Alliance Strategies for Accountable Care

The competencies I proposed last month as important considerations for beginning the work of remaking the US health care system met with a great deal of positive reaction. Many responders asked that I expand a bit on the idea of developing and managing partnerships, alliances and acquisitions across organizational and sector boundaries. As the system of care moves toward the creation of Accountable Care Organizations, such work will become increasingly important. If you are a leader who is engaged in broadening the work of your organization or you are just beginning to recognize the need, here are five steps to consider as you develop your leadership strategies.

1. Alliance Strategy - The first step involves understanding what is needed from such an alliance. Pushing your organization to understand the challenges and opportunities in the environment is the first step. This step should create some form of a desired future state. The gap between current assets that your organization holds and what will be needed to achieve the future state creates a list of needs. Being clear about the desired future state, strategy, culture and leadership style are all essential at this stage. These might be created within the organization or they can be gathered through one of the partnering activities from contracting to acquisitions. Not all options are open to every organization, but these considerations are the key to the formation of an alliance strategy.

2. Selecting Partners - This second phase matches the organizations aspirations, needs and assets against the aspirations, needs and assets of a potential partner. Sometimes the partner’s assets will compliment the existing organizational assets, compensating for weaknesses or providing a needed resource. At other times the partner may add similar capacity that is needed for geographic growth. In addition to the technical assets, this phase should also assess culture, leadership style, tradition and values. These are as likely to derail an alliance as a mismatch between strategies. At this stage, both partners need to push hard to understand how they individually will need to change to make the new arrangement work. If either party is using the partnership to avoid making the changes needed, the relationship will fail.

3. Making the Deal - This is the phase in which the deal is struck; developing a shared vision of a future state of success is the critical first step in success. This will take time and effort to move beyond generic talk and fuzzy visions toward a detailed description of what future success will look like for both of the organizations: what each organization is likely to have to give up in the new arrangement, what each group brings in strengths and weaknesses, and what the tangible benefits of partnering are. After this realistic assessment of where the future direction points and what is to be given up and gained, this stage should focus on developing detailed operating agreements between the parties. Who will do what parts of the work to be done? How will resources be shared? What are the performance goals? Who will measure these? And, what are the exit strategies? All of these items need to be in place prior to the deal being struck.

4. Manage the Partnership - Like with most of life, the devil is in the details. And as carefully taken as the steps leading up to the deal have been, there will be many aspects that need attention in this phase. Many, perhaps most people focus on the courtship and marriage and don’t spend enough time on the day to day life that follows a partnership. Some of these factors will be captured in the agreements, but many more will emerge in operation to threaten the partnership. Strengthening the relationships of all parties, but particularly those across the old organizational lines will be essential for success in this phase. Allocating resources to this step is essential and is another common stumbling block for organizations.

5. Continuously Improve - No part of an organization can be left alone for long; partnerships even less so. In addition to focused and well resourced management, the governing structure needs to have a plan for full reentry into the ongoing assessment and redirection of all alliances. This is best done against data that is focused on how the partnership is functioning. If clear goals and expectations have been set at the outset, then measurement toward the goals in this phase is critical. Otherwise the discussion will devolve to impressions of how the work is going and any new relationship will always have its shortcomings until new work processes and culture have evolved. Having performance data at this point allows the organization to celebrate the merger or partnerships for accomplishing what it set out to do, and then reflecting on how processes can be improved.

Very few organizations in health care today have the market share, competencies, technology, people or financial resources to pull off the creation of an Accountable Care Organization by themselves. Attention to the process of partnerships, mergers and alliances will help the evolution of this important new structure in health care.