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Mergers and Marriages: Six Tips to Help Healthcare Organizations Live Happily Ever After

By Rob Zisman

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A recent study1 from Booz Allen found that only 41% of acquired hospitals outperformed their peer group. In the U.S., approximately 50% of marriages end in divorce. Since Mergers and Acquisitions are often thought of as a "marriage" of two organizations, I was compelled by these two similar statistics to explore the "glass is half full" scenario to see what can be learned.

As many private practices and hospitals are being purchased by large health systems, and many large health systems are merging with each other or payers, here are a few tips from happily married couples to consider.

  1. Understand how you balance each other out - Phrases like "opposites attract" and "you complete me" are woven into our culture. There are compelling reasons why. The same sentiment is a primary driver of healthcare M&A activity: to close gaps in the continuum of care for patients, while also preparing to manage risk as organizations move to new structures such as Accountable Care Organizations. Lesson: Ensure each organization clearly understands the other's value proposition and why at the end of the day, 1+1 should equal 3.
  2. Meet the extended family - When you marry someone, you are also marrying their family. Strange Uncle Earl and loud Aunt Deb come with the deal, whether you like it or not. Lesson: Many hospitals and physician practices have well established ecosystems. Seek to understand your new family and its connections before it's too late.
  3. Set goals or make a bucket list - Happily married couples often work together to set goals for one year, five years or beyond. They draft the list collaboratively and work together to achieve it. Lesson: Healthcare organizations should work together on creating goals and ensure there are regular mechanisms to review progress and course correct as needed.
  4. Shared values - Along with a common set of goals, having shared values is imperative. That said, there is plenty of room for different interests, beliefs and opinions. Even if you do not agree with your partner at all times, you should respect them. Lesson: With more collaboration between for-profits and not-for-profits, faith-based and non-faith based organizations, medical schools and university hospitals, providers and payers, it is critical to define a path for shared values and behaviors in order to operate as a single entity.
  5. Understand each other's practices and habits - Before you "propose," you better understand how your significant other lives. For example, do you both cook and clean the same way? Probably not and stating "my way is the right way to do it" is usually not a smart move. However, if you can show why an approach is better, it often helps. Consolidating healthcare organizations face a similar challenge. Adding a "brand name" sign on the front door or stating "do it this way, because it's evidence based practice," does not magically change the way care is delivered. Lesson: Understanding how each organization operates and working together to arrive at a consistent experience is critical to success. If you approach contentious issues with an open mind and avoid a "not-invented-here" mentality, everyone will come out better for it.
  6. Be willing to compromise - While compatibility and balance are vital, a great marriage always involves compromise. This can range from the mundane (picking the restaurant) to the weighty (deciding what religion to raise your child). M&A in healthcare will always include compromise as well. Lesson: The key to success is making decisions within the context of what is better for the organization as a whole - drawing on the foundation of your shared goals and values, ensuring transparency in the decision process, and clearly communicating the rationale.

While we are not marriage counselors at GE Healthcare, our Performance Solutions team has worked with healthcare organizations for the past decade, successfully applying many of the principles described above. Click here to read one of those success stories. And if you have gone through or are planning an M&A activity, I invite you to join the dialogue and share your own experiences and tips for success.

Reference

  1. Saxena, S.B., Sharma, A., Wong, A. (2013) "Succeeding in Hospital & Health Systems M&A Why So Many Deals Have Failed, and How to Succeed in the Future" Leading Research paper, Booz & Company.

Comments (1)






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  • Eman Aly May 30, 2013 3:43 AM

    Calling merge "marriage" is good selection of word reflect the concept