University Physician Group (UPG) is a multispecialty group practice plan associated with the College of Osteopathic Medi

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University Physician Group (UPG) is a multispecialty group
practice plan associated with the College of Osteopathic Medicine
(COM). UPG employs 90 physicians and 340 clinical and business
support personnel. UPG has recently been profitable (with revenue
from operations this fiscal year of $32 million and a retained
profit of $500,000 from operations). However, prior year losses
make UPG a break-even organization. Management and the physicians
are focusing on strengthening the fiscal position of the
organization. This focus has led to plans to restructure physician
compensation, establish a self-insurance trust for professional
liability, and improve the financial budgeting and reporting
processes. UPG has entered into a preliminary agreement to merge
with Northern Affiliated Medical Group (NAMG). NAMG is a
150-physician multispecialty group located in the same city as UPG.
NAMG holds a contract with the local county hospital to provide
indigent care and serve as the faculty for the graduate medical
education programs in family medicine. Both organizations believe
that the merged organization would be able to reduce expenses
through the elimination of redundant functions and, because of
greater geographical coverage and size, would improve their ability
to obtain more favorable payer contracts. Information Systems
Challenge: For many years UPG has obtained practice management
systems from Gleason Solutions (GS). The applications are hosted in
a GS data center, reducing UPG’s need for IT staff members. Prior
to the merger, UPG was in the process of examining replacements for
GS. UPG had become displeased because of the GS application's
failure to incorporate new technologies and application features,
limited ability to generate reports, and inflexible integration
approaches to other applications. Despite its displeasure, UPG now
appears to be on the path to renewing the GS contract. GS
executives have effectively lobbied several important physicians
and administrators, and UPG’s limited cash position makes the GS
low-cost financial proposal attractive. NAMG uses GS applications
and has also been examining replacing the system. NAMG has a strong
IT department and will be providing IT support to the newly merged
organization. After examining the market, NAMG has identified four
potential vendors, including GS. Discussion Questions 1. Would you
suspend both organizations’ pursuit of a new system until an IT
strategic plan for the merged organization has been developed? Why?
2. What steps would you take to integrate the system selection
processes of the two organizations? 3. Implementing a practice
management system is always challenging. What additional
implementation risks are introduced by the merger? 4. Both
organizations expect the result of the merger to be lower costs,
improved patient service, and increased market power. What steps
would you take to make sure that the new practice management system
furthers these objectives?