Merger has always been one of the most effective ways of combining the efforts of several health care institutions in the way of creating more opportunities and services. However, to achieve this aim, a lot of hard work is needed. Successful mergers are able to survive if they own some crucial elements (Thier, Kelley, Pardes, Knight, & Wietecha, 2014). An essential feature of a merger is competent leadership.
It allows to create the atmosphere of confidence and trust, establishes the stability of the employees, and connects cultural diversity within an organization (Their et al., 2014). Other crucial components of strong mergers are concerned with making the medical employees resistant to change and organizing the possibilities for attaining their expectations (Choi, Holmberg, Löwstedt, & Brommels, 2012). Therefore, to make a merger survive and prosper, both parties need to perform a thorough analysis of their strengths and weaknesses in order to come up with the most effective ideas for their cooperation.
The first big wave of hospital mergers was initiated in the 1980s-1990s when the adjustments of the health care delivery system required structural changes in the health care facilities’ organization. It was a customary practice to connect the facilities which previously had used to be independent and existed separately (Mallon, 2003). A merger between Pennsylvania State University’s Hershey Medical Center and Geisinger Health System in Danville was initiated in 1997 (Mallon, 2003). The merger lasted for three years, and then it unwound due to a number of reasons.
To analyze the causes of de-merger, it is necessary to investigate the reasons for merger. The interest of both organizations in the union was triggered by the unsettled situation in health care environment. They believed that in the nearest future, independent small enterprises would not survive, and only big consolidated facilities would continue functioning (Mallon, 2003). Pennsylvania Medical Center, as well as Geisinger Health System, endeavored to reinforce their organizations, promote the position in the market, and reduce the expenses. Apart from these common reasons, each company had its individual motives for merging.
Pennsylvania Medical Center pursued a goal of sustaining the academic mission and supporting the financial growth of the College of Medicine. Geisinger Health System wanted to spread its organization’s activity geographically and reach new markets. These diverse objectives were the first cause of merger’s failure, followed by some other causes.
The main problem of the merger was that both leaders were determined individuals used to operating their organizations, and none of them was willing to give up his authoritative position (Mallon, 2003). Thus, arguments were frequent, and leadership was ineffective. Neither of the two leaders was welcomed by the other organizations’ employees. The drawback of board leadership was that it was not qualified to perform its primary duties.
The aim of a governing board in such company is providing strategic management which would enable the company to achieve its mission (Mallon, 2003). Pennsylvania Medical Center’s board did not cope with its duties. The problem with organizational culture was connected with the divergences in underlying assumptions in the organizations. Geisinger Health System advocated cooperative independence which focused on the clients, whereas Pennsylvania Medical Center defended the need for independence as a means of authority (Mallon, 2003).
Therefore, three core reasons of de-merger were identified as a result of analysis. The first one was concerned with ineffective leadership, the second one dealt with the lack of trust among the board committee members, and the third one was based on the discrepancies in organizational cultures.
References
Choi, S., Holmberg, I., Löwstedt, J., & Brommels, M. (2012). Managing clinical integration: a comparative case study in a merged university hospital. Journal of Health Organization and Management, 26(4), 486-507.
Mallon, W. T. (2003). The alchemists: A case study of a failed merger in academic medicine. Academic Medicine, 78(11), 1090-1104.
Thier, S. O., Kelley, W. N., Pardes, H., Knight, A. W., & Wietecha, M. (2014). Success factors in merging teaching hospitals. Academic Medicine, 89(2), 219-223.