Achieving potential in hospital mergers

This applied research project focused on hospital mergers and the combination of “business” and “people” factors that allow full potential to be achieved. The business factors included finances and the “people” factors related to culture and practices. We sought to examine whether or not both factors were necessary in order for the merger to reach full potential.; “Merger” was defined as the creation of a single entity out of two in which there is movement of services or staff. A “merger stabilization model” was developed that predicted potential merger synergy as dependent upon “people” fit and “business” fit.; Four merged hospital locations for field research were selected based on a matrix of: (1) better for the business/better for the employees; (2) better for the business/worse for the employees; (3) worse for the business/better for the employees; (4) worse for the business/worse for the employees. Interviews were conducted with 107 individuals in these locations representing a cross-section of governance, management, medical staff, employees, patients, and community representatives. A quantitative survey was conducted with the employees that compared culture and practices aspects post-merger to pre-merger. Secondary data were also examined, including financial information, patient and employee satisfaction information, and media coverage.; The model's prediction that achieving merger potential requires business fit as well as culture fit was not proven. Additional “process” factors emerged from the data which impact merger potential outside the model's factors of business fit and culture fit: leadership, including transparency and motivation, time, and proximity. Of all seven factors examined, leadership and business fit were the most critical factors both pre- and post-merger influencing a hospital merger's ability or inability to achieve potential. The factors of culture fit, time, and proximity contributed in a secondary way to achieving full merger potential.; These findings have implications for hospital leaders. Even though market conditions may prompt an alliance, business fit and leadership primarily impact merger success. Culture fit as well as the process factors unique to a particular merger setting (time and proximity) can enable or disable achievement of potential. Hospital mergers will have a better chance of reaching expected potential when the importance of business fit and leadership are recognized as key determinants of merger outcome.