The leaders of a newly-merged multi-hospital integrated delivery system have given up on the two-year-old merger of their distinguished academic medical centers. "The results of the merger have been even more disastrous than had been anticipated," said one hospital staffer.
After posting an estimated $43 million in losses over its life, officials said it was decided the new system will be dismantled. The two university systems that made up the merged entity are to go their separate ways.
"With great anguish I have concluded that, in our efforts to find bold solutions to the problems of academic medical centers, we have taken on too much," one of the University's presidents said in an Oct. 28 letter to the other University's President. "We have failed to achieve a new common culture that would provide the wholehearted support needed." The letter outlined his desire to unwind the financially troubled merger. The 1997 merger had brought under one umbrella four hospitals with a total of 1,350 beds, with two hospitals coming from each University.
The decision came less than three months after the university presidents sent a joint letter to the system's board challenging the merger and asking for a review. The top two executives at the merged system subsequently resigned, and a state audit outlined the merger's financial shortcomings.
The merger's architects originally predicted a $65 million profit in fiscal 1998 and 1999. But in the most recent fiscal year ended Aug. 31, the system had actually realized an operating loss of $86 million and a net loss of $73 million on operating revenues of $1.5 billion.
Instead of reducing staff, the system had added nearly 1,000 employees during its first year and a half, primarily to integrate financial and other information technology systems. The attempted information system merge was running far behind schedule and had not been highly successful. The cost of merging the two systems' computer networks jumped fivefold, from the original estimated $25 million to a whopping $126 million.
A troubled-hospital management consultant "rescue" firm was called in. A leader of that firm stated that "A poorly executed merger causes trouble; there's no doubt about it. I think there were certainly execution difficulties in this one. I think it was a good concept that was not executed as effectively as everybody would have liked it to have been."
He also stated that the projected cost savings were real, but the merger's leaders didn't pursue them hard enough. Among specific failures were a lack of meaningful consolidation, an unwillingness to cut expenses and expensive corporate overhead, he said.
What has been missed is why 1,000 employees were unable to merge the information systems of the two institutions. One thousand I.S. employees should be able to merge General Motors. Considering such a number amounted to about one I.S. person for every 2-3 physicians in the system, this is an astonishing failure.
It is apparent that MIS in this situation was not operating very efficiently (in fact, spectacularly poorly may be a more fitting description), but unfortunately there rarely are any "morbidity and mortality" conferences to address such shortcomings. Healthcare IT seems to exist in an isolated, siloed environment, immune to the same critical scrutiny and discipline that healthcare itself is subject to. Metrics and standards for healthcare IT are necessary. A system of "managed computing" analogous to the system of "managed care" that's been placed upon healthcare itself (on the basis of measuring and improving efficiency) may be of great benefit to the healthcare industry.