Edward Berenblum knows why hospital mergers fail.
"They just merge on paper," says Berenblum, a senior manager at Deloitte Consulting in New York. "They don't do anything to cut costs, and they actually build an additional layer of overhead to manage the merger."
While merger breakups from California to Pennsylvania have been in the news lately, Berenblum is more interested in mergers that work.
He'll be leading a seminar during the ACHE congress that tries to build a framework healthcare executives can use when contemplating whether to move forward with a merger.
"The message is, before you jump into a merger, consider what the merger is going to do for you," Berenblum says.
He is scheduled to deliver his presentation, "Implementing Hospital Mergers that Deliver," at 4: 15 p.m. on Tuesday, March 28.
Berenblum's co-presenter, Michael Greene, senior vice president at UMass Memorial Health Care, was unavailable for comment.
Berenblum says potential mergers should be looked at from two points of view: strategic and operational.
Strategically, a merger should be evaluated based on such market dominance factors as better pricing and better network coverage, he says.
Operationally, a merger is rated on how it achieves economies of scale, spreads fixed costs, rationalizes capital and shares best practices, he says.
Berenblum says that during his presentation, he'll use UMass Memorial as an example.
The system was created in 1998 by the merger of the University of Massachusetts Clinical System and three-hospital Memorial Health Care, both in Worcester, Mass.
Berenblum worked as a consultant on joining the operations of the systems when they were newly merged.
The systems joined because "individually they realized they couldn't make it," Berenblum says. At the time, three systems dominated the greater Worcester area.
Since the merger, UMass Memorial now controls almost 65% of the acute-care beds in Worcester. It's chief local competitor is Santa Barbara, Calif.-based Tenet Healthcare Corp., which owns 369-bed Saint Vincent Hospital in Worcester.
Overall, UMass Memorial owns eight hospitals and is affiliated with nine others throughout central Massachusetts, a system spokesman says.
Since UMass Memorial came together, it has "substantially reduced its costs," Berenblum says.
"They're together with a much leaner cost structure and with a process that continues to make the cost structure better every year," he says.