Suppose you were in the market for vacation property and decided to buy after the developer offered a schedule of reduced monthly assessments in the first five years of ownership. After moving in, however, you were hit with a special levy of thousands of dollars for improvements the developer could have reasonably expected. You'd be pretty angry about biting on misleading information.
A similar scenario has arisen as healthcare transformation explodes across the country, bringing fear, confusion and-yes-even greed. Too many executives are rushing into deals to expand market share and failing to be forthcoming about the effect of industry changes on communities they serve. In promising merger efficiencies they don't always deliver, they contribute to a growing crisis in credibility.
In 1991 Flagler Hospital in St. Augustine, Fla., acquired competitor St. Augustine General Hospital and achieved a monopoly over acute-care services in the city of 12,000. But Flagler promised both facilities would remain open for acute- and emergency-care services. "Patients will still have their choice of going to either healthcare campus," it said in an Oct. 30, 1991, statement.
Now Flagler wants to issue tax-exempt bonds and spend $30 million to build a 105,000-square-foot acute-care patient tower and 60,000-square-foot medical office building at its main campus. The old St. Augustine General building will be converted to an outpatient surgery facility-a fate predicted in local speculation when the deal was announced.
Closing facilities often is necessary to achieve the efficiencies sought by merged organizations. But the community must be educated about the price of such moves, including costs of closing existing facilities and additional capital expense for new construction. Otherwise executives risk alienating those whose interests they profess to serve.
In Joplin, Mo., Oak Hill Hospital failed to do its homework while pursuing a merger that would give it control over 46% of the beds in a two-county metropolitan statistical area. Oak Hill failed to consider competing offers until the federal government insisted it do so. The combination may ultimately win government approval, but executives could have done a better job of preparing the community on merger options and how they would affect costs and services.
Such lapses used to pass unnoticed. No longer. In Lorain, Ohio, the American Civil Liberties Union has filed a complaint with the state and threatened a lawsuit because it contends a merger has resulted in elimination of contraceptive services to the community.
With public activism on the increase, administrators can't afford to squander the community's goodwill.