Post-acute organizations are growing larger in size and scope due to record amounts of M&A deals and consolidation in recent years. The result is a post-acute market comprised of less independent organizations than ever. However, many systems have yet to unlock the power of systemness to capitalize on the advantages this newfound size and scale can offer.
Achieving systemness requires a concerted effort and durable commitment to run the organization in a unified way, moving the organization forward from a system-level perspective. Although challenging, this work will help post-acute organizations achieve long-standing goals.
Advisory Board defines systemness as the ability for a group of owned or independent business units to achieve collective benefits faster and more easily by working together, or consolidating, than each party can do on its own.
For post-acute especially, this means using the current size and scope, whatever size your organization is, to your benefit to help achieve goals like reducing costs, improving patient experience, creating a seamless care experience, improved staff engagement, etc.
The state of systemness in post-acute care
The post-acute market is consolidating into larger systems. The post-acute market is becoming comprised of more systems and less independent organizations. 2020 was a landmark year for post-acute care M&A with over 130 completed transactions—the highest in the past five years—up 45% compared to 90 transactions on average over the last four years.
This trend is driven by health systems buying into the post-acute market to expand their continuum of care, post-acute organizations growing in size and scope either independently or through M&A, and the newfound interest private equity firms are taking in owning and investing in post-acute organizations.
Many post-acute organizations are systems in name only. Despite systems becoming increasingly common in the post-acute market, many haven't integrated and maximized their scale and services to their benefit yet.
Many mergers and acquisitions focus on the acquisition side of the deal, while not truly merging the new assets into the existing organization. For example, some organizations have multiple HR and payroll structures as residual from the initial acquisition.
But the bigger challenge organizations face is when they lack a system-level perspective and goals that the entire organization is working towards. The result is a system comprised of many different pieces that aren't working to achieve a common goal.
3 reasons post-acute care needs to invest in systemness now
1. The work has already begun.
Many post-acute organizations centralized processes, analytics, and oversight during the pandemic. Organizations standardized supply chain processes to ensure equitable PPE distribution and improved information and data pathways to maintain a birds-eye view of system needs and challenges. Post-acute organizations should not abandon this progress, instead using this momentum to tackle industry-wide challenges such as staffing, care quality, and cost saving.
2. Systemness can strengthen partnerships with acute care hospitals.
Post-acute systemness requires leaders to consider health system partners as a necessary extension of their own system. Integrating a select number of pre-existing preferred provider network partnerships into system strategy helps both organizations to achieve the goals they rely upon one another for such as providing a high-quality location for discharge and securing a strong patient pipeline.
But longer-term, these system-level partnerships present an opportunity for post-acute and health system organizations to tackle mutual challenges together and secure a higher portion of patient care in their markets.
3. System integration can unlock new innovations.
Having a system purview enables organizations to source innovations from across the system, exposing existing ideas and best practices that may address system-wide issues. Fostering systemness also gives leaders a new lens and perspective to create innovations and design solutions that will serve the entire system. This approach enables various stakeholders to co-create and implement innovations—maximizing benefits, such as staff flexibility and quality improvement.