshops, Mentoring
One-on-One’s, Physician Leadership Councils and
Town Halls)
– Training provides necessary skills to succeed
8
Training
Programs
Communications
Change
Activities
Skills Behaviors
Knowledge
Adoption

9. Day-1
9

10. • Guiding Principles
• Governance
• Integration Process
• Integration Approach
• Leadership Team
• Planning Process
• Development of Action Plans
• Key Activities Methodology
– Prioritization Schema
• Metrics
At the onset of an affiliation, there are a number of
critical topics that must be considered.
10

11. • Clear and measurable success criteria
• Sequencing plans
• Funding and resources
• Key metrics should be tracked and reported on a
regular basis
• While groups will need to define the appropriate
metrics, some suggestions include:
– Financial metrics, such as one time savings, cost avoidance, recurring
savings
– Clinical metrics, such as LOS reduction, quality improvements, lower
cost of care, improvements in patient satisfaction, wait times
reductions
– Human Resources – turnover, satisfaction, recruitment times
Among the first topics of discussion needs to be how
success will be measured.
11

12. After clearly defining success, the new Governance structure must include the
creation of an Integration Management Office (IMO) to manage and track the
measures of success.
Integration Steering Committee
Organization Culture Strategy Synergies
Work
Groups
Supply Chain
Revenue
Cycle
IT
HR
Business
Initiatives
Legal
Fundraising
Bus. Dev.
Etc.
Integration Management Office
IMO
Oversight
IMO
Apprised
Process
Benchmarking
& Metrics
SME &
Resources
Analytics &
Measurement
Charter
Savings Targets
Timeline
Givens
Boundaries
Organization
Operational
Budgets
Low Risk/Impact
Communication
12

13. The Governance Model needs to ensure that all leaders are engaged in identifying the areas of
opportunity for improving the effectiveness and efficiency of the combined organization.

14. Solution Sponsor
TechnicalOperational Cultural
Executive Sponsor
ESC
Operational –
Integrated
Cross-Cultural
Office of
Integration
Solution Teams
C-Suite
SVPs
VP’s
AssessmentandDesignRecommendations
ImplementationDecisions
Local
Directors
Supervisors
Business Unit Leaders
Merged
System
Leadership
Local
Leadership
These opportunities must be evaluated based on an
established collaborative decision making process.
 Recommendations are developed
in close coordination with local and
functional leadership at each
operating entity
 The decision to implement
and prioritize will be the
responsibility of combined
integrated leadership.

15. • Identify & Prioritize projects by degree of
impact and degree of difficulty
As an example, the key activities that have been identified
as the drivers of success can be scored and tracked on a grid
in order to provide focus.
15
Low Priority
Important but
longer
implementation
Opportunistic Quick Hits
High ImpactLow Impact
Easy to implement
Difficult to implement

16. 16
• PIPELINE – Pending project, not fully vetted but
savings may be identified.
• VETTED – Savings have been identified and
project has an approved Charter and Investment
Summary
• ACTIVE – Project is in progress or launched
$
$XX
The key is to continuously have a funnel of valuable projects
in the pipeline.
Example: Supply Chain

17. Role of Information Technology
17

18. • No organization shall regress as a result of the integration – no reduction in the
ability to provide the same or higher level of service.
• Whenever possible, staff will be given the opportunity to retrain in order to
acquire the necessary skills to continue to add value and maintain employment.
• The operating environments will be consolidated when operational
efficiencies are increased and cost reductions and/or avoidance can be
achieved.
• The integration efforts will be undertaken with a primary goal of enhancing our
ability to function as an efficient system as well as reaching the financial goals
established for the affiliation.
• A business case will be developed for any major project required for
integration. The business case must be approved by the Integration Steering
Committee prior to making any contractual commitments or assigning
resources.
In information technology, we must define the key principles
that guide our actions throughout the integration process.
18
IT&S Guiding Principles

19. Those guiding principles are then applied in the
identification of integration projects.
19
 Information Technology includes an evaluation of the following areas:

20. • Consolidation of data centers
• Consolidation of servers and networks
• Use of the centralized help desk
• Consolidation of clinical, business and administrative systems
• Consolidation of vendor contracts
• Merge into the tower organizational structure
• Corporate security management
• Biomed/Clinical engineering consolidation
• Desktop strategy
• Printer management consolidation
• Share Project Management Office (PMO)
• Operational processes and tools
• Policies and procedures
• Others
Examples of potentially high yielding IT projects include the
unifications of applications along with several operational efficiency
initiatives.

21. • IT must deliver on IT specific projects along with all the other
projects that require IT participation
• IT must ensure that the organizations continue to operate while
transitioning to a new operating model…IT must be involved in all
aspects of decision making
• IT staff must be reassured that they have a key role in the new
organization in order to avoid flight risk of critical staff…if
necessary, put in place retention bonuses for key employees
• IT must avoid OWNING all projects and focus on serving as an
enabler of the integration
• IT must deliver on short term operational projects that are
required for the acceleration of the development of a single
culture….email, policies and procedures, network consolidation,
portals, etc..
In delivering these projects, IT faces several specific challenges that
could results in shortcomings if not carefully managed.

22. Summary
22

23. Integration Key Success Factors
The complexity of all integration efforts must be managed with discipline and focus
in order to achieve the objectives of the affiliation.

24. IT projects, along with all other projects, need to be continuously evaluated and
prioritized based on the value they bring to the newly formed organization.
 Ensure feasibility of recommendations
 Identify risks / mitigation strategies
High
Low
Example Low HighRisk
Span of
Control
$$
Service Line
Rationalization
$$$
Market Share
Growth $$$
Physician
Alignment
$$
HR Pay
Practices
$$
Elimination of
duplicate
efforts
$$
Supply Chain
Physician
Preference
Items
$$
Information
Technology
Integration
$$$
HR Benefits
$$$
Vendor
consolidation
$$
Supply Chain
Consolidation
$$$
Organizational
integration
$$
New
Governance
structure
$$
Effort
24
 Ensure alignment to organizational strategy
 Assign accountability for implementation

25. 25