The Merger of Two Competing Hospitals

“The Merger of Two Competing Hospitals”

Driven by a variety of factors, as well as amendments in the reimbursement environment and the need to have scale to successfully bear risk and support delivery models that put emphasis on population-based health management, merger activity among hospitals has been robust over the last couple of years. The annual number of transactions is nearly double what it was five years ago. 

With the continued debate over the benefits of hospital consolidation and whether these benefits outweigh a possible harm to competition, hospital mergers have come under renewed scrutiny from the Federal Trade Commission (FTC) and on occasion, the Department of Justice’s (DOJ’s) Antitrust Division. Merger activity among hospitals however have been robust in the last couple of years. In this thesis, two hospitals, Porter Regional Medical Center (PRMC) and Banner Regional Medical Center (BRMC) are going through a process of merging. both of them have full complement of state of the- art diagnostic technology, including MRI and CAT scanners, 24 hours physician staffed emergency care centers, and specialized women centers. In order for the merger to thrive, the new hospital rebranded as Portsmith Regional Medical Center, appointed new transitional team, brought on board 1, 400 member staff and a new Chief Executive Officer Mr. Pat Herman. However, the success of merger will focus on the decisions of several matters such as leadership, culture adaptation, human resources, staffing and benefit issues.

Beginning with leadership, there are steps which the board has to take to create an executive team in order to run Portsmith Regional hospital. Establishing a fair representation from both institutions needs to be the principal concern of the board in constituting a new executive team. Moreover, it will be imperative to keep in mind that top management within Banner Regional Medical Center (BRMC) had recently changed due to the exit of several key members; the new representation should reflect this change. The consolidation agreement should be closely adhered to because it stands as a written agreement between the two hospitals. Therefore close attention to the result within the agreement will be symbolic to the upper management of both parties because it will show the intentions of the new board to integrate the agendas of each. Teams typically include individuals with complementary skills who are committed to a common approach for which they hold themselves mutually accountable. (Buchbinder & Shanks (2012).  The executive team should also create strategic plan for the merger process and communicate it to the staff of Porter Regional Medical Center and Banner Regional Medical Center as well as to the public. Employee relations and engagement efforts work to identify and address needs of employees so they will be satisfied and remain with the organization (Buchbinder, 2012). Pat Herman, The previous CEO of Porter Regional Medical Center (PRMC) and the new group of 15 board members should generate a timeline that will allow for the structure of the consolidated hospital to be established. Interim managers should be appointed in the duration of the timeline. For that reason, the timeline will examine the management structure and should permit 2-4 years for job descriptions and managerial roles to be identified.

 The respective staff of each institution should be informed of the timeline as well as the outlined details of the strategic merger plan. Because the merger will affect all employees, lower level managers should have a say about who should be a part of the executive team. In this manner, it allows time for a bigger vision of the candidates and possibly prevents issues in management from continuing into the new organization.  An informative public relations campaign, introducing the new executive team is critical to the integration of the greater public into the merger plan. In this manner, public relations campaign would build credibility because instead of ‘selling’ to the public, engaging them in conversation or reminding them about your expertise is what makes your organization unique”(Richard, 2013).

As a result, this public exposure, whether its press conference, a newspaper article or radio interview will draw attention to the ways in which the executive team supports the general public. Dale Miller, the new Vice President of Human Resources is also expected to bring his merger experience to facilitate with this process. Benefits and pay structures will be set by the partnership of the board members and the Human Resource team. Human resources should also be aware of the very different cultures of the merging hospitals and identify solutions for the initial integration of management styles and then methods for the creation of a new organizational culture. Graban (2011) also emphasizes that leadership has a responsibility to set a good example and to insist that others live up to the organizational ideals and philosophy every day. Additionally, it will be that very significant that as Human Resource engages new management positions; two-way communication becomes extremely imperative in the consolidated hospital. Lower- and mid-level managers should be involved in the decision making process. “A hierarchical management system is prevalent in the department with feelings of difficulty in two-way open and open communication between leaders and employees” (Sarka, 2014, p.10). By laws, rules and regulations that reflect joint-decision-making efforts should be followed by the new, consolidated medical staff. Firm, well-documented standards for keeping physician’s credentials current should be applied to Portsmith Regional Medical Center and resolutions on that matter should be made by the newly elected medical executive team.

Furthermore, given the diversity of culture embedded in the merged organization, Pat Herman and the newly formed executive team need to clearly define the vision and mission statements of the consolidated hospital. Likewise, clearly communicate the vision and mission statements to staff through training and development programs. There should also be designated training coordinators, in charge for coordinating the provision of training of staff either on site or at remote locations. This training should also comprise unifying “team building” activities including members of both organizations since this will extinguish any past of “us versus them” attitudes. If it is possible there should be a deliberate mixing up of staff from both sides. As a result of this, it would cause employees to become devoted to the newly consolidated hospital. An icon representing the union and a new logo should be created to enhance the status of Portsmith Medical Center. Employees will feel more connected if they share a common vision and mission. In order to keep employee’s motivation, the executive team should communicate to employees the policy that no workers would be laid off as a result of the merger. They should evidently explain the merger process through public meetings, press conferences, and state what procedures will they acquire to enhance and maintain quality of services as well as how do they intend to keep the healthcare costs from increasing.