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A prescription for successful health sector integration

As an increasing number of health-care boards across Ontario consider integration as a way to use taxpayer dollars most efficiently, Toronto health lawyer Kathy O’Brien says it’s critical for potential partners to take the time to get to know one another well before joining forces. 

“An integration for any health-care organization is one of the biggest governance decisions it can make,” she tells AdvocateDaily.com. “It carries a huge impact at the organizational level, and system-wide we’re just seeing more integrations happen everywhere.”

O’Brien, partner with DDO Health Law, says there are steps organizations can take so that a successful integration is more likely.

She explains that many organizations in the health sector are currently looking for “a dance partner” as a way to pool resources to provide the best possible care to the public.

“One of the key themes is that the whole dance partner analogy really plays out — it’s like you need to date before you get engaged and then get married,” she says. “Just like getting to know your potential life partner is really important before getting married, building trust between the potential partners in the health-care sector is critical before merging.”

O’Brien, who advises health-care organizations and boards on how best to proceed with integration, says some of the more successful mergers can take between 18 months to three years to finalize. 

“You want to explore whether the cultures of the two organizations mesh and whether their missions mesh — you want to take your time in doing that,” she says. 

“It takes a great deal of effort and you need to be patient because it takes time. You can rush an integration, but that is one of the key pitfalls. You have to take your time with these preliminary, getting-to-know-your-potential-partner 'dating' stages.” 

O’Brien says as soon as a board starts to think about integration, it’s important to obtain legal advice as early as possible.

“Legal counsel can map out the process and provide insight about a timeline because there is usually a whole bunch of third-party approvals, such as ministry approvals or Local Health Integration Network (LHIN) approvals, that are needed for these integrations,” she says. 

O’Brien says legal counsel can provide information about the different options available when it comes to collaborative governance. There are mechanisms available for the organizations to get to know each other and legal counsel will advise you about those, she says. 

One such step is inviting the chair of the other organization to your board meeting, she says. 

“This will help them understand how you do things and what the issues are that you’re focused on,” she says. “It will help the parties understand whether this is an organization that shares their same sort of philosophy and priorities. Sometimes you bring key management together just to talk about priorities and philosophies and key issues and hurdles facing the organizations. If you are getting really serious, you might want to set up either a half-day or a full-day retreat, where the two boards get together to start visioning what the merger may look like.“  

The direction should always be coming from the board because one of its key functions is to plan the strategic direction of the organization, O'Brien says.

In order to identify potential partnerships, she says the board needs to have a good knowledge of the health-care sector in order to choose an appropriate organization to approach about integration.

“The board may want to hire consultants or assistants who are able to help them do that exploration if they don’t have that in-house expertise,” she says. “And once they start engaging with the potential partner or there may be multiple potential partners, they often hire a facilitator too, who will help organize discussions and structure meetings. It adds to the cost, but it also involves an objective third party who is able to help guide the organizations.”

It often works best if a third party asks the hard questions, which include: are there going to be job losses as a result of the integration; in bringing two organizations together, how will the CEO or executive director be selected?

At some point in the process, O'Brien says the organizations decide to either breakup because a partnership isn’t going to work or they want to take it to the next level. 

Taking it to the next level usually involves doing a preliminary legal document, such as a letter of intent where the parties will map out such things as: the structure of the board and senior management of the integrated organization, what they want to achieve from the merger and how they plan to improve their mission.

“It will also indicate such things as the organizations want to strengthen their ability to provide services, become more efficient and find cost efficiencies and reduce redundancies," O'Brien says."Then you make that document public, because there are going to be rumours — for one, staff are going to be concerned about job losses."

O’Brien says it’s critical there is full buy-in at the board level before a decision is made to move forward with integration plans.

“It’s a huge change to the organization so once you do an integration, to continue the marriage analogy, it’s very hard to get divorced,” she says. “It’s very hard to break up after that fact. You have to be all-in because it’s a life-time commitment for the organization.”

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