The key to a successful merger may lie before and after serious discussions have been held.
Two healthcare consultants hope to relay a better understanding of the pre-merger and post-merger processes in their seminar "Before and After: Making Mergers Work." The session is scheduled for 2 p.m. to 5: 30 p.m., Tuesday, March 4.
"We will be looking at the do's and don'ts on both sides of the equation," says Scott Mason, managing partner of National Health Advisors in McLean, Va.
"There are some serious mistakes that can be made pre-merger and post-merger," Mason says. "Let's learn from the mistakes and develop a tool kit."
Mason and Roger Witalis of Witalis and Co., Lafayette, Calif., will present two case studies from California and Massachusetts.
For those presentations, the consultants will be joined by John Day, president and chief executive officer of Southcoast Health System in New Bedford, Mass., and Thomas J. Collins, president and CEO of Memorial Health Services in Long Beach, Calif., both of which successfully completed mergers. Since Southcoast and Memorial formed their respective systems, they have added other hospitals.
Before talks begin, executives should be most concerned with involving people other than just senior management.
"People are always in a rush to deal with the most difficult issues," Mason says. "A fair number of folks are trying to manage things at the management level; they need to involve physician and board leadership."
While merger mania in the hospital industry continues in unprecedented numbers, break-ups are almost as common.
Recently, the only two hospitals in Dubuque, Iowa, decided they wouldn't pursue a partnership after fighting all the way to the U.S. Court of Appeals and spending more than $1 million in legal costs. Mercy Health Center and Finley Hospital fought the U.S. Justice Department for three years in an effort to stay together, but now they say the Dubuque market is big enough for two hospitals (Jan. 27, p. 17).
In the post-merger process, boards and executives tend to make the mistake of moving ahead with the merger without consolidating management, Mason says. Many merged organizations wait too long to eliminate duplicate executive positions.
In Indianapolis, St. Vincent Hospital and Health Care Center and Community Hospitals of Indianapolis dissolved their healthcare network last year after they were unable to settle on a leadership structure. The breakup came two years after the Justice Department had approved the hospitals' joint operating agreement.
"A lot of times, to get the hospitals together, people will try the co-CEO model, but those structures are flat out not working," Mason says. "Volunteer boards require a single individual to lead them. I have not found boards to look to two people to do that."