The potential to expand the breadth of services and significantly reduce costs was too great to pass up. So when two Catholic hospital systems, Sisters of St. Francis Health Services (SSFHS) and Provena Health, failed on their first attempt to merge laboratory operations, it was time to try, try again. And the second time was a charm.

Cheryl Vance, CEO

“We’d anticipated we’d have a reduction of roughly 23 employees,” Vance said, noting that job security was one of the roadblocks that stopped the first merger attempt. “But because the lab managers and people working at the hospitals held positions open for the people whose functions would go away, we’ve only had one reduction in force. It’s something that has helped make this merger a terrific success story.”

Group planning
Headquartered in Hammond, Ind., the new Alverno serves 18 hospitals and dozens of clinics and health centers in Illinois and Indiana. Previously, the clinical laboratory handled roughly three million billable tests per year. As a result of the merger, Alverno anticipates it will handle three times that amount annually.

The keys to the successful merger on the second attempt, the chief executive said, were careful planning and communication, communication, communication. The consulting firm of Sprick, Stegall & Associates was hired in 2003 to assess the feasibility of an SSFHS and Provena merger. Bringing in a third party helped add credibility to the proposed merger, Vance said, and demonstrated to employees that it was something that could benefit both organizations.

After the initial recommendation from Sprick, Stegall & Associates, the consultant began working with employees from both organizations to create a comprehensive plan. Teams made up of personnel from all levels were formed to address specific aspects of the merger, including finance, operations, and human resources. “There was a great deal of communication between the teams,” Vance said. “For example, as the operations group examined what could be centralized at the main lab in Hammond, it communicated with the finance group so they could examine the financial impact.”

The comprehensive plan was completed in the spring of 2004, and the boards of both health systems gave the merger the green light in December. In September 2005, the new organization was born. Careful planning and employee involvement helped get the merger plan off the ground, but the toughest part remained: implementation.

Finding efficiencies
Once the merger plan was approved, management stepped up its communication efforts to make sure all employee concerns were heard and responded to. The organization launched a weekly newsletter to keep everyone abreast of the merger’s progression and held numerous town halls and staff meetings to create a platform where people’s voices could be heard.

“People were concerned about the impact of the change, and hospitals were concerned about whether or not we would be able to continue to provide the service that was needed by clinicians,” Vance said. “We worked hard to let people know that this was a very methodical process and that we were looking at detailed information on all issues.”

To maintain service levels and sidestep substantial costs, management decided to avoid adding a single new lab information system for both hospitals to operate on. Instead, SSFHS stayed with SCC Soft Computer, Provena stuck with Meditech, and Alverno connected the systems using SeeBeyond’s Datagate/eGate interface engine.

“A lot of labs that have come together have installed one information system,” Vance said. “We didn’t want the cost or the delay associated with that, so we got creative in our connectivity. We’re running data back and forth through interface engines, and it’s been working well.”

As the organization integrates operations, it’s also trying to improve them. Once a month, the heads of each of the 18 hospitals and the core lab meet to look at what works and what doesn’t. By mining best practices that can be implemented system wide, Vance said the organization is becoming more efficient.

Alverno is also using lean principles to study all of its processes to help streamline operations. Thus far, the organization has conducted lean reviews at five locations and produced some significant results. At Provena United Samaritans in Danville, Ill., Alverno discovered the lab’s phlebotomy service had trouble getting tests done in the morning. By mapping out all processes, management discovered a minor adjustment to employee schedules could greatly increase turnaround times.

“We’ve revised the process we’re using, and we can now get an order from the ER to the testing lab within 15 minutes,” Vance said. “That’s a significant improvement for us at this location. As we continue to examine processes at each of our locations, we’ll be able to create similar efficiencies system wide.”

While Alverno’s integration efforts are ongoing, its legal structure was designed to allow other Catholic healthcare organizations to become a part of its system. Once the merger is complete and the new system is running at optimum speeds, Vance said the company will begin looking for suitable growth opportunities.

“We’re still building the foundation, but we’ve seen tremendous success thus far,” she said. “That success is due to the work of all of our people at Provena and Sisters of St. Francis. We’ve made the effort to communicate with our employees, and they’ve made the effort to communicate with us, and that’s made all the difference.”