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A BPOE for hospital affiliations

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Brandon Klar and Gregory Shufelt of the Camden Group discuss their “Business Plan of Operational Efficiency” (BPOE) for health-system  affiliations and mergers.
{In a more innocent age, before there was so much business jargon, most Americans would have thought of the Benevolent Protective Order of the Elks (BPOE) when they saw those initials.}

They say that a  BPOE should:

  • “Identify and quantify specific affiliation-related cost-saving opportunities within each department.
  • “Identify barriers to achieving the efficiencies.
  • “Identify the resource and time requirements necessary to implement the action plans.
  • “Lay out a game plan for aligning specialty programs throughout the system.
  • “Ensure accountability by specifying the individuals responsible for implementing the plan.”

They note that ”many partnering organizations craft a BPOE before any affiliation agreement is signed. This lets system leaders proactively identify savings opportunities after the transaction. A pre-transaction BPOE also might be required for regulatory approval by the state department of health, state attorney general, Federal Trade Commission or the Department of Justice.”

But “An inherent limitation of a pre-transaction BPOE is that the prospective partners are unable to share competitively sensitive information before closing. This limits the specificity and detail of cost-saving opportunities and action plans. But provisional BPOEs developed before the transaction are directionally accurate; they can also ensure that the prospective partners are strategically and culturally compatible.”

And they discuss the need for:

1. A clear leadership structure.

2. Clear ground-level integration plans.

3. Realistic and sustainable cost-saving targets.

4. A strong foundation for a system-oriented culture.


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