Partnerships and the Value They Bring

At its core, Partnership as a Relationship is about mutual trust, engagement, commitment, and motivation to deliver value to the all the entities served.

By William G. Schneider, Vice President, Partner Development, Zelis Healthcare

The Merriam-Webster dictionary defines a Partnership in two ways. First, as a legal relation existing between two or more persons contractually associated as joint principals in a business; and second, as a relationship resembling a legal partnership and usually involving close cooperation between parties having specified and joint rights and responsibilities.

The key difference in the two definitions is the concept of “joint principals in a business relationship.”  In the first definition there is a legal creation of a distinct business unit where there is shared management, division of profits/losses, and assets are owned by either the partnership itself or by the individual partners as a “tenant in partnership.”  Experience concludes that Partnerships in the healthcare marketplace tend to move along the lines of the second definition where companies enjoy confidential collaboration without becoming joint principals in a business.  The parties have the advantage of contractually defining the variables of the relationship, without being encumbered by the additional resource burdens associated with creating new business units.  Both definitions use contractual commitments to bind the companies together.  Therefore, is a Partnership simply an agreement that defines the variables of the relationship, expressed through contractual commitments?

Most often successful corporate partnerships are characterized as a Relationship paired with a contractual arrangement where collective expectations and goals are defined, key performance indicators are identified to track success, rules of engagement are solidified, conflict resolution processes are implemented and communication channels are opened. At its core, Partnership as a Relationship is about mutual trust, engagement, commitment, and motivation to deliver value to the all the entities served.

Partnership: does it stem from basic human tenet?

Aristotle’s philosophies became the basic building blocks of western culture.  In 340 BC, he wrote the Nicomachean Ethics which explored the concept of basic human needs in relation to achieving happiness in life.   He postulated that relationships and the need to experience competence through accomplishment in relationships are basic human needs that play vital roles to live a good life and achieve happiness. He concluded that ultimately the most critical ingredients in the recipe for happiness are our experiences of accomplishment and our relationships with other people. The experiences of accomplishment and our relationships with other people are also some of the basic building blocks of a successful corporate Partnership Philosophy.

If one equates Partnership and Relationship, the concept of Partnership pre-dates recorded history. If we knew when the first partnership was created, we would know when humans first interacted with one another.  One can imagine how in prehistoric times those who established a simple relationship with another to coordinate a hunt had enormous leverage towards a successful experience. One needed to eat. Cooperation resulted in a successful hunt.  It was expected that the spoils of the hunt would be divided, they were and everyone ate.  From those basic tenets and positive experiences, the relationship naturally evolved which resulted in expanded goals and expectations. In this example perhaps “defending the camp” became the agreed upon second common goal with an expectation-set that a battle plan would be created in a timely manner to achieve the goal of “defending the camp.”  But if building relationships is ingrained in us, is it enough to agree on and establish goals and expectations without memorializing them?

According to the American Journal of Theology, Formal Partnerships and Laws governing partnerships dates back to 1754 B.C. when the Code of Hammurabi explicitly regulated the relations between partners and amongst members of society.  Half of the Code addresses Matters of Contract and a third of the Code addresses Societal Issues. History illustrates that humans possess a basic drive to connect and that cooperation with others leverages abilities to achieve success.  However, to initiate and begin is one aspect of a relationship; to grow and maintain it is a different dynamic of a relationship.  The ability to maintain and grow the relationship is dependent on positive experiences, and the clear communication of goals and expectations. Hammurabi’s Code tells us that clear documentation that memorializes the established criteria is another ingredient necessary for the relationship.

In his 1954 book, “Motivation and Personality,” American Psychologist, Abraham Maslow explored his theory known as “Maslow’s Hierarchy of Needs” which is a theory of Psychological Health predicated on fulfilling innate human needs in an order of priority. The theory states the first three innate needs of a human are foundational to our survival and psychological health.  The first need is physiological- air, water and food; the second need is safety- shelter, resources; and the third foundational need is belonging- our relationships with others.  A debate then ensued about Maslow’s Theory.  The debate questioned if “Belonging and Relationship” is truly a need, a personality trait or simply a desire.

In 1995 Roy Baumeister, Ph.D, and Larry Leary, Ph.D, wrote a paper built on the work of Maslow, entitled: “The need to belong: Desire for interpersonal attachments as a fundamental human motivation.”  They suggested that humans have a need to belong with others that is expressed as a natural need to form relationships coupled with a natural need to maintain those relationships. That just as humans need to eat, we are hard-wired “to push to form relationships while we simultaneously struggle to avoid the disintegration of these relationships.” And, the combination of those two elements of human behavior helps to distinguish “the need to form and maintain relationships” as a need, not simply a desire.  Furthermore, forming Relationships and working in coordination has been ingrained in us over thousands of years, because it led to success. Whether it be in prehistoric times hunting, in medieval times defending villages, or in today’s business environment where one’s specific experiences are leveraged with that of another’s, initiating and building Relationships to advance common goals is entrenched in each of us as part of our natural drive to succeed.

Therefore, when a corporate entity declares that building Relationships is part of its DNA, it literally means that both the spirit and actions associated with it are imbedded into the fiber of its Corporate Culture.   Through experience, companies recognize, as history has, the innate human need to build and maintain Relationships of Meaning.  Forming meaningful business relationships advances one’s own goals by advancing the overall goals of the Relationship. And like all relationships, a potent Partnership requires a beginning based on a solid foundation with continued nurturing from all involved. It requires mutually agreed upon criteria and an open communication platform where ideas and feedback can be exchanged without judgement. What happens to the Partnership if these elements are not put in place or maintained as the Relationship ages?

Lessons from a Healthcare Partnership that almost became extinct:

In the late 1930’s Henry J. Kaiser and Dr. Sidney Garfield created an industrial health plan for 6,500 of Kaiser’s construction, shipyard and steel mill workers. The initial partners were the employer, Kaiser Industrial, which was mostly union employees and the providers of the medical services. The stakeholders had common goals and a plan to achieve those goals. Very simply, heal sick and injured workers via a collection of providers dedicated exclusively to those workers and their families.  That health plan was the basic building block of what has now evolved into Kaiser Permanente. But, the loss of the partnership’s original vision and other variables almost imploded the plan.

In July 1945, the health plan opened for public enrollment and allowed non-Kaiser Industrial employees to join. In 10 years, the health plan’s enrollment had exceeded 300,000 members.  From all appearances, this partnership was a big success.  However, over time, strife and resentment built because the original goals of the partnership had changed and there was ineffective communication amongst its stakeholders. In 1986, 10,000 SEIU healthcare workers went on a 49-day strike and strikes occurred repeatedly from 1986-1996.

Finally, in 1996 tension amongst stakeholders forced the parties to realize that to avoid irreparably damage they needed solutions that provided healthcare for its health plan members and jobs to its union workers. The communication was effective and in 1996 the Coalition of Kaiser Permanente Unions, representing 57,000 workers was formed.  The fractured partnership had achieved a milestone with its first step towards realignment. Common goals, objectives and expectations were established.  The mind-set once again became one of partnership and mutual benefit. Over a six year period beginning in 2000, a new foundation for partnership was built by training more than twenty-thousand Physicians, managers, and staff members throughout the Kaiser Permanente system  in partnership principles, including Consensus Decision Making and Interest-Based Problem Solving.

As part of the ongoing commitment to the partnership, the established long-term and short-term goals and expectations are transparently promoted throughout the organization.  Performance improvement tools and ways to measure progress are used and results acted upon to align performance with the established goals.  Communication procedures are in place for stakeholders to have open dialogue and effect change as market conditions change.  The mind-set change and subsequent actions have resulted in a flexible and successful partnership that we know as the nonprofit Kaiser Foundation Health Plan and Hospitals, the Permanente Medical Groups, their workers and its members.

The Differentiating Ingredient:

The contracts have been signed.  The goals, responsibilities, and collective expectations have been memorialized. A solid foundation has been laid.  Effective communication has built upon it. The natural drive to connect has brought everyone together.  But, what truly differentiates “best in class” is the substance which supports a relationship based partnership.  A partner focused culture fosters a mindset where a company is not a vast, life-less entity.  It is a living organism whose heart comprises each individual of that company. By extension, the life of the Partnership comes from each individual at the Partner Companies who is engaged, committed and motivated to accomplish the Partnership’s established goals.    Therefore, the substantive definition of differentiation is the empathy that team members have for the individuals that comprise the Partner Companies, the respect they have for both the stakeholders and the spirit of the Partnership and finally, the understanding that each Partnership is unique unto itself.