Although hospital mergers and acquisitions have become increasingly common, the process is still fraught with roadblocks. And for many CIOs, it’s a much bumpier ride than they anticipated, according to the September healthsystemCIO.com SnapSurvey, which revealed a wide gap between expectations and post-merger realities.
Not surprisingly, the majority (65 percent) of CIOs indicated they had experienced an acquisition; of those, nearly half stated that although the deal went through, there were significant hurdles, with the biggest being the merging of cultures. One respondent identified culture, expectations, and leadership as “key factors in any merger,” adding that “if it is viewed as a merger of equals, it is doomed to fail.”
One option that is emerging as a possible alternative is strategic alliances, which “if structured appropriately, can be viable,” noted a CIO. But although 59 percent believe they are a strong option, some expressed doubts, with one respondent saying, “You never get the outcomes expected and the smaller firm continues to do their thing.”
For those who do find themselves aligning with another organization, CIOs offered the following pieces of advice: be proactive, make sure you bring value to the table, and “try not to take it personally.”
(SnapSurveys are answered by the healthsystemCIO.com CIO Advisory Panel. To go directly to a full-size version of any individual chart, click on that chart.)
1. Have you been with an organization that had plans to acquire or be acquired by another organization?
Yes, I’ve been at an organization that was acquiring one or more hospitals.
Yes, I’ve been at an organization that was being acquired.
- I left my health system after eight years of very successful employment because I was pushed out after we were acquired by a larger six-hospital system (we had 2 hospitals) about five months ago.
Yes, I’ve been on both sides.
No, I haven’t experienced either.
- We’re expecting to be acquired at some point but are not actively being acquired.
2. If so, did the merger go through as planned?
Yes, it was a success.
- Still in progress.
Yes, but there were significant hurdles.
Yes it went through.
- It ended in divorce after just a few years
No, it did not go through.
- Not yet on the “being acquired,” but yes so far on the merger with another hospital.
3. What is the primary reason why some mergers fail?
Inadequate planning/failure to anticipate challenges
- The biggest factor by far is culture. That is usually solved over the long term because a large percentage of the acquired generally are gone after one year.
- Cultures, expectations, and leadership are all key factors in any “merger.” Also, if it is viewed as a merger of equals, it is doomed to fail.
Lack of leadership/change management
Failure to determine roles/responsibilities prior to merger
- Size does not equal quality.
- Leadership of other organization.
- Merging cultures, lack of strong leadership, and lack of direction being established.
- Early in the merger.
I’m not sure
5. Do you believe strategic alliances will emerge as a viable alternative to M&A?
- Already happening. One savvy CEO I spoke to deliberately called it a “collaboration” since the word “affiliation” has become the code word for mergers or acquisitions.
- Yes. We are already seeing them as organizations align to offer very narrow networks.
- I think we’re getting to the stage of we need one another — to paraphrase, we will have to perish together or we will surely perish separately.
- There is something to be said for scale and economies, so I’m not sure strategic alliances will dominate. I think they are alternatives for people who are profitable but need niche services.
- Strategic alliances, if structured appropriately, can be viable.
- I think we will see some of both, where and when it makes sense
- I was at a place that tried this. You never get the outcomes expected and the smaller firm continues to do their thing… it is a waste of everyone’s time.
I’m not sure
6. What advice would you offer to CIOs who are going through (or are about to go through) a merger or acquisition?
- Try not to take it personally.
- Plan thoroughly.
- Bring value to the process.
- There isn’t much you can do really. Pray.
- Rocking the boat won’t help you or your staff.
- Be involved and informed.
- Always take the high road and make yourself valuable.
- Evaluate your situation. Proactive move is best.
- Stock up on whiskey. Be clear on expectations.