All healthcare mergers have bumps and unforeseen challenges. If not managed properly, they can lead to financial, operational, and quality-of-care challenges that will undermine the benefits of why you got into this agreement in the first place.
Here are the three largest culprits and how to battle them:
Communications Across the Organization
M&As are shrouded in uncertainty and rumors. If misinformation is allowed to fester, it can cause a worse infection. Even the most well-meaning and loyal employees often end up spreading half-truths and speculating on the future of the organization simply to join the “in-the-know” club. They want to be recognized as the one who saw this coming.
When should you begin a communications campaign? It’s complicated. To win employee buy-in and avoid losing key employees, they need to feel like you trust them and are keeping them informed. On the other hand, when negotiations are underway and there’s no formal agreement, there’s limited information you can share.
You can’t tell your employees much more than you’re saying publicly. Why? Secrets never manage to stay secret. Expect everything you tell your employees “in confidence” will be printed on the front page of your local paper.
Everyone is tempted by the siren song of “Don’t tell anyone I told you this, but …” Oftentimes, reporters will use this to their advantage and question anyone who works for the organization. In a mixture of excitement and pressure, employees will speculate and spill the beans.
Remember the children’s game Telephone? If you tell your employees that it’s possible (but highly unlikely) that facilities may close, there’s a high likelihood it’ll become part of the news story and your organization will be portrayed as “shuttering its doors, creating mass layoffs and a leaving a hole in the community.”
Once you lose the community’s support, your M&A deal may go south. A popular narrative is to turn the affected consumers against the idea. Harvard Health Publishing cites the oft-used negative media angle, “From the standpoint of consumers, hospital mergers may offer expanded access to healthcare services, but this may very well come at a cost — higher prices for those services and higher insurance premiums.”
Takeaway: It’s not just what the media prints. You have to control the public narrative and manage the flow of information within your organization. Treat your employees with respect, but know that everything you tell them can (and probably will) be interpreted differently and shared.
Lack of Experience or Planning for an M&A
Similar to remodeling your home, there’s a massive gap between how long you hope it’ll take and how much it’ll cost versus reality. Even worse is living on-site through the renovation process. This is what going through an M&A is like.
According to Deloitte’s US Healthcare Providers practice, “Taking on the monumental task of merging two organizations' systems, or integrating multiple operations in another's enterprise, adds additional layers of potential hazards in regard to IT complexity. This challenge — sizable under ordinary conditions — is greatly exacerbated by M&A activity.”
Manage expectations of your employees, partners, and consultants. This will lessen the sabotage by those who feel “I’m getting the short end of the stick in this deal.”
A New York Times analysis of several studies found that just because a plan “has theoretical benefits of better coordination does not mean it achieves them.” It added, “Integrated organizations are larger and more diverse. As anyone who has worked in a large company or has managed a large group knows, the more people involved, the harder it is to coordinate activities.”
But don’t let the fear of figuratively herding cats stop you from making your merger a success. By realistically planning, managing expectations, and communicating early and often, you’ll be leaps and bounds ahead of most other mergers regardless of industry.
Takeaway: Budget more time and money for unforeseen emergencies and setbacks. Check in and communicate with (not just inform) your various audiences.
Data Integration and Privacy
The lure of more data often drives mergers and acquisitions in healthcare. But with all the data breaches in the news, there’s also a downside.
Healthcare organizations have usually invested in securing their own data. But what about the security of the data and system of the company you’re acquiring?
After a healthcare merger has taken place, there's a lot of "We merged ... now what do we do?"
According to Healthcare IT News, “The target company’s IT vulnerabilities ultimately become the acquiring company’s vulnerabilities. Thus, if a target organization has sub-standard safeguards in place, the acquiring company is at a greater risk of being breached.”
As the saying goes, you’re only as strong as your weakest link. You want to get value out of the new information and data available. But if you don't protect it, you'll be tomorrow's news story as the latest victim of data and privacy issues.
If a breach happens, do you know what you’ll say? You have to reassure your patients, staff, investors, etc. that you’ve got things under control and are doing everything you can to fix it. Never appear to be flustered, disorganized, or uninformed. Put another way, Never let them see you sweat.
Takeaway: If the captain of the ship is panicking, everyone onboard will take their cues from the captain and fear the worst.
Eden Gillott Bowe, president of Gillott Communications LLC and former business professor, has resolved crisis and brand reputation issues both in and outside the media’s glare from Seoul to Manhattan to Los Angeles. She has been interviewed about brands in crisis in publications and media outlets such as the Wall Street Journal, the Washington Post, Los Angeles Times, NPR, PR News, ReputationManagement.com, Eater and the National Federation of Independent Businesses magazine. Her articles have appeared in PR Measurement Guidebook, Verdict magazine, Attorney@Work and Attorney at Law, Downtown Los Angeles. She regularly speaks to bar associations, law firms, CPA firms, and other organizations about best practices in protecting a company’s reputation before and during litigation or investigations involving regulatory compliance.