ACHE 2017: Failure to blend cultures can doom physician-hospital integration

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Mergers can be difficult, or even doomed, when organization cultures clash.

CHICAGO—When their cultures clash, it can make for a difficult or even impossible integration of physician groups and hospitals.

Different cultures that never mesh have been responsible for the failed or difficult merger of numerous companies and organizations. Think AOL and Time Warner. HP and Compaq. Penn State and Geisinger.

Hospitals and medical groups typically have different cultures, said Nick A. Fabrizio, Ph.D., a principal with the Medical Group Management Association’s consulting group, who spoke about the issue at the American College of Healthcare Executives’ 2017 Congress last week.

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Hospitals tend to have a “hierarchy” culture, which favors structure, control and values efficiency, timeliness and smooth processes, Fabrizio said.

Medical group culture, on the other hand, is more likely to be an "adhocracy." Like Apple and tech startups, they are more dynamic and entrepreneurial and value innovation, adaptability, growth and cutting-edge services or products.

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“The hard part is: How do we get together?” he asked, noting that integration requires an understanding on both sides to bridge the gap.

When physicians become employees, they need to learn how hospitals run. It’s not right or wrong, but the way they do business can be very different.

For instance, when a copier machine breaks down at a medical practice, a doctor can ask the practice administrator to buy another machine that may get delivered the next day. When a hospital owns the practice, it must fill out a form, send it to someone at the hospital and then, possibly, wait months. Or better yet, they anticipated the need and submitted a request to budget for the expense a year ahead of time.

It takes an average of five years to change an organization’s culture, said Thomas Whalen, M.D., chief medical officer at Lehigh Valley Health Network in Allentown, Pennsylvania. It’s been almost 10 years—since 2008—when the industry hit the tipping point where more medical groups became hospital-owned than owned by physicians, he said.

RELATED: ACHE 2017—Physician engagement; it’s not as hard as you may think

At Lehigh, the number of private practice physicians on the medical staff is on the decline and the number of employed physicians is increasing.

Bringing physicians on board whenever there is a merger with other hospitals or medical groups is important, Whalen said. Organizations can ensure success of a merger by focusing on a few critical shifts in organizational behavior: Build the culture with small wins or projects where both groups work together, he recommended.

Physician development and leadership are critically important for success, he said. Leadership training can help doctors who are typically fiercely independent become good leaders who can delegate and participate in the organization.

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