Maureen Summers RN, MBA, CHE

As efforts continue to contain the cost of healthcare, providers will continue to seek economies of scale and healthcare organizations will choose mergers as a means of achieving that goal. This is risky business for many reasons. The purpose of this article is to assist those administrators who anticipate a merger, or who are already immersed in a merger, to identify the obstacles that are certain to appear, and to discuss actions which will lessen the impact of the changes that occur. By building trust among the team members, a clinic can proceed to its goal of a merged program that delivers quality, cost effective patient care.

Studies show that mergers have limited success (50% – 75%) in achieving stated goals. Business scholars would suggest the reasons for failure are price, purpose, or timing: the price paid was too high, the reason for merging was not right, or the timing was off. It is the management of the merger during the two years following the event, however, that provides the best lessons on how to achieve success.

Risks

What are the risks associated with a merger? These risks will affect all aspects of the clinic including events that are external to the Occupational Health Clinic.

Loss of leadership is a primary risk, as good managers decide to exercise other options rather than ride the whitewater that ensues from the merger. Studies show that 47% of senior managers leave within one year of a merger, while 73% leave within three years. A 15% decrease in productivity occurs shortly after the merger and can be felt for 18 months after the merger. Staff morale decreases, and as a result, patient care and billing errors can occur. During this time, customers are aware of the turmoil and may decide to seek care elsewhere, resulting in a loss of customers and revenue. Employees also decide to jump ship, seeking work in less stressful environments, and the resulting staff shortages affect access to care.

Merger Stakeholders

During the merger there are stakeholders, whose needs should be monitored. Patients want access to quality, appropriate care provided in a pleasant atmosphere. They want relief from their pain and recovery from their injury. If attending the clinic for a procedure, they expect it to be done accurately and respectfully.

The Client Companies expect to have the needs of their employees met in a satisfactory manner. They want timely access to accurate procedures, provided in a cost effective manner. Both companies and insurers want accurate billing and other necessary medical information to meet regulations.

Clinical employees want a pleasant, safe workplace with minimal confusion and available resources to provide good service.

Administration and/or investors are watching the bottom line. Increased revenue and decreased expenses are often desired objectives in the merger.

Even your competition can be a stakeholder in the merger process. Competitors are seeking to add your dissatisfied customers to their own customer base.

Obstacles

The largest obstacle is attitude. Attitudes of the employer and the employees can make or break a merger attempt. If senior management denies that issues and concerns exist in their employees, and provides no resources for the employees to help alleviate those concerns, stress increases at all levels of the organization. If employees allow their resistance to change, or their fear of losing their job control their actions, frustration will climb as fast as morale will nose-dive. In this stressful, frustrating environment, it is no wonder 47% of the employees leave in the first year. Senior management should provide information in a timely fashion, especially concerning staff reductions, and should show a strong commitment to open communication.

There are often cultural differences between the merging organizations. One organization may have a hierarchical organization style with multiple signatures required for approvals, whereas the other may have a decentralized management style. One may be entrepreneurial in style and the other more laissez faire. One may tightly manage finances, the other may manage with less fiscal restraint. The diversity and demographics of the organizations may vary, even if in close geographical proximity. If one has an older workforce, this may translate into long term employees with increased resistance to change.

In addition to cultural differences, there are often significant differences in policies and procedures. One may have open communication, while the other gives information on a need to know basis (and very few need to know!). Human Resource policies, particularly as they relate to payroll and benefits, can result in fear and lack of trust among employees. The principle fear is the loss of their job, though decreased earnings or benefits also play into the hand.

Clinical policies and procedures may differ with different standards of care in each organization. This disparity can exist both internally and externally. Internally, pre-placement physicals may see a physician or physician extender in one organization and a COHN in another. The use of forms in both organizations will be an issue: whose will prevail? The staffing may vary with medical assistants in one and nurses in another. One organization may manage its own medical records and the other may obtain its records elsewhere. One organization may have good relationships between their clinics and the Emergency Department, the other might be described as peaceful co-existence. In one, clinics may see walk-ins and the other only by appointment. The lab may be very supportive of the clinics and have a timely reporting mechanism in one hospital, but less so in the other. Getting Radiology reports in a timely manner may be automated in one hospital, while internal mail is used in the other.

Business procedures from fees to billing cycles may differ. Which fee code will be utilized? Are the procedures the same? Does the bill go to the same entity from all clinics? The customers may be concerned about the accuracy of the billing procedure. How are the Accounts Receivable and the Accounts Payable handled? Does the clinic do its own billing?

Information Systems may differ or may not be fully utilized. In either case, the databases must be merged. This creates stress over the possibility of lost data. Even if the data merger is successful, the data must be reviewed for accuracy, duplication, and addition, if necessary. If one organization has not utilized their data management system fully, then additional data must be reviewed and entered. Staff may require training to get up to speed with a new information system. Information system support is vital and may be scarce in a newly merged organization.

The physical environment creates additional strain on the employees after the merger. A new manager may now have several clinics to manage with considerable distance between the locations. Staff must learn a new physical layout when transferred or reassigned. Where are the ancillary services located? Is there easy access or do patients need to go to a different campus?

Strategy / Action

When thinking about the strategies and subsequent actions to take, think in terms of the stakeholders and aim those actions at those stakeholders.

Communication:
Communication must be frequent, honest and open. Don’t pretend everything will be the same. Make few promises and keep the promises you make. Don’t feed the rumor mill and be aware of the impact of everything you say.

Communication with customers can take the form of an early letter informing them of the changes that may occur as a result of the merger. If the billing will be late, inform them. If there will be staffing changes, let them know. If their relationship with the clinic as a provider will be affected, tell them. Press releases, breakfast meetings, and site visits assist in that communication. Community relationships, such as Rotary International, United Way, local church affiliations, or school activities can serve as an opportunity for meeting and informing your customers regarding any upcoming changes.

Communication with the team is vital. Avoid canceling meetings. Get memos out to employees as soon as possible. Walk around. Find someone doing something right, and let them know on the spot. Financial rewards can be scarce at this time so maximize other rewards for doing a good job.

Issue Identification/Team Building:
As early as possible meet with the staff and identify the strengths and weaknesses of the team. Close the clinics for an afternoon and have the staff understand that their input is valued. With that input, establish the most compelling issues and agree to work on those issues. Other issues may become emergent and require action. However, everyone knows which issues the plan includes, and agrees to wait for their issue to be addressed later. Since the goal includes team building, the whole team decides the most important issues.

Clear Agenda:
From the issues identification exercise, set a clear agenda and work quickly to accelerate the integration of the clinics. Keep the priorities in the forefront and remind people of the goals. Measure progress frequently and give feedback. Assign teams to address the issues and hold them accountable, with deadlines, for completion of the tasks. Raise the bar at this time, as everyone expects change. If there is additional free time, it often becomes time for complaining.

Role Identification:
It is critical to reduce role ambiguity early by establishing written job descriptions and an organizational chart with clear reporting lines. The chart can be temporary, but it must clearly outline the chain of command. This is essential when there are job reassignments, as staff will be uncomfortable in their new roles.

Competency Evaluation/Review of Practices:
After establishing accurate job descriptions and a chain of command, begin to monitor job performance. If the patients are to receive the needed care, then top performance is a must. Review practices in both organizations, and, with input, choose the best practice. When implementing that practice be sure to allow time for training, and concurrently monitor patient satisfaction, at least by means of a complaint log. Take corrective actions quickly, and communicate those actions to the staff. Monitor the financial performance with an eye on overtime and other expenses; this is the time that an upward creep can occur in both categories.

Summary

In order to become the preferred occupational health provider in the area with a single medical management, single quality outcomes, single information systems, and a single financial management program, the administrator must focus on the needs of the stakeholders. However, he/she must continue to be flexible, realizing that change will continue. Maintain customer connections on an ongoing basis, keep communication open with the team, and monitor performance. These efforts will lead to a more successful merger.

References:

1.Pritchard, P, Robinson, D & Clarkson, R 1997, After The Merger, The Authoritative Guide for Integration Success, New York, McGraw-Hill

2.Van Doran, K, "Surviving Merger Requires Adjustment to Change", Hospital Employee Health, February 1996

3.Mirvis, P and Marks, M, 1992, Managing The Merger, New Jersey, Prentice Hall