Health care mergers and acquisitions (M&As) have become a constant in recent years and there is no sign of a course reversal anytime soon. 2017 set a record with more than $60 billion in transactions. Although 2018 was a bit slower, activity is expected to remain strong and involve some of the industry’s largest players. If you haven’t been affected yet, the odds are that you will be (in one form or another) in the near future. It’s essential to be prepared.
During the SHSMD Connections conference, M&A activity was a hot topic and the focus of a pre-conference workshop entitled “Navigating Uncertain Times: Building a Strategy to Survive and Thrive During Mergers and Acquisition.” This blog will cover highlights from that session in three areas most likely to affect members: branding, integrating teams and driving strategic work during times of change.
Tackling the emotional issue of branding
Let’s get something on the table right away. M&A activity means changes, uncomfortable conversations and difficult choices for one if not all of the entities and people involved. Emotions will run high. It’s inevitable that one side or the other will feel a loss of identity on some level.
In a good-faith effort to avoid the pain of losing an identity, health care organizations tend to compromise and come up with a branding solution that tries to please everyone. That often means combining multiple names in an alphabet soup approach to positioning and branding the new organization. This leads to brand dilution and confusion for the key audiences you want to engage.
The best way to head off this situation is to ensure that the marketing and communications team is involved early on in the process before any specific branding promises are made. You’ll want to take a few steps to prepare:
- Conduct brand strength research. Most leaders value the brand equity they believe their organization has established. However, perceived brand equity is often anecdotal and not supported by research. Get the facts on brand awareness, preference, likelihood to recommend and other factors.
- Be educated on best practices for branding (outside health care). The top brands all have something in common: branding that is simple, clear and distinctive. Look to Apple, Amazon and Coca Cola for inspiration.
- Use common sense. If proposed names and other brand elements are confusing to you, they won’t make sense to the public.
- Set realistic expectations. Putting a new name on an established hospital won’t turn around years of poor performance. Creating a new identity also won’t be cheap, easy or fast.
- Resist the urge to compromise. If you agree to something now without following the steps above, you are likely to be stuck with it for the next 20 years or until the next M&A happens.
Integrating teams: Listen and learn first
The natural impulse for most leaders preparing to construct a new department in response to a merger or acquisition is to start with the names and roles on the respective org charts and begin mapping out changes. That’s actually jumping ahead too fast. “The best starting point is to identify the true business needs and establish a shared vision for the future,” advises Karina Jennings, Associate Vice President of Marketing and Communication at Providence St. Joseph Health. “You need to understand what each side is bringing to the table and how those attributes will help support a new structure that is aligned to the overall M&A goals.”
Being able to take an honest look at those attributes requires keeping an open mind about how different organizations have done things in the past. It’s vital to avoid the temptation to throw out what one side or the other has done solely because it’s different.
Jennings also advises that it’s important to take care of the people in your marketing and communication departments who will be affected by changes. “We all know about the emotional rollercoaster people go through during times of change, which moves from denial to resistance to acceptance. Your teams need help navigating those peaks and valleys,” Jennings says.
As the department tasked with communicating M&A changes this support is also crucial to ensuring consistency. If the marketers and communicators are confused or having difficulty supporting what’s happening that will affect other parts of the organization and possibly public perceptions.
Driving the work of the organization
The transition process from the start of exploring a potential merger or acquisition to implementation is often up to two years. During that time, it’s extremely easy to lose sight of strategic planning and current initiatives. As you might expect, losing that focus can have a damaging effect on the business.
“Putting strategic planning, and subsequent execution, on hold during times of uncertainty is exactly the opposite of how organizations should behave. You can, and should, do more than simply keeping operations going through M&A,” says Tammy Graves, Healthcare Principal Consultant with Point B. “For organizations with the culture and organizational capacity to do so, not only can strategic work continue it can also be an opportune time to quickly identify and begin strategic growth initiatives that begin to realize the value of the merger or acquisition.”
Graves also points out that there will be people on the team – many if you work for a large organization – who won’t be involved in integration efforts or need to immediately focus on work or role changes due to the merger or acquisition. Utilize those people to drive forward your current strategic work. Being flexible and customizing your integration roadmap to account for your culture and people is critical to the success of any M&A activity.
Conclusion: Three rules of the M&A road
Surviving and thriving during M&A activity is never easy, but it requires persistence and focus. Following these rules can help:
- Brand: Strive for simplicity and resist compromising for the wrong reasons
- Integrating teams: Take the time to listen and learn first then build a new vision and org structure together
- Driving strategy: Agile methods and nimble governance can drive growth and value during integration
By Alan Shoebridge | Posted January 8, 2019
Health Care Marketing Leader