But there’s less certainty as to exactly how this will play out. Will M&A and joint ventures between like players surge in the months ahead, or will we see more rapid-fire tech and public-private partnerships executed in record time? Will fundamental metrics like market share, profitability, and brand value increasingly drive partnership decisions as healthcare system leaders seek to stem the transfer of wealth from providers to payers? And what are the best, most practical ways for marketing and brand executives to add value to partnership initiatives?
In this webinar we brought together executive advisors from the M&A, Communications, Brand, Healthcare System, and Marketing Operations disciplines to explore:
- The current and future landscape of Partnerships and M&A, and what factors will lead to their success for the health system, partners, and patients
- Three ways brand and culture shape the success of partnerships—from market-facing value propositions to activating employee engagement and alignment and drawing focus to the patient experience
- How the pandemic has accelerated expectations around timelines and implementation ability and how to make the good aspects of this sustainable
- How marketing can influence and effectively implement new partnerships through 2021 and beyond while retaining the higher levels of public trust in healthcare generated during COVID
- What brand and marketing teams and operations are doing to efficiently and cost-effectively integrate and service, while maximizing the impact of, this new wave of partnerships coming in 2021
Our expert panel:
- Nate Kaufman, Kaufman & Associates
- Donna Lee Ubertalli, VP Marketing and Brand, Dana-Farber
- Jeff Gourdji, Partner, Prophet
- Shannon Susko, Executive VP and Healthcare Lead, Edelman
- Philip Guiliano, Partner, BrandActive (moderator)
Full Transcript below:
Philip: Welcome. I’m Philip Guiliano. I’m thrilled to introduce today’s webinar, New Rules: Healthcare partnerships, and M&A in 2021, and the role that marketers should play.
For this webinar, we’ve got executive leaders from emanate, from corporate, communications, brand, and business strategy, health, system marketing, and marketing operations. And we’re going to explore the current and the future landscape for health care partnerships, and M&A. What we’re seeing, what we expect to see, What makes them successful, what makes them failed, the role that the marketers should play, and how to drive efficiency, And success and activities, you know, we’re working with over 20 different health systems right now, And this is a huge topic for every single one of them, I’m sure, for every single one of you, which is why you’re spending your time with us today. And we did a previous webinar on, on the level of consumer trust engagement, and how to leverage that strategically at this time, and even that the panelists were bringing up how corporate America in their region technology companies, media outlets, data aggregators, and, and other companies like that. We’re reaching out to them in ways that they’ve never done that before.
Philip: So, I know that your time is really valuable especially now and we want to make sure that you get what you intended to get out of this webinar. so please do use the questions panel in your GoToWebinar Attendee panel. We’ll spend about 35 to 45 minutes having an organic discussion amongst ourselves with the panelists, and should you need any assistance during the webinar also, use that questions panel. Reach out to us. We’ll be monitoring that, and yes, the slides that we share for this will definitely be made available for everyone.
Philip: So, let’s get into introductions. We have a great panel here. I’ll start by introducing myself, I’m a moderator for this panel. My name is Philip Guiliano, I’m a Partner at BrandActive. And I bring a marketing, financials, efficiency, and operations lens discussion. And we’re gonna have today through my career as an engineer, MMA interchange consulting for many, many years: Little, Brief stint in the branding and marketing strategy area. And now, 14 years here at Brandeis, and for those of you that don’t know, brain active, because most executives of a company like ours, we’re really focused in, on the financial analysis, The logistics of brand, implementation, and marketing operations.
Philip: Which basically means that if you’re going through a big rebrand, M&A, partnership, affiliation, that kind of stuff, we’re the ones that come in and help you scope, do the cost analysis, plan, and execute that conversion efficiently and effectively. And we also spend time with our clients on Marketing operations to make sure that they know how to save money, redirect resources towards things, do things more efficiently, that kind of stuff. So, that’s the lens that I’m bringing to this discussion. My hope I work with all of these disciplines that’s represented on our panel every day and every project that we do. So, my hope is that I can facilitate a good discussion using this forum to bring out some good content for all of you. Now, we’ll move over to our panel. I’ll let each of you spend a brief minute introducing yourselves as well. Donna Lee, why don’t we start with you?
Donna Lee: Sure. Hi, I’m Donna Lee Ubertalli, I’m the VP of Marketing at the Dana-Farber Cancer Institute in Boston. And I’m very happy to be here I’m responsible for the strategic direction and the day-to-day operations of the marketing function at Dana-Farber.
Donna Lee: And with that, I’m responsible for driving short and long term, brand impact and clinical growth. My background is in big brand, developing big brands globally, here in New York City or advertising agencies.
Philip: Excellent, Nate.
Nate: I’m Nate Kaufman, Managing Director of Kauffman Strategic Advisors and Diego. My associate is whiskey. He’s taking a break. Right now, I’ve been in health care over 40 years. I was one of the first healthcare marketing professionals at HCA and Enemy, which is now tenant, I’m actually a lapsed marketer. I have my own consulting firm, and I work with hospitals and physicians primarily on physician hospital transactions and payer transactions. I also provides strategic advisory services and board education services to health systems and large medical groups. For the past decade, I’ve also helped a large health system manage their Orthopedic Service line. So I spend a good part of every day in the trenches working with doctors, which is both the best and worst part of my day.
Shannon: Thanks. I’m Shannon Susko, I’m an Executive Vice President of Financial Communications, and healthcare need an element. I lead our healthcare fan comms team, which supports clients across the industry And in anything that didn’t hacks reputation evaluation, so we support crisis communications capital, market needs, investor relations, special situations, And of course, I’m an amateur here to talk about today.
Shannon: I spent my career at the intersection of healthcare and finance starting originally working for a decade for a payer that focused on the military’s healthcare benefit, Tricare, and then later moving over to the agency side where I work to support activist investors and our corporate clients who are exploring opportunities for consolidation and court requisitioning across the sector. Looking forward to today’s conversation
Philip: Awesome. And finally, Jeff:
Jeff: Good morning everybody. I’m Jeff Goudji, I’m a Partner from Prophet. We’re a growth and digital transformation firm that helps our clients grow through any number of ways, experience, organization, culture, marketing, and certainly brand strategy. I lead our healthcare practice. I wrote a book that we published last year called Making The Healthcare Shift: The Transformation to Consumer Centricity, and through that, I learned all kinds of interesting stories and insights and looking forward to sharing and experience from network and from our, from our client work on the subject at hand today.
Philip: Awesome. Awesome. So, that’s good background on everybody. You know, leverage that background, If there’s questions that come to mind even outside of their current roles, you’ve got some history. So, by all means, again, use that question panel, ask some questions, and we’ll get to that in the back half of this webinar.
So, let’s move on to the topics that we’re going to be discussing.
Philip: As I mentioned sort of at the beginning, we’re going to be talking about the current and future state landscape of partnerships and M&A. What makes it successful and fail? How brand new culture on play a role in that, and shape the success of the partnerships? What’s going on right now, around the acceleration of getting things done, just in general, frankly, as a marketer, and a health system? But also, as it relates to partnerships, and M&A ways to influence these things within your organization, the role that the marketer should play. And then, how to bring efficiency to these will? We’ll start off with a couple of data points just to lay the foundation obviously, gets funder to show what other people think. So, we all know the obvious because basically this points out the obvious, right? You know, we’re looking at a BFA and Health Leaders media study That basically says, over the next 12 to 16, 18 months, actually.
Philip: Two thirds of health systems are currently exploring New deals are in the process of exploring new deal’s. I don’t think that’s a surprise to anyone.
Philip: But the interesting information, and as we move to the next slide, right, and we look at the next three years, right, Again, only only 10% of respondents are saying that they’re, they’re unsure of or might be decreasing their M&A partnership activity.
Philip: And on the next slide, we’ve got an EY study, which basically is in furious agreement. So, again, we’ve got a second and third party here talking about how that, this, this basically matches the tenure of expectation level for partnerships, and so, again, really contemporary topic and then finally, we’ll show one more piece, which is the President and CEO of Hartford Healthcare. I’m Jeffrey Flax spoke at Modern Healthcare on partnerships, and was really highlighting what makes them successful. And his four points of success in The Partnership, is community, access, quality, and affordability, and you know. I know from our prep conversations with this panel, Nate, potentially in particular. What would have a perspective on this and we’ll get into some questions around what really does make the successful?
Philip: From a business metrics side it and then also just you know the more the more intangible success factors, so we’ll get into that.
Philip: But, let’s start off with a general thought on the current and future state of partnerships, and M&A, Shannon. I know that you’re involved in quite a lot of these across your client base and you know, how would you describe the current state of affairs, how the pandemic may have accelerated expectations and timelines. Is there a greater opportunity right now in your perspective for partnerships at this time? Whoops.
Philip: We may have lost Shannon, Nate, do you want to, do want to jump in on that?
Nate: Sure. Yeah. There’s a lot more talk going around about this. And one of the things that’s driving it is the payers while the payers have had record profits as a result of the pandemic.
Nate: And this health systems and the hospitals have seen record losses, operating losses. You would expect the payers to be somewhat empathetic towards the providers who they referred to as heroes during the peak of the pandemic. Unfortunately, they haven’t changed their playbook. In fact, they are being more aggressive in terms of expecting lower rates. Rate increases from both the physicians and the hospitals. And what we know is that if you don’t have any negotiating power with the payers, in terms of being a must have health system in a region that you’re not going to get the kind of rate increases you need to subsidize under funding from the government, And so one of the things that’s really driving consolidation is shelter from the aggressive negotiating from the payers.
Nate: So, from my perspective, both physicians and hospitals are having to consolidate to get shelter from the payer storm, we’re seeing payers opening with -18% rate increases in some markets. And so, in order to counter that, if you’re a standalone hospital, you have no ability to counter. Consolidation payer. The aggressiveness of the payers is, I think, a primary driver in this whole process.
Philip: Jeff, do you have thoughts on what you’re seeing in your client base?
Jeff: Yeah, I think there’s, there’s, there’s tremendous opportunity for partnerships, no doubt. I think when, just because two kinds and I’ll share a caution. One, certainly traditional partnerships for all the reasons that Nate talked about in terms of gaining scale and the ability to make investments. I think the other thing that’s really interesting is just potential for partnerships, what I call non-traditional partnerships, between providers, systems, and technology companies, start-ups, et cetera.
Jeff: And, the key to, kind of, transformation being more consumer centric, is creating solutions that often come, through partnerships that are not just, you know, one healthcare provider with another.
Jeff: The cautions, though, are obvious, right now, I’ll just leave this, here, is that when you take one organization that is, delivers a fragmented experience and you merge it with another organization that delivers a fragmented experience, most likely you’re going get a more fragmented experience. So, we could certainly dive more into that, and I’m sure we will dive into some of the cautions and the key success factors, but with opportunity, also comes, also comes from cautions.
Philip: Now, and Shannon, when you, when you dropped off, I actually directed the question to you. So, I’ll allow you a chance to jump in where we’re talking about what are you seeing in your client base right now? What, what sorts of new partnerships, what sorts of new pressures? You know, how is this accelerating and how does that work?
Shannon: Of course, in my apology, our power went out, so I am on my cell phone right now. Some certainly apologize for the disruption. So, I think, you know, clients right now across the sector are challenged by a lot of things. There’s a lot of liquidity situations and the uncertainty of the future, both with considerations of the COVID-19 pandemic, but also regulatory uncertainty, and for many of our health and hospital systems. With the unfortunate passing of Justice Ginsburg uncertainty about the ACA potential for repeal and what that will mean for hospital system revenues, going forward from a financial and operational perspective. I think those are factors that are considerations as they think and look ahead to potential growth and strategic trans promotion opportunities both in the near and the longer term.
Philip: That makes sense. Donna Lee, I’ll check in with you real quick because this I mean this this sort of general foundation setting I’m interested in your perspective as you’re working through you know this time. Are there are there new things that you haven’t thought of before that are being brought to the table that you know are being accelerated? What’s happening at Dana Farber from a partnership perspective?
Donna Lee: I reinforce what the other panelists are saying. And we’re seeing a lot of interest in partnering in to stabilize growth for smaller health care systems who need an oncology partner. So they’re looking to leverage the strength of a brand like Dana Farber for instance to extend their growth.
Philip: All right, well let’s talk about the benefits. Right, so, you know, obviously, I mean, there’s going to be a lot more of this. There is a lot more of this right now, very simple, things like technologies, you mentioned, Jeff, but Nate, partnerships bring a lot of promise. They bring a lot of perceived benefits. We’ve gone through many of them already, even just with our client base, So, you know, what are the, risks to the drawbacks? You’ve gone through a ton of things. Right, so, you know, as, as an advisor, and also on staff. So, what are the risks and the drawbacks of partnerships compared to traditional laminae? Right, is there an argument for more traditional M&A yoga partnerships, or how do you see that balance?.
Nate: I just want to follow up on what Jeff said. You know, you can’t take the third and fourth tier hospitals that have poor physician relations and physicians that have poor reputations in the community and merge them together and think that that’s going to turn into something good.
Nate: Also, Navigant did a study recently of 93 health systems, and they plotted their revenues against the profits and actually saw an inverse relationship between revenue and revenues and profits, because the larger you are, the more difficult it is to control to create an operating company that’s efficient and can present to the market. A brand that is consistent and high quality, in fact, what happens is they lose control of operations and start dictating things from the system office and start mandating layoffs and all the hospital personnel instead of focusing on the patient or focusing on whether the system is going to dictate another layoff. And so, quote, the brand becomes, all the employers of the only employees of the system looking over their shoulder, wondering if they’re going to be the next layoff.
Nate: So, the whole issue becomes, how do you balance the, the system, and creating a true brand to the public, and to the physicians? Because, in my opinion, the physicians are the key to a brand. How do you create that, that kind of commonality of care delivery with the ability to address the local nuances of local health care? And very, very few organizations have been able to create that balance. And so the larger you get the more you become, just this behemoth is that loses control of operations, and loses control of the brand. And so, scale is not always in your favor, and so, just because you merge doesn’t mean you create a brand.
Nate: In fact, just the opposite of what the data shows, So the answer is, that scale is not necessarily in your favor, and very few have been successful.
Nate: So, just one other point, most of the partnerships that I see out there aren’t working with, you know, talking about mergers and other partnerships with hospitals or health systems, the other it’s kind of like being in half pregnant. Most of these other ones don’t work.
Nate: So, we’re still in the early phases of what makes up a successful merger. I think there are few and far between.
Jeff: Yeah. Just to build on that point, some of our work comes around the time of a merger but an awful lot of our work will come three and four, even seven years later where they want to create a one company approach. And, you ask, what, what, why are you, not one company you did your last merger seven years ago?
Jeff: Very often, it’s because of those issues that deal was put together for financial synergy reasons, which are, you know, totally logical and provide potential not only for bottom line savings, the potential for driving the entire triple or quadruple aim, but they don’t always materialize. So, you know, we usually advise on the early days, bring your customer to the deal table, bring your marketing department to the deal table, don’t let your marketing department find out when it hits the newspaper, right, that you made this merger. That’s kind of the early days. And then after the merger, you know, think about, you know, not just system, integration of financial assistive technology system integration. But think about all those other kind of cultural pieces that make people actually want to work together and want to deliver on a value proposition. That makes the merger make more sense for the patient than the entities independently.
Jeff: Just one more point on that, if I could. The answer I usually get is, Well, what’s the proposition for the customer or the patient that you put these two systems together? And I hear access, right, But almost always they’re talking about access for commercially insured patients. They’re already had both systems in network already to begin with, right? So that alone is not a value proposition. And figuring out that value proposition, ideally before the merger is put together. But, if not, certainly in the very early days, is critical. It can’t just be the value proposition for the financial bottom line, or it’s as Nate said, I’m likely to be in that category three or four, or five years down the road of being unsuccessful.
Philip: So, I want to put you guys on the spot. you, First of all, you brought up two things there that I want to touch on again, in more detail, But I want to put you on the spot. So, what is the value proposition. And I don’t mean, you know, I know every situation is different, right, but, you know, what, are what are the two or three or four things that, you know, are outside of the financial metrics. That is the value proposition.
Jeff: So, there’s a couple of different buckets that they could fall into right off the top of my head, right? One is, it can be, you know, greater expertise, right. So, ability to have greater collaboration between systems, greater access to clinical trials, greater sense that they’re creating something new and best in class right versus just the local community oncologist, for example. Right. So, that’s the first of all, unusual expertise.
Jeff: The second one, which I think is actually more important and likely to be prominent going forward, is about, you know, is I’ll put in the bucket of a better experience, right?
Jeff: So, per elastics change, putting systems that don’t work together, that don’t talk to each other together is actually likely to be a step backward to begin with. But ultimately, over time, scale can provide the opportunity for investment in things that actually make for a smoother, more integrated, less fragmented customer experience. So those are two broad buckets. Every system has got to figure out which one they want to be in, and how they’re going to deliver it, and being clear on early is beneficial.
Philip: Shannon and Donna Lee, do you have anything to add to that around success metrics?
Donna Lee: I was just going say that, I totally agree with Jeff about bringing your marketing partner to the table early because you really need to work out what the value that the brand is going to bring to any deal and how that’s going to work. Because there’s a lot of times opposing forces, right, you’re dealing with two different brands now with different partners. And so it’s really important to have that person or that partner at the table with you.
Nate: So just one comment, you know, the hardware of a health system is the buildings and the administration. The software is the doctors and the nurses and the other clinical personnel. It’s all about the doctors.
Nate: So when you look at if, I can speak for Donna Lee for a second, Dana Farber is nothing without the clinicians.
Nate: And so, this business is about doctors, clinicians. And so, if you have different sepsis protocols at two hospitals, you don’t have a health system. My friend, Jeff Goldsmiths said, care has to be organized, not improvised. So you’re not a health system if care is delivered into hospitals in two different ways.
Nate: You’re just, you know, two different organizations, and you talk about bringing the marketing people to the table, The first thing you need to bring, are the clinicians to the table, and figure out how you’re going to organize care.
Nate: Because if you’re not providing appropriate care at the two organizations, and you’re not getting similar outcomes at the two systems, that, how are you a health system? You’re just two buildings with different doctors in it. As one pediatrician, I’m on the board of a pediatric group. He said, we don’t have a brand we’re branded.
Nate: And so fundamentally, our brand is clinical before anything else. So, the patient experience, the service, the access, the appropriateness of care, and the outcomes have to be standard in order to have a brand, before you put, before you put a logo on. I mean, those are the fundamentals. And if you don’t have those fundamental things standardized throughout your system, then basically, you’re kidding yourself. So, my two cents.
Philip: This is great. I’m interested in the bringing the marketing to the table early element of this.
Philip: We spend a lot of time trying to educate our clients and their teams across the organization around why that is so valuable marketer’s perspective. And it’s, it’s not just about figuring out the value proposition and how we’re going to market. Right. You know, branded asset conversion is millions of dollars, even for small houses, you know, across legal entities in IT and signage, and all that kind of stuff, as well. And that’s a financial element that, you know, M&A deals don’t actually optimize, right?
Philip: So, even just from a pure dollars perspective, bringing the marketer to table to help scope this stuff, that is really important. And then, you’ve got the value proposition, and then you’ve got the operational disruption of actually implementing that across everything that you’re going to do. That a marketer can help with, right? And these things just take time. So, the earlier and partner that can get in the better.
Philip: But, Donna Lee, you’re kind of a unicorn in this area, in the sense that you are at the table early, in these deals, and I’m curious if you could share some with the group around one, how you’ve made that possible, or if it’s just something unique within the organization and the culture there, right. And what’s made that successful as a partnership internally?
Donna Lee: No, I agree with what Nate was saying that it’s actually a multi-disciplinary approach and I’m fortunate to have partners that believe that. So you, know, well, marketing may be there in an advisory capacity early in the deal, it’s very important for us to at least hear what’s happening and how the deal is being structured.
Donna Lee: How the brand, how our brand Dana-Farber Cancer Institute is going to be used or the desire for how it would be used in a deal, that sort of thing.
Donna Lee: So it’s you know, we have new leadership at Dana Farber and past three years and and she sets the tone from the top about collaboration. It’s something that Dana Farber has done for its entire history. Dana Farber is about collaboration and so I think this just takes it to that. In this particular situation. It just extends to collaborations.
Donna Lee: So everyone you have to have people want you to be there right in the first place. So in addition to coming there with some authority on your particular subject.
Shannon: Just to build on what Donna Lee was saying, I agree wholeheartedly. And I think when we look at the transactions that we work on, whether they are academic medical centers, for-profit systems, non for-profit, or religious based systems, those that tend to have the best success bring comms, marketing and public relations to the table early. Because the, the focus on a multi stakeholder, multichannel approach to make sure that your deal rationale resonates with key audiences can’t be underestimated, Right. And the ability to reach those audiences in earnest and communicate that value proposition, which, as Nate noted, may be very different for a clinician, then, you know, for a patient. And a consumer of health. And today, consumers are more savvy than ever before. And so, I think with the Amazon effect on healthcare and broader expectations being more heightened, it’s really critical that comms play an upfront role in guiding and helping to convey that strategy from the very beginning. And that doesn’t end at deal close. That further goes into integration to make sure that they’re a central role in helping to communicate that ongoing value proposition in the market.
Shannon: And I think, you know, one of the things we look at it Edelman is trust, right? And so, for more than 20 years, Edelman has been looking at the intersection of trust between business, governments, NGOs, and media. And central to communications, and anything, is building and maintaining your credibility with your audiences, and we know from our research, particularly with a recent edition of thrust that, we’ve done a COVID cut, if you will, that, doctors have great trust and credibility during this time. And so, we can’t stress enough the importance of bringing your clinical service line, and your leaders to the table here, because they can be very effective in helping to convey and articulate messages. Not only internally, about value proposition of a deal, but to external audiences, and communities as well.
Philip: That’s all really great points, and now I have to ask an annoying question, right? Because I can imagine, we got 46 people sitting out there watching this right now, and, you know, none of this about, yes, I’d like to be at the table earlier, is news to them. I can see them kind of rolling their eyes and saying, that’s all, sounds really great, but, you know, my organization doesn’t care, I’m a cost center, right? And they kind of want me to just go do what I do once they figured everything out. So, how do you help these people who are spending their time with us today, build that case? How would you advise them to say this is, this is a conversation with your executive leadership about why that makes sense to do?
Jeff: So the answer doesn’t come the day of the deal. Right? Or the day before for the deal saying, let me in. It’s certainly not that. It’s really about building credibility for the marketing function. I would say there’s a lot of our work is around building what we call modern marketing organizations and looking outside of healthcare places like Target like, MetLife like you know, Electrolux, other places where they’ve made a transformation right. It usually starts though in healthcare by bringing examples from outside to talking about the role that marketing can play beyond communication beyond, logos beyond advertising. And that usually starts with the ability to bring customer voice and insights, and, integrate that into business decision making.
Jeff: So, the process for us is usually around mapping, you know, the changes happening in the environment that your organization may or may not understand, right? External forces, consumer needs, customer needs, referring physician needs with business priorities. and aligning on a role marketing can play, in the future, right. And saying, this is a future role, and then building capabilities toward that processes, Technology, structure, et cetera.
Jeff: But then, it’s about putting proof points on the board, bit by bit by bit, and showing how marketing can add value before the fact, by bringing an insight, and forming a business decision, not just communicating and after. And through a couple of the building proof points over time, is where marked organizations build credibility. So that, when the next deal comes along, there’s opportunity to play a bigger role than in the past. You know, where’s it happened? I tell you, I only see green shoots of it happening, right? There are very few organizations where marketing has become that central role, like in CPG. But, green shoots of progress.
Nate: So, one of the things that I just heard about the Amazon the examination. Shannon. You split said it better of consumerism in healthcare. I really caution everybody. There are segments of consumers in healthcare. 5% of the any population in health care consumes 55% of the health care dollars. These are high cost climates, and these people don’t shop, they don’t shop at all.
Nate: These people have HIV. They have cystic fibrosis. They have cancer. And there’s a whole bunch of research about these people, and they go where the doctor tells them there in the system. And there’s a whole lot of data on this. These are doctor directed folks in general, 50% of the population consume 4% of the health care dollars. These are the virtual folks. They may or may not shop and they shop for select services like ED, urgent care, and other things. So, we need to say, first thing I ask is we segment the market, and understand that that five percenters are physician directed, totally physician directed, and probably the next 5% that consumes another 20% of the population of the health care costs – they probably don’t shop much. They have multiple chronic conditions.
Nate: And the reason I bring that up, is we have to segment the healthcare market. Don’t consume. Don’t assume that everybody’s going to be a consumer, and they’re going to shop the same way, and all that stuff.
Nate: The second thing is the reason I’m lapsed marketer is because I couldn’t stand sitting there and having some CEO tell me that, OK, we just hired this physician, who was not respected in the community, and we put them in a closet. Now, go, sell him
Nate: I was supposed to go try to figure out how to make that all work. And just get back to the fact that you have to have all the elements in place. And if, if, if they’re not listening to you as a marketer, I don’t know how to fix that stuff.
Nate: And if you don’t have good relations, you can’t go on to that next step of going and branding and selling, and so hopefully you can find a small project and show that it works. You mentioned Joe Flax, who’s one of the smartest young CEOs in the country, I worked with him a lot. And we’ve been able to show that by putting physicians in charge of an orthopedic, inpatient unit, and listening to them, and working with them, and then marketing them that we’ve been able to shift, market share, and increased profitability. And once you can take a small project and show that it works, then you get the CEO’s attention. That’s the only way I know, to get marketing to the forefront, because most CEOs still don’t get it.
Shannon: I think communications and marketing are also at the forefront for both offensive and defensive reasons, though, right? Because if we think about it, everything we’ve just spoken to, speaks to deals that are successfully announced, right, and, and nearly 45% of deals leak early. So if you don’t have your comms, marketing and PR team at the table early, you’re really at a strategic disadvantage because you may be finding yourself as a system in an, in a situation in which your deal rationale has been controlled. The narrative has been controlled by someone else. And so capturing or recapturing control of that in short order and getting things back on track is critically important. And central to that is obviously your comms, your marketing, and your PR teams, to make sure you’re appropriately situated to get back on track, execute against your strategy, and really regain control of the rationale for this deal in the strategic benefits for all audiences, not just those who may be supportive of this.
Philip: I’m really, I’m really glad you brought that up, Shannon. Honestly, that’s, um, that’s one of the areas that we spend a lot of time advising our clients on as well, not that we do communications because we don’t, right. But, that owning the conversation element of that can only come if you’ve had time to plan for it. Right. Or you’ve got labeled associated with that because you’ve taken the time to plan out what that playbook looks like or, you know, whatever that looks like. So, I think those are, those are all really good ideas.
Philip: I’m interested, Jeff, you talked about the cultural element of this. Right, and in any partnership, and M&A, right? I mean, you go, you go back 15 years, and every study right says, You know, the biggest point of failure in any M&A or any partnership is, you know, employee buy in culture and experience.
Philip: So, how do you, how do you address that element? Particularly, in hospitals and health systems, that have such a massive cultural attachment to the organizations that they’ve worked for, your community, that, they were born at, that, you know, blah, blah, blah, right. I mean, how do you manage that?
Jeff: Yeah, so, an interesting, there is a project that Philip, your team, and our team worked on together with post acute care, provide our merger. And here, the interesting insight was, was, well, so, a couple of things.
Jeff: One is for, I go there, one, is that sometimes like communicating externally and explaining what’s the value proposition and why this is done is absolutely essential, and getting it right is hard, right?
Jeff: But, actually, that’s actually often not as far as getting the employees to buy it, right? Because the average patient, they wonder, ha, this is new, what’s this about? They get an explanation, they’re satisfied, right?
Jeff: Employees are much more skeptical. They have much more skin in the game, so to speak, it much more effects their livelihood. But you know, back to the deal that Phillip, your team actually worked on the post acute care deal. The insight there interestingly was the senior most leaders got it, right and we’re probably part of architecting and bringing it together.
Jeff: Later on, down the road, the frontline employees, the nurses, they got it. They said, OK, this is the new way we work and the new silos we work in. They got it. The biggest barrier were those people, those career employees who’d spent 15, 20 years, most likely had gotten there what I’ll call, you know, middle management, and next level down from the C-suite management.
Jeff: And put so much of their own kind of self value in their relationship with the organization, to your point. So that’s very often the pinch point. It’s not in the very front lines, right? It’s not at the very top. It’s in-between.
Jeff: So that’s critical. And I think what typically works with us is, first of all, over, communicating and explaining, but also, we always advise the chance to build something together. So for this post acute care organization that we recently worked on the merger with, we worked through a very co creative process with dozens and dozens of employees to create their new values of the new organization. Now, in the end, and I put it up on the slide, if you’d say, yeah, that’s the, looks familiar. That’s, that’s the typical things. That healthcare organizations include those values.
Jeff: But the magic was in the creating it, and the magic wasn’t people knowing they were creating it. And if they didn’t directly participate, knowing their peers and friends participated and knowing they were invited to participate. And those are the types of things that get people to say, This isn’t a takeover. This has the opportunity to create something together that goes beyond the initial messaging and actually create some tangible shared experiences to allow that. So, that’s usually the key to make it happening smoothly. You create new interactions, you wouldn’t have had otherwise. You focus on what are we creating versus where did we come from and you focused on the shared experiences and shared values and shared vision for the future.
Philip: Yeah, Donna Lee, I’m interested. You know, for you. As the leader of a health system from marketing, communications perspective, how are you doing? From a cultural integration standpoint? Even just a partnership that says, yeah, we’re going to use your brand, you know, whether that’s actually directly owning your brand or some sort of co branded environment or something like, how are you managing?
Donna Lee: I think there’s a couple of things. So we have, we’ve worked over the past couple of years, too, rebrand ourselves and create a brand architecture. So, we had to have a very complex organization with a lot of partnerships, you know, hospitals, and physician practices, and pharmaceutical, and biotech, and so forth. It’s all very complicated.
Donna Lee: And so, we sorted out our brand architecture and created very strong brand guidelines, And I think we start there. I think you have to be really organized about what you’re doing, and you bring that to the table, And then I think it’s very important to establish guidelines for any partnership, So, how the brand is going to be used, and how it’s going to be talked about. And all of that needs to be part of the discussion, you know, as the deal is being put together.
Donna Lee: So, it’s very important for everybody to be in alignment on that,.
Philip: When you look at actually managing those, so instead of, you know, communicating around, you know, ok, we’ve got this new partnership that we’ve got, this new M&A, and now we’re engaging, right? Once you’re beyond that point, and now you’re in the point of managing that partnership, right? How do you manage that for quality consistency? You know, the right brand representation?
Donna Lee: Depending on the, depending on the type of deal it is, if it’s a collaborative partnership, for instance, we do have a team of marketers and business development people who work directly with them to support the physicians and to support. So to Nate’s point, you know the physicians at Dana-Farber bring a lot of the credibility to the organization and a lot of training and knowledge and so forth, and that’s all part of what they’re partnering with us for. And so, we have a team that manages those relationships. So, putting on program CMEs, and many, many other activities in the marketing and communications area that support that relationship on an ongoing basis.
Philip: That’s great. Yeah. I’ll throw a few more ideas out into the mixed on this, Right? You know, when we’re when we’re talking about managing partnerships, and this is, you know, inside and outside of healthcare, we have a lot of corporate clients that you have to manage, you know, hundreds of third parties that are leveraging their brand, Right. And, you know, having an M&A playbook huge, right, Having a partnership playbook from a marketer’s perspective, right? Huge. Not the organizational integration of IT and HR and that kind of stuff. You have, you know, Deloitte, and McKinsey, and other, people like that, that are trying to sort that out. And they’re not dealing with the marketing aspect of how are we going to manage this? How are we going to convert assets? How are we going to cost this out? How are we going to manage all those finances and budgets? How are we going to collaborate from a creative and workflow standpoint? So, sorting all that out really big piece, you know? Having a good digital asset management system. And I know that that I almost choked on myself using the digital asset management element of that because that whole landscape has gotten so much more broad.
Philip: When I talk about that, I’m talking about having workflow, right? Having templates, elements that people can adapt and use right. You know, having standardized vendor sets and integrating production into that digital asset management environment right on having standardized rate cards and rate sets for that stuff. So you’re not treating everything as a one-off.
Philip: So I’ll just kind of throw off, throw that stuff into the mix, as well, on how to manage this stuff.
Nate: Let me, let me raise one issue that I think is probably the most important from my perspective. You know, 67% of a median hospital’s gross revenue, comes from government funding or indigent care. And so, rates are everything. And our rates are always under attack. In fact, the Rand Corporation just came out with a report, again, attacking hospital rates as being unfair and unreasonable, especially for higher hospitals with higher rates.
Nate: And our communication with hospitals, health system communication with local employers, especially as it gets closer to rate negotiation with payers. I think, in my opinion, is the most critical communication that we have. And the ongoing communication justifying our value. And why our private rates are justified and necessary.
Nate: To me, there’s nothing more important that a marketer does than that because we are under attack. And there’s no way that we can survive on anything close to Medicare or Medicaid rates. And the payers – this is a space I live and have become more aggressive. And then we see Rand Corporation coming out with these national studies saying that employer shouldn’t be paying 250% of Medicare. We’re under attack constantly, and so from my perspective, there’s no more important area that we need to be focusing on, and we’re not very good at it, at this point.
Philip: OK, any additional thoughts, Shannon, Jeff, on managing partnerships, driving efficiency, driving success?
Shannon: Sure, I’m happy to add one thing there. I think to your point there before and Nate, and then to your question, Philip, I think, you know, there are a lot of reasons that drive partnerships, and M&A activity. And I think, right now, some of the things that drove it, pre COVID, that are still in the mix, But there are others that have taken on, greater emphasis, right? So, we always see opportunities for our mission alignment, or capital, or, financial reasons, payer considerations, Nate, to your point marketing community needs, and then optimization of systems, or a few that, particularly during the COVID era. Regardless of why you’re looking to transact or seek a partner or though. I think those that have more systematized and templated operations on and considerations that certainly makes integration and planning easier, right. Because their likelihood of greater consistency facilitation of processes that are more standardized, which can make that effort to combine your organizations and align more efficient.
Shannon: But in either instance, I think, you know, the fact that communications has a central role in helping to kind of organize and pair it through some of that. To make sure, that, at either on the prize, not only keeping things, moving internally on those processes and integration efforts, and planning, but also externally, so that everyone is kind of aware of and informed of the efforts underway, where you stand in the process, the continued benefit and rationale of a transaction during this period.
Shannon: And I think as we move ahead, you know, there’s, there’s a greater emphasis and an onus on transparency than perhaps ever before. And I think that’s an important consideration as we move through this period and beyond, whether you’re in a period of strategic transformation, or you’re just normal course business. And so, I think that’s something else that we may want to think about, from a system perspective moving forward.
Jeff: I’ll just pick up. I think, I heard implicit in Shannon’s response and Philip in your response just around making M&A can become if not a competency, at least something that you know, you can get better at. Right?
Jeff: If organizations are diligent about learning and you look at, you know, the advocates of the world that have, you know, joined forces, with Aurora, very process of possibly join forces with Beaumont and announced very publicly, they intend to continue to expand organizations that have a lot to learn if they if they choose to. Nate’s experience, maybe a Tenet and an HCA may or may not support that. I don’t know. But I think it’s really important for organizations.
Jeff: Once they’ve gone through it for moralize, what worked, and what did it? Otherwise, you know that there’ll be legends, and lore, and probably myths created by the time the next deal comes around.
Philip: Yeah, like I said, where we work with GE and Caterpillar and you know, companies like that, right. And the concept of Marketing Operations, Right, is, is something that even those organizations, kind of, across their eyes out, and like, what is that. And, you know, it’s becoming significantly more important. And you’re starting to see people get appointed into roles of marketing operations now, and, and their entire job is to figure out how to standardize and simplify and make marketing operations repeatable, right, And partnerships and M&A represent a really great opportunity to do that.
Philip: I just want to pause real quick, and say, I definitely want to make sure that the panel gets to any questions that, that the audience has. And we’ve gotten a couple questions in the question pane, but while we finish up one last round of thoughts here, I’ll just prompt everyone to get any question that you have into the question pane and then, we’ll spend a little time at the end of this address.
Philip: So, I wanted to just take a second and, you know, kind of do a round robin on the, the agenda of, you know, the current landscape, what makes them successful, what makes them fail, the role that a marketer should play. That kind of stuff.
Philip: Is there anything in your mind that we haven’t touched on, that you’re like, ah, gotta get that one in?
Nate: One thing I just want to point out, I mean, at the end of the day, we have to judge our health systems based on two things is, market share, growing, and is profitability growing.
Nate: Those are the two metrics, because we can’t, we can’t lay off enough people to solve our problems, we have to grow, and, and, and if the market is, if we’re doing the right things, and the market should be rewarding us, and, ultimately, we can’t survive if we’re not profitable.
Nate: And so, the ultimate reward for an M&A strategy has to be market share and profitability. And one of the concerns that I have is, if you look at a lot of these organizations, at the end of the day, if M&A is working, the, the answer has to be market share and profitability is growing. And what scares me out there, is that a lot of the M&A work, the leadership of the organizations and the boards have been fooled into thinking that things were working. Because, the buying organization had high rates and high rates hide since operational sins. Marketing sins, position, relation sins. And as the shift from commercial to Medicare and Medicaid happened, all of a sudden they uncovered that they’re not good operators. They’re not good marketers. They’re not good physician relations people, and now they’re struggling.
Nate: And so one of the concerns I have is this hubris that exists in our organizations that were good, but we weren’t really good. We just had really good rates. And so, I encourage all organizations, as they do M&A work, to discount the benefits of high rates and really look at the two questions, which is market share, which is not hidden by high rates and profitability. And if those things aren’t growing, then you’ve got some sort of marketing, operational, or physician relations problem that needs to be attended to. Don’t be fooled and get back to basics.
Jeff: Your point’s well taken that the other metric for me, feels like it has to be on the table are related to outcomes and experience. And, I think, you know, to your point, when that happens market share grows. Right. But, I think there are counterexamples, as well, or market share grows, and there are problems with that. And, the inverse is true. Right? If you measure outcomes and experiences to improve those that then, market share, will follow. So, but all your points are well taken.
Philip: Donna Lee, any final thoughts that we’ve missed from your perspective?
Donna Lee: No, I think I wanted to just build on what Jeff said in establishing clear KPIs at the beginning. And I think that your marketing partner, bringing your marketing partnering early will be helpful because they bring outside experience. They have and then you’re going to rely on them at the other end of the equation to help you to promote this new relationship. And so it’s really important to have that person be fully aware of what the you know all the aspects the pros and cons of any DLR.
Philip: All right. A question from the group here.
Philip: In your experience, would you speak, to what extent do you see brand value as a strategy and negotiating partnership agreements versus brand use as a negotiating tool by those negotiating partnership? Really, it’s a brand value question, right? Of, you know, does brand value in your mind play into partnership negotiation or is it straight financial?
Donna Lee: This is a million dollar question.
Jeff: Yeah, I guess I don’t think it’s either or. Philip, I think there’s, there’s clearly far, more than financial value, but you know, so often the brand value, when you have systems in different geographies, one brand doesn’t mean anything to the other geography and vice versa.
So, I am fully an advocate for making sure the customer comes to the table, the marketing department, comes to the table. Brand considerations come to the table. But, brand value, I think, goes a lot of ways as, as an outcome, and not a reason to do a deal.
Donna Lee: Yeah, I think it’s an important component. When you’re putting the deal together, is what is the value that your brand is bringing to the partnership?
Donna Lee: And understanding what that is, because they think it can be leveraged in your negotiation,
Philip: Healthcare is such an interesting industry in this. And I know I’m not a branding guy, and even moderate, you guys have much better perspective on this, but, you know, I mean, we see it a lot more on the corporate space. That brand value gets leveraged as an asset in deal negotiations and then there’s, you know, Donna Lee, right? Dana-Farber: right, there’s John Hopkins, there’s Cleveland Clinic, there’s, you know, there’s these unique organizations that can really make a solid claim on that. Then, there’s other people that, that have a hard time making that art.
Nate: I’ve actually seen huge brand value of individual physicians in the region. So, if you bring the clinical star from one hospital to the other, they get a huge following and you get brand value from them.
Nate: I’ve actually not seeing a lot of brands value, when you, for example, bring a certain competitor to Donna Lee down from up from, oh, let’s say, Texas, to Minnesota. You don’t necessarily get a lot of brand value, or, you know, bringing Mayo or Mayo affiliation to Washington, DC. You know, all of the hospital administrators look at the fact that there’s that affiliation, but I haven’t seen a lot of big market share shifts as a result of a male affiliation. So, you know, everybody, all the administrators look at the billboard, but you don’t see a lot of patients shift as a result of it. So, to me, the biggest brand value, like, sorry, for being a broken record, is with the physicians in a particular region.
Philip: Another question: How can academic medical centers overcome their bureaucracy and delay the technology to be competitive and successful in engaging in M&A?
Nate: So, when I approach those clinical stars at academic medical centers to steal them away from academic medical centers, my pitch goes like this.
Nate: We will do a deal, and it’ll be you and me on Zoom. We’ll make the deal and that’s it. There’ll be no big conference rooms, we’ll get the deal done. I’ll bring legal in as I need them and these physicians will be floored that we can do a deal in 60 days without any bureaucracy and that’s it. I mean, it’s a huge, competitive advantage over these academic medical centers that can’t figure out how to get out of their own way. It’s just embedded it in their organizations.
Nate: And I can’t figure out why they just refuse to create these bureaucracies that they have and I’ve represented, by the way physicians who have tried to negotiate with these academic medical centers and the rules and just how stringent they are. It’s impossible to deal with them, just impossible.
Philip: So the point is, get rid of your bureaucracy, or I will steal your doctors,
Nate: It’s that simple. And we have. And in terms of market share, it’s been a huge opportunity for market share growth. And I don’t understand why, they just can’t figure it out. I mean, it’s not hard, you just stop doing it. But they won’t.
Donna Lee: I think, it’s a culture thing at an institution. And there’s also leadership, the will, of leadership in the, in those kinds of situations that needs talking about. Go ahead, Jeff,
Jeff: Let me pick up on that point, Donna Lee. You know, we’ve advised clients on how do you create the low hanging fruit and some quick wins, start to catalyze greater change. But our researches is reasonably clear, is that, when organizations successfully completed transformation, including AMCS, right, for the question, It always comes from the top. It’s just impossible to drive transformation and drag the CEO and the C-suite along. They’ve got to be on top. They’ve got to be driving it, and for those listening, and that may not be the answer you prefer to hear. But, the research is clear. I mean, that, that is the path toward transformation, in and outside of healthcare.
Philip: One final question for a rapid fire two answers from the panel. What unique added value role should academic medical centers play moving forward on rescuing regional systems, lowering costs, building a more robust primary care network? What are your thoughts?
Nate: What makes you think that academic medical centers can do those things? I mean, just the fact that they, how can they do those things?
Nate: And it just gets back to the comment, Philip, the system that I work for, the CEO hired me and said, you’re outside the organization. Go do your stuff. And that was the only way we were able to overcome bureaucracy.
Nate: So, I’m not loved within that academic medical center, because I just kind of work outside. So, I guess my question is, how can an academic medical center implement all of those things when they have such difficulty just working within the academic medical center?
Jeff: Yeah, my answer is academic medical centers should do what academic medical centers do best, right? And many are building front door strategies because they need to. But in the end, they’re not better at the front door than the non academic medical centers. It’s just the cost of doing business and doing what they need to do.
Jeff: So, my initial reaction to the questions is similar to Nate’s.
Shannon: OK, I think there’s also a unique opportunity. You know, AMC’s are not going to be good partners for everyone in the health ecosystem. But there are some that will benefit from some of the R&D and innovative academic research considerations that can help, for example, some more rural and community-based hospitals have access to things that they wouldn’t ordinarily have. And so, while there are certainly bureaucracy and other situations to consider, I think, you know, this isn’t an operating environment where we’re going to see a backlog of M&A in the next year, And you’re going see, you know, AMCS, rural, non-profits are, religious based, hospitals are all going to have opportunities for things to so many have had such a strong, liquidity head because of COVID. But I think the benefit of this, operating environment is that there’s going to be a buyer’s market.
Shannon: And there’s going to be some interesting opportunities across markets and geographies, where partnerships of different shapes and sizes to include, potentially some, AMCS, will be up on the docket in the next year, and so I think it’ll be an interesting time to see how some of those things unfold, particularly in the AMC space.
Philip: Excellent. This brings us to the top of the hour, everyone. Thank you to our panel. Really great job, and thank you to our audience, for participating and for the questions. This will be available on demand, by the way, and a copy of the slide deck, as I mentioned, will be sent out, and a link to the recording, will be e-mailed to you in the next 48 hours. And this concludes our presentation. Thank you all. Thanks for spending your time with us today and have a great day.