To avoid those breakdowns, the Brentwood, Tenn., company started a transitional services division that is present at the creation of a deal, so to speak, working side by side with the development team from the moment a tentative deal is struck. The transitional services division, headed by Jeff Seraphine, works with the development team once LifePoint begins due diligence on an acquisition, Carpenter says. The company first employed this approach when it acquired 154-bed Rockdale Medical Center, Conyers, Ga., in February 2009.
Watch a two-part Video Feature to learn more about how investor-owned hospital companies integrate their acquisitions
One of the problems with a less integrated approach is that operators aren't as aware of the promises made during the negotiations, Carpenter says. The transitional services division also helps the development team to understand the target hospital in order to make an appropriate final offer in the definitive agreement and also begins work on developing a strategic plan for the first three to five years under LifePoint ownership, Carpenter says.
The executives at five investor-owned hospital companies interviewed for this article all cited communication—with employees and physicians—as the most important aspect of integrating an acquisition into their companies. The acquiring company must explain its plans for the future, but even more important initially is reassuring employees about their job security, pay and benefits, the executives say.
During an interview in the boardroom at one of LifePoint's biggest acquisitions, 145-bed Sumner Regional Medical Center in Gallatin, Tenn., Carpenter says, “It's all about the individuals, and ‘What does this mean to me and my family?' And we have got to pay attention to that, because we want to ensure that patient care isn't interrupted.”
The more opportunities a company has to communicate with its soon-to-be-employees, the better, says Jay Hoffman, senior vice president of business development for Iasis Healthcare, Franklin, Tenn. “They may not like everything that they're going to hear,” he says, “but at least they're hearing something, which is better than uncertainty.”
In addition to getting the communications right, the process of integrating a new hospital involves a lot of planning before the deal is completed, executives say. The planning covers the conversion of information systems, including clinical, financial and personnel systems; changes in group purchasing and other supply-chain matters; and an evaluation of capital and physician recruitment needs and how those can lead to new or expanded services, executives say.
The planning period also is a chance for the acquiring company to learn about the culture of the hospital, system or company it is acquiring, Hoffman says. Listening to current managers, board members and physicians will tell you how you can meld that culture with your own and how fast you can make changes, Hoffman says.
“That's not an overnight transition,” he adds. “There's a trust that has to be built up over time.”
Sumner Regional Medical Center is the flagship of the former Sumner Regional Health Systems. LifePoint completed its purchase of the four-hospital system on Aug. 31, 2010, for $156.8 million and a commitment to spend $60 million on capital projects, just a few months after the Sumner system filed for bankruptcy.
Right now, the Sumner hospitals are the only ones under Seraphine's transitional services division, as Rockdale Medical has already graduated to the regular division structure, Seraphine says. LifePoint's new acquisitions are ready to leave the division's nest “when the monthly meetings become similar to regular division meetings,” he says.