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Once the deal is signed on the dotted line, it’s make or break time for merging two medical practices. Here’s how to ensure the acquisition doesn’t fall apart.
In order to be successful, a merger must be followed up with a detailed course of action.
Here are several specific places where physician groups routinely stub their toes when merging. But, if you get them right, your success rate will soar.
Mergers succeed or fail based on the quality and dedication of the people who execute them. Start with your leadership team. Determine the composition of the new management team as far ahead of time as possible. This helps mutually ensure physician owners that the integration process is beginning to unfold both smoothly and sensibly. Then, identify those individuals (and occasionally teams) who are outside the leadership realm but still essential to retain. Develop specific strategies to keep them engaged during the transition.
Be proactive and make opportunities. If your strategic intent calls for headcount reductions, do not rely on “natural attrition.” That is just abdication in the name of kindheartedness. Similarly, even if reductions are not a big part of your plan, people expect them. Use the acquisition as a time to do a little constructive pruning if need be and consider the possibility of offering severance packages.
Attention to patients should seem like a priority at all times, but it is particularly true during periods of change and uncertainty. Because mergers are times of great internally-focused thinking and activity, an outward focus on patients can suffer during this time.
Competitors will seize any open opportunity to lure your patients away, and practice upheaval is one such door. They may spread misinformation and regale your key referring physicians with the dangers of your merger and the glory of their own practice. Do not let that happen.
Be proactive and convincing. Take the show on the road. All physicians must actively outreach and proactively engage referring physicians. Keep them in the loop with frequent communication. Walk them through what you are doing, if and how it will benefit them, and state clearly how they can get in contact with any questions or concerns throughout the process. In addition, provide physician liaisons clear language about what they can (and cannot) say to referring physician practices.
Keep referring physicians informed and make sure to spend time listening to their concerns. This might even be a good time to probe what they like and don’t like about your existing relationship or services you offer. If there is a weakness in their mind, it’s better to open that door proactively with an eye toward solving it in the integration/transition process than let a competitor open the door with an eye toward leveraging it.
Culture is woven into the fabric of a workplace over time. That makes it difficult to see and even more difficult to change. The list of deals that have famously failed because of mismatched cultures is epic.
The first, and perhaps most important, rule in dealing with culture during a post-merger integration is to compare the existing cultures and see how they will be combined. Do not downplay the culture as something that will work itself out. It won’t.
Here are some questions to ask yourself:
The second rule in merging cultures is to know thyself. It is not possible to integrate two cultures based on an understanding of only one of them. Culture assessment should begin way before staring down the path of a merger-and well before the demands of a deal set in.
In medical practice mergers, good communication is by far the simplest and cheapest way of reducing uncertainty and stress-two of the biggest causes of dysfunctional deals. Good communication can:
Start by being up-front and direct about the rationale behind the deal. Don’t assume that its logic and benefits are self-evident to employees or others. To the greatest extent possible, have clear and concise answers to the one question at the top of everyone’s mind: “All that sounds fine, but how will the merger affect me?”
Here are some hints and guidelines for how to proceed with compassion and respect:
The phases prior to a merger, e.g., strategic planning and due diligence, are indeed essential, but the integration that occurs post-merger is by far more important to the deal’s overall success-or failure.
Nick Hernandez, MBA, FACHE, is the CEO and founder of ABISA, a consultancy specializing in strategic healthcare initiatives for physician practices. His firm helps devise and implement strategies that will allow practices to remain competitive and solvent. E-mail him here.