In health care, few considerations are of greater potential strategic consequence than affiliations. Affiliations can enhance clinical quality and financial performance. For the purposes of this article, an affiliation is defined as stopping short of an organization-wide merger or acquisition and includes "any relationship between otherwise independent health care providers designed to create shared advantage and value."
Today, one of the most powerful changes transforming all manner of provider organizations is the accelerating shift to increasingly interwoven networks. A robust network of affiliations resembles a healthy forest. And yet:
A forest of just one or two species of tree is a vulnerable forest. Every species of tree contributes to the welfare of the others, whether tall or short, wide canopy or narrow, shade tolerant or in need of blazing sun. Some are proficient at holding a slope, while others are adept at growing fast.
In addition, forests are tree-dominated ecosystems. Dependent on the trees for their well-being is an interconnected understory of plants, animals and insects. Across the forest, compatibility and pursuit of mutual interests are key. So, too, with health care.
Case in Point
The Medical University of South Carolina (MUSC) has proven particularly adept at generating a variety of high-value affiliations. Dave Cole, M.D., president of MUSC, emphasizes the importance of compatibility in forming and supporting high-value affiliations: "Culture, values and mission alignment tend to be significant drivers to any successful partnership,” he says. “Without a common vision, collaborative relationships rarely get off the ground or succeed. At MUSC, we look for partners who share a desire to transform health care."
Pat Cawley, M.D., MBA, the medical center’s CEO, describes how MUSC maximizes the value it derives from the portfolio of affiliations it has established. He points to MUSC's clinical-enterprise strategic plan as the basis for forming and evaluating affiliations.
While the organization remains open to newly emergent opportunities, it evaluates existing and potential affiliations on the basis of their contribution to the direction set forth by the strategic plan. That strategic plan guides the allocation of scarce resources across MUSC's portfolio of existing or potential affiliations. MUSC affiliates include physicians and physician groups as well as hospitals. Important, too, are affiliations of state and private agencies who play a vital role in improving health.
According to Cawley, MUSC now categorizes its affiliations as local, regional and statewide/national. Strategies and expectations vary based on that categorization.
In the local category, MUSC has benefited from a shift in its relationship with another leading player in Charleston, Roper St. Francis. For nearly 200 years, the relationship between the two organizations has been highly competitive. In October of 2016, the two organizations announced their first significant affiliation – a stroke collaborative focused to the Low Country region.
MUSC has also focused particular emphasis on expanding telehealth initiatives to generate and solidify affiliations statewide. In February of 2018, it announced a national affiliation with Shriners Hospitals for Children for a new burn unit.
As MUSC has pursued affiliation relationships consistent with its strategic plan, it has sought to leverage its advanced capabilities in ways that generate clear value for its affiliate partners and itself:
As the designated steward for funding allocated for telehealth by the South Carolina legislature, MUSC worked with providers and state agencies to create a statewide affiliation network called the Telehealth Alliance. At the heart of MUSC's value proposition are the advanced clinical capabilities of its faculty. But as other quaternary and tertiary referral centers have long recognized, putting faculty and subspecialists on the road is often impossible to cost justify. Making the faculty available electronically is an affordable and increasingly effective alternative for MUSC and for its community hospital and physician affiliates.
As an academic medical center, MUSC's tripartite mission of education and research as well as patient care has shaped its affiliations. For example, its commitment to education has caused it to seek expanded venues for student rotations throughout South Carolina. This decision also meets the needs of affiliates: MUSC needs training sites while community hospitals and physician groups need the care professionals MUSC trains. Its telehealth platform is now poised for application to both education and research.
As population health has gained in importance for providers, MUSC has begun to look to its affiliates for capabilities and access that can be used to identify and address health disparities statewide. Through cooperative efforts with MUSC, affiliates gain access to resources that can be focused to improving community health. MUSC generates a lot of relevant data, but it is able to expand and diversify that data through relationships with its community affiliates.
Among an academic medical center's most valuable assets is its brand identity. Research indicates that across South Carolina, MUSC is the preferred brand in health care. As a result, affiliates benefit in the marketplace by positioning themselves with the MUSC brand, while MUSC benefits through disciplined co branding that extends awareness of its value proposition throughout the state.
Like other academic medical centers, MUSC has long attracted faculty interested in inventing and commercializing new technology. To support greater synergy and impact, its chief innovation officer is focused to pulling together innovative initiatives spread across the various departments and colleges. Such innovation at MUSC is expected to play an important role in the continued development of what USA Today recently labeled Charleston's "Silicon Harbor." While health care innovation will increase economic vitality in Charleston, there is also an intention to share innovation, experience and infrastructure across MUSC's network of affiliates to provide economic benefit for the communities they serve.
Joint strategic planning has been one of the more unique methods of affiliation that MUSC has pursued. In these efforts, MUSC and leaders of three major community hospitals in the Low Country have used strategic planning to bring focused prioritization and implementation to the interests and opportunities they share. Similarly, the statewide telehealth effort (described above) has relied on joint development of a strategic plan that included health care providers and agencies throughout South Carolina.
Our research on affiliations nationwide suggests there are seven characteristics that are essential to creating high value:
It's often been suggested that trust is never given. It always has to be earned. Still, leaders don't necessarily have to demonstrate untrustworthiness to be mistrusted. For example, there's an inherent tendency to mistrust size. This point of view springs from power disparities. Big organizations are presumed to have greater access to financial and political clout, so they are invariably regarded with a degree of wariness.
There are other sources of mistrust. Occasionally, old transgressions transition into myth. Myths die hard. If a party to an affiliation did something in the past to erode trust, it is often remembered long after the guilty parties have passed from the scene. Barriers of mistrust can usually be overcome by first acknowledging them, then committing to a new relationship characterized by fair play and transparency. Treating affiliates as equal partners helps set the groundwork for building trust.
Unless the affiliation is clearly seen as creating meaningful advantage for all participants, consistent commitment is unlikely. There is, after all, much distance between "nice to do" and "clearly advantageous." While discussing this fundamental with Matt Severance, MUSC's chief of affiliations and network development, he points to the importance of defining what will constitute "success" at the onset of every affiliation.
There is an oft articulated view that the path to "big wins" is paved by scoring a few "small wins" early. As it relates to affiliations, our research doesn't support this view. Indeed, the small-wins approach frequently relegates an affiliation to the shallow end of the pool, where it flounders unattended. Too often, the big possibilities that deserve genuine commitment remain untapped because resources are consumed by the pursuit of small wins that no one really cares enough about. If accomplishment of one big thing fails to materialize, it's usually better to learn from it and then get to work on the next big thing.
Affiliation, like all opportunities, can starve to death. Even if the potential advantages are significant, a lack of organizational bandwidth can doom an affiliation. The most important ingredient in allocating sufficient resources is the support of leadership. Ultimately, that's where budgets are set and resources allocated. But of course, allocation of resources involves more than dollars. It involves commitment of talent.
Key to the success of the MUSC affiliations described above has been an adequate commitment of money and people. For example, the South Carolina legislature provided significant funding for the development of statewide telehealth. These funds enabled MUSC to deliver focused physician and administrative support. Some individual affiliations are so important to MUSC that they warrant the assignment of a dedicated, full time executive and supporting infrastructure.
Successful affiliations tend to be very tight about a few fundamental things and loose about the rest. For example, an affiliation must be viewed as something distinct and different from the individual organizations who participate in it. It can't be allowed to distract or overburden its affiliates.
In our research, we found instances where leaders felt an affiliation was robbing them of the ability to be sufficiently focused to their primary organizational responsibilities. Of course, one response to this challenge involves dedicating full-time leadership and administrative support to affiliations. Even so, there will invariably be demands placed on other members of the leadership. This necessity requires a disciplined focus on a few mutually agreed-upon fundamentals.
In theory, there is no limit to the maximum number of participants in an affiliation. However, as the number of affiliates (N) increases, so too does the complexity of their relationships (complexity being a function of N). At some point, an affiliation grown too large is likely to encounter "diseconomies of complexity" that dilute focus and intensity.
High-performing affiliations include organizations that each contribute unique value. MUSC's unique value is reflected in its advanced capabilities and reputation. Community-hospital affiliates contribute deep understanding of the communities they serve, a strong local brand and the loyalty of their medical staff. These unique contributions provide the essential ingredients for the mutual value the affiliation creates.
MUSC's ability to form and sustain high-value affiliations requires it to continuously enhance its attractiveness as a partner. Advanced capabilities are useless as differentiators absent a compelling demonstration of the quality they generate. For Cawley and the organization, therefore, demonstrated quality has become an obsession. He emphasizes that, for the past decade, MUSC has been on an ascendant trajectory, much of that fueled by strategic recruitment of world-class faculty attracted by the organization's clearly articulated aspirations.
Another aspect of MUSC's attractiveness as an affiliation partner is comprehensiveness. MUSC has had a longstanding involvement in subspecialty pediatric care, but its children's hospital has been co located in the same building as much of its adult capacity. In 2019, it will open a new freestanding children's hospital on its downtown campus, further accentuating MUSC's reputation as a comprehensive resource.
Lack of timely access can be a persistent cause of underperformance in affiliations. This challenge cuts in a number of directions. Perhaps most concerning is the inability of referring physicians to reach faculty colleagues. Another is difficulty in getting a referred patient admitted in a timely fashion.
Wayfinding on large academic medical center campuses can be frustrating to patients and their families, particularly if they are traveling from their hometowns to an unfamiliar urban setting. But even physicians and office staff can find themselves entangled in complicated voicemail and referral systems. For MUSC, enhanced access has become a major strategic commitment in its affiliations.
Disciplined performance standards
In some instances, because they often emerge without clear connection to strategic priorities, affiliations are held to fuzzy performance expectations. Critical from the onset, our research suggests, is identification of the performance that will be expected from the affiliation, as well as assignment of accountability.
For Cawley, the same discipline that's being applied within MUSC to translate strategies into performance has to carry over into its affiliations. As a necessary precursor to establishing an affiliation, all parties to the relationship should agree on mutually desired performance indicators.
Severance also emphasizes that every affiliation, at its core, is a relationship. Performance indicators then should include the quality and value of relationships. An example of this approach is the frequency with which faculty and community physicians interact in ways that establish and build clinical relationships.
In an economy characterized by the emergence of diverse and vigorous networks, standing disconnected and alone will likely prove disadvantageous. Fortunately, as the example of MUSC demonstrates, there are a variety of options available for building high-value affiliations.
Still, time is of the essence. While this article is focused to the importance of affiliations as they relate to an academic medical center, much of what's conveyed is relevant to any referral center, whether tertiary or quaternary. In an upcoming future article, we'll look at what our research reveals about the perspectives of community hospitals related to affiliations.
The author acknowledges the contribution of research for this article by Christopher Beckham, vice president of The Beckham Company.
Dan Beckham is president of The Beckham Company, a strategic consulting firm based in Bluffton, S.C. He is also a regular contributor to AHA Today.