I have read with interest about two large collaborations, including one with Sarasota Memorial Health Care System exploring aligning with BayCare Health System to decrease costs, increase revenues and to strategically grow revenues over time. In the other, USF Health is entering into a partnership with Lakeland Regional Health Systems, Inc to create a transformative healthcare system.
Three thoughts came to mind as I read this, and each is consistent with TPF’s approach to supporting collaborations:
1) Organizations’ income statements (revenues and expenses) will continue to be under pressure
2) Explore collaborations as a matter of business planning (especially if your business is strong)
3) Collaborations take time
No. 1 answers the question, “Why?”
No. 2 answers the question, “When?”
No. 3 gives us an expectation
1 Income statements will continue to be under pressure – There probably aren’t many people who would disagree with this statement. With revenues (and contributions) down, organizations have been focusing on expenses. This is likely to continue for some time as the nation’s economy continues to be weak. Interestingly, collaborations can benefit both sides of the equation. If structured correctly, and as discussed in the articles, not only can a collaboration decrease costs by leveraging economies of scale, but it can increase revenues by strategically positioning the “joined organization”.
2 The “When?” – Explore collaborations as a matter of business planning – especially if your business is strong. “Strong” is a subjective term, but as a matter of business planning is fairly straight forward. Collaborating with other organizations should be an option considered by any organization desiring to fulfill/drive its mission while using the least amount of resources to do so. By joining forces in a contractual relationship, versus a legal merger, the collaborative partners can take immediate advantage of economies of scale, and can test the waters for an expanded relationship.
3 Collaborations Take Time – The most difficult aspects of any organizational relationship is developing trust and understanding cultural differences. These both take time and are not without their “bumps in the road”. To accelerate, both organizations must be intentional in growing the relationship and sensitive to the nuances of each organization. Start small and expand the relationship over time.
Are collaborations easier for larger or smaller organizations? Honestly, I am not sure. (The answer is that it depends on the Leadership, Willingness, Capacity and Culture of each organization…but that is discussion for another blog.) There are challenges for all size organizations, but there are lessons to be learned by watching the large organizations do it.