With healthcare mergers, joining workplace cultures can be a difficult transition

As healthcare mergers continue to pick up pace due to industry conditions that favor large-scale systems, it can be a difficult transition when organizations with different work cultures are forced to combine.

So far this year, thousands of healthcare workers nationally have had to adjust to life with a new employer, new colleagues, and maybe even competing managers.

"Ten to 15 years ago when there were acquisitions or mergers there was so much time focused around mission and cultural match that you made sure they were aligned," said Mark Madden, senior vice president at the executive search division of BE Smith, a healthcare placement firm. "I was involved in some leadership evaluation in a couple of those that got to the 11th hour, but then fell apart because they came to the conclusion that the "culture" match, the mission and the values match wasn't as closely aligned as they thought it was."

That may be the exception, since experts say healthcare mergers are increasingly driven by strategic alignment and not cultural fit. That means the likelihood of any one manager not "fitting in" is greater.

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Of course, as healthcare systems grow in size, many are doing away with a number of middle and upper management level positions in each facility and instead managing from a central office through a central role.

The challenge of blending workforce cultures can't be understated, though, since the acquiring organization will probably want to put its people into most of the key management and executive slots.

"The acquiring organizations want to be able to maintain as much stability as possible, at least for a period of time," Madden said. "But then, as they work through that integration into the new organization, we will see that the tendency is – especially at the top – the CIO, CFO, COO – that those positions have a stronger likelihood of turning over because the organization will want to put one of their leaders in the role."

Middle managers that stay on will probably have an easier time, Madden said.

"When you get down to the manager level, the middle management level, those folks are in the trenches and they're getting the work done every day," Madden said. "So if there is an adjustment, it is not quite as dramatic as what we would see at the higher levels."

Two years ago, the Jersey City Medical Center joined the Barnabas Health system. Suddenly Jersey City Medical became part of a very large-scale organization, since Barnabas Health is the largest nonprofit integrated healthcare delivery system in New Jersey and one of the largest in the country, with more than two million patient visits annually.

"Two of our executives on the senior executive team -- our CFO and our general counsel -- decided that they did not want to be part of a system, so they left the organization," said Joseph Scott, CEO at Jersey City Medical. "The other folks in our management team have pretty much stayed for the most part."

But there have been other casualties as well. All told, about 120 positions at Jersey City Medical Center were affected as a result of the merger, and more consolidation is coming, he said.

"We do have to consolidate some of our departments. In fact we're in the process of now, for example, consolidating our business office. Remember, we've joined one of the largest healthcare systems in New Jersey," Scott said. "Our objective through that consolidation process is to make sure that every employee gets a job. Today I met with the business office to tell them that we're consolidating on April 1. That gives us six months to help them transition either into a new role in Ocean Port where the central business office is, or somewhere else within the system."

The pain at Jersey City Medical would have been greater if the two organizations had not been a good fit to begin with, Scott said.

The importance placed on compatible cultures often ranks lower than other concerns, though. Many new healthcare partnerships are all about increasing bed capacity, expanding specialty and outpatient services, and reducing operating costs. In those cases, a marriage of mission takes a back seat.

But the merger and acquisition teams that do pay close attention to cultural fit are likely to have an easier time of it, experts said. That includes the ability to hold on to key staff -- managers, physicians, and employees alike -- in the process.

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"We've had a very positive merger," Scott said. "I could give advice to people who are going to go through this process: Make sure way up front that the organization that you're going to merge with has a similar culture to what you're used to. We did a lot of homework around that in the very beginning. For us, the cultural issues were less of an issue and quite frankly, if you look back and even talk to many of our staff; it's as if we've been the same system throughout the term here."

So what are the lessons here for other healthcare executives? For one thing, if you're at an independent hospital, you're days as such are numbered, Scott believes. He says a recent study identified only 18 remaining independent hospitals in his state.

But more immediately, for those executives preparing for or going through a merger or acquisition, open communication is a key to success.

"I think the other thing that has made us successful during this transition is the significant amount of communication with our employees around what it means, what the issues are, how we're transitioning, and really getting that communication on a regular basis to the staff has made for a very seamless transition," Scott said.

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