Following the acquisition of two independent and geographically dispersed behavioral health organizations, a large health system became the largest behavioral health provider in the state of Washington. Each of the acquired organizations were operating on disparate systems, which limited their ability to communicate with the system and each other. While leadership recognized the opportunity to integrate the behavioral health network to the system-level shared services, the cost model needed to be sustainable. Guiding principles were drafted to shape the integration including relevance, economies of scale, better support, better outcomes and lower price.
To add to the challenge, the health system had initially decided that the acquired entities would operate autonomously post acquisition due to competing priorities and lack of resources. This delay in integration and corresponding turnover within the core team that performed the acquisition diligence meant the integration assessment had to be redone. Not only was integration necessary, it was imperative that it occur within three years while maintaining cost neutrality.
M&A Growing Pains
The two acquired entities operated autonomously for 29 and 15 months respectively. Operational challenges surfaced, communication issues and manual work arounds across the three organizations had taken a toll. All three entities were running on different technology platforms requiring manual processing and re-work. The three organizations had different networks, employee benefits, and job descriptions for the same role. Additionally, having three different accounting systems resulted in a one-month lag in reporting consolidated financials.
To lead integration assessment, the health system partnered with Point B given the firm’s proven expertise in M&A, project leadership and change management.
This was a complex challenge with many moving parts, including systemic technological and financial issues, employee change management concerns, and the need for corporate leadership buy in. Point B provided a team-based approach, bringing together organizational effectiveness, industry, technology, and M&A expertise to deliver results.
For successful integration, 23 workstreams were identified for the assessment. The team conducted multiple work sessions and interviews to ascertain the current state of each of these workstreams, and to begin drafting the steps necessary to achieve an integrated future state including quantification of the resulting cost impact.
Our council was blown away. Point B set a new benchmark for the enterprise on how to assess service integration.
Health System President
A key objective of this assessment was that integration needed to be realized at a net zero cost – within a three-year window. Each recommendation we made had a corresponding impact to the financials, some favorable, some unfavorable.
One option for integration early in the assessment showed an unfavorable impact of $4 million. Point B worked this issue into a cross functional workstream and with leadership’s collaboration, produced a hybrid package that delivered the best combination of benefits and cost savings. This type of meticulous, iterative assessment offered our customer cost-neutral recommendations across all workstreams in only a few months’ time.
When our assessment was complete, we presented our findings and recommendations for how to move forward. We shared not only the rationale behind each decision, but proposed timing, risk analysis and the financial impact to each workstream. Point B also included a financial implications summary that focused on people, process and technology, noting one-time and ongoing costs.
The customer was extremely pleased with our guidance and expertise, fully endorsing the recommendations and engaging Point B to help guide the initial rollout of the company-wide integration process. They stated that Point B set a new benchmark for the enterprise on how to assess service integration. The best outcome of all? Helping position our customer as Washington state’s largest behavioral health network for a sustainable future.
By the Numbers
- 3 entity assessment for integration into 1 corporate shared service
- 23 workstreams contemplating the integration of 1,186 FTE’s
- Over 100 key integration constituents
- Cost avoidance of ~$4M - $5M and a comprehensive set of break-even recommendations
- 100% customer endorsement of recommendations