If you are in healthcare, you no doubt have been involved in a merger and acquisition of some sort or know several people who have been.
Healthcare reform, the increased focus on population health, and lower overall reimbursements have set forth a healthy wave of mergers and acquisitions — 235 deals were completed in Q1 of 2017 alone — and there are likely more on the way.
Capital One recently released its annual survey on merger and acquisition activity, illustrating what to expect in the year ahead. Of the more than 450 healthcare executives that responded to the survey, 38% percent report merger and acquisition transactions have driven their growth plans for 2017.
So why is it then, according to Harvard’s Clayton Christensen, up to 90% of M&A’s fail to live up to their planned potential?
The root of the failures likely lies in the fact that the newly formed entity often finds itself struggling to identify what the new company will look like and what it will stand for. Mergers and acquisitions, and healthcare M&As in particular, often involve executives that are hyper-focused on the financial aspect and too often neglect the less tangible brand discussions until much later.
Or worse, never at all. The result is a disjointed and misaligned mess that includes varying cultures, processes, visions, and brand strategies.
The best time to bring the merger and acquisition brand strategy discussion to the table is actually during the M&A. Bringing these issues to light early will force the consideration of some tough decisions. And, it might even point out some holes in the thinking and prevent yet another failed acquisition.
For any healthcare organization considering a merger or acquisition, here are a few key points to consider to help ensure that it delivers value — both internally and externally:
The leadership team must own the brand.
The brand architecture of the newly combined company is a direct reflection of the business strategy behind the merger or acquisition. The leadership team must own this, it’s not a marketing exercise, it’s bigger than that. Healthcare mergers and acquisitions typically comes with significantly more moving parts that need to be aligned, and the depth in which the team needs to be involved in aligning those pieces prior to the rebrand could be more complicated. Furthermore, the time of the M&A presents an unheralded opportunity to make tough decisions that, if not made then, only get tougher and more disruptive as the two companies settle into their new existence. Consider all of the brands that each company has, whether they are product or service brands or both. Try to draw out a logical structure for them that goes beyond just pushing the two organizations together. Which brands should make the transition? Which should not? Which should be downgraded from brand status altogether? This discussion will help drive the bigger conversation around the future business model of the combined companies.
Dare to be different.
In the healthcare space, there is often significant overlap in positioning. That’s why an M&A presents the perfect opportunity to identify “the differentiated sweet spot,” or two to three points of distinction — things that set the new brand apart from others in the space. It’s taking a step back to ask “what do our competitors look like and what are they saying about themselves, and how can I do it differently? How can I do it better?”
All too often, healthcare brands look at their competition for inspiration in what to say. The reality is that you should look at the competition and try to find ways to say it differently and in a more meaningful way. Following a merger or acquisition, the key is to differentiate yourself within a crowded market, and typically you will find that brands within a specific category are saying all the same things in the same ways.
Don’t forge ahead without a solid communications plan.
Healthcare consolidations of any sort can incite strong reactions within the community, potentially leading to a public relations nightmare if not handled correctly from the get-go. A thorough and well-executed communications plan can prevent roadblocks by outlining a plan to not only communicate brand changes to providers and community leaders early in the process, but how those providers should communicate the same to patients.
Use brand to build a patient centric culture.
As patients are much more deliberate when evaluating potential providers than ever before (and less likely to remain with a provider if they’re unhappy with the care or treatment received), healthcare brands and vendors must stand out, exude trust, and have an appreciation of the patient experience. This means, taking care when bridging organizations to build a patient-focused brand culture, starting from the inside-out (with physicians and administrative staff) and consistently delivering on the brand’s value promises at every patient touch point. Often, a key factor of failed M&As is the lack of focus of bringing the cultures together, the brand is a terrific vehicle to fix that. Brand strategy is about creating new stories — stories that are emotional and connective, yet logical. Employees view brands emotionally, so harness this.
Bring in a neutral third party to lead the discussions.
Everyone internally, from both companies, has an agenda during this period. Having a third party to help make these decisions, gives leadership an expert source to lean on and unbiased counsel to consider, which is exactly what is needed.
If you are part of the healthcare organization in an M&A or an investor, following the above guidelines will go a long way to ensure that success and value are achieved.
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