Introduction
In the recent past, the UAE and the greater GCC healthcare sector has experienced accelerated growth. Several hospitals have undergone mergers and acquisitions (M&A) in the region, specifically in the UAE. Most small hospitals have been acquired with larger ones in the UAE. In fact, experts have pointed out that M&A in the healthcare sector in the UAE will increase significantly.
In the year 2015, NMC Healthcare, which is the UAE’s largest private healthcare provider, made two critical acquisitions. It acquired the ProVita International Medical Centre based in Abu Dhabi and Dr. Sunny Healthcare Group, which consists of six medical centers and three pharmacies based in Sharjah.
Acquisitions in the UAE healthcare sector reflect aspects of change management currently taking place. Change, as it is known, is not a simple process to manage. This essay, therefore, explores issues related to change management in NMC.
History, Culture, Orientation
Established in 1975 with a single pharmacy and a small clinic in Abu Dhabi, New Medical Centre (NMC) has grown to be the largest UEA private healthcare provider. In the recent past, NMC has made several acquisitions to enhance its position in the healthcare sector.
It has developed a strong work culture driven by performance and quality of service. As such, it is today found in Abu Dhabi, Dubai, Al Ain, and Sharjah.
The hospital is change, growth, and acquisition oriented. The management team and board of directors continue to provide vital strategic business direction for the hospital. These factors are responsible for excellence performance, increased acquisition, and expansion into other areas of the UAE.
It is expected that the newly acquired entity, ProVita International Medical Centre does not have highly developed organizational culture, advanced care services, practices, IT solutions, competent teams, and vision for growth beyond the UAE. Hence, the acquisition brings about significant challenges to NMC.
Drivers for Change
It is observed that change for NMC is driven by both internal and external factors. Internally, senior executives and the board of directors are focused on the growth of the organization through acquisition and expansion strategies. The management team therefore drives and leads change internally. When NMC acquires small hospitals, other CEOs from such hospitals definitely lose their position. Consequently, acquisition often presents challenges for them. This could lead to change resistance from some executives and employees due to the fear of redundancy.
Externally, drivers for change are mainly market forces. NMC wants to expand service provision, acquire a wider customer base, and grow its profitability. By acquiring smaller healthcare providers and independent physician practices, NMC aims to maximize business efficiency and enhance the downtime of care delivery. In addition, NMC uses acquisitions to strengthen its bargaining power with insurance providers.
It noted that NMC could attain about 15% to 20% of the profit margin after the acquisition. It can only realize such results from strong smaller hospitals with less mature operational capabilities.
In this case study, the most critical drivers of change are senior executives and employees. While acquisition can quickly be executed, the ultimate test and ability to embrace change rest with individual employees, leaders, and organizational structures that support change processes. Clearly, NMC has effective leadership, employee motivation, and organizational to drive change. These driving forces are stronger than change limiting forces, specifically employee resistance.
Leadership
The hospital CEOs and other managers of the hospitals are anticipated to lead the change. In this context, communication is vital for change success. For example, research shows that that effective communication during merger and acquisition to affected stakeholders, including employees has positive outcomes (Daly, Teague, & Kitchen, 2003). The hospital management teams comprehend various internal factors such as communication, hospital culture, power, controls, philosophy, and organizational structures that support change efforts. Hence, they should focus on these forces and rely on communication strategies that are honest and open to control both positive and negative outcomes associated with acquisition, including employee resistance and redundancies. Hospital administrators and executives use such communication strategies to curtail staff absenteeism, anxieties, and low-levels of productivity once acquisition news is communicated.
Given the success of NMC in the acquisition and subsequent growth, its leaders depict the transformational leadership style. This style of leadership is recognized for improving the engagement of managers and employees in the change plan. Appropriate involvement of managers and employees was related to a positive appraisal of the change process (Appelbaum, Degbe, MacDonald, & Nguyen-Quang, 2015). For NMC, clearly, the use of transformational leadership style has led to direct, long-term influences on employees for positive adoption of change (Holten & Brenner, 2015). Thus, the transformational leadership style has been extremely useful for NMC in its acquisition and change management strategies.
Hospital senior managers and nurse administrators should be responsible for change and implementation plan. Evidence suggests that senior leaders and leading employees play vital roles through commitment during change plan implementation (Chrusciel & Field, 2006). Therefore, all employees in the hospital effectively participate in change management processes. At the same time, the change plan with effective communication ensures that all stakeholders cooperate and get relevant information on the overall achievement of the acquisition and change plan (Kitchen & Daly, 2002). Communication among all stakeholders played a critical role in change management during the acquisition process.
No Shotgun Wedding
NMC understands the risks associated with hurriedly done acquisition and poor change management approaches. Acquisition of smaller healthcare providers and independent physicians may leave bigger hospitals with critical change management issues.
Therefore, to avoid these issues related to acquisition and change management, NMC has developed a plan formulated to maximize the essence of acquisition and ensure that the best employees are retained. The acquisition was linked to high returns for NMC. Further, NMC had developed a strategy to keep key employees and reduce possible customer attrition.
In most cases, studies have established that most M&A initiatives fail because of failure to manage pre-M&A and post-M&A processes effectively (Weber & Tarba, 2012). That is, what organizations intend to do after the acquisition or merger and actual events after the process are two completely different events.
NMC also understands that significant challenges are related to integrating two different organizational cultures of a larger hospital and a smaller one, merging IT systems and balancing hospital practices across different emirates.
The change plan is therefore designed to overcome such challenges.
The Transition Period – One Year On
Once the acquisition has taken place and integration begins, the transition remains the most challenging aspect of change management. The transition process should lead to sustainable change. Research shows that poor transition processes and subsequent failure of implementing change plans lead to outright failure (Kritsonis, 2005). Therefore, NMC strives for real integration of various cultures and values from the newly acquired organization to ensure that it adopts NMC policies, standards, practices, procedures, and organizational culture.
The hospital has demonstrated that transition requires stabilization mechanisms to avoid negative impacts of opposing forces.
Effective structures, practices, and institutionalization are then introduced to the newly acquired hospital using both formal and informal processes. Well-defined NMC policies and practices are then communicated to employees.
One major approach for the transition process is to devise a new business approach for the acquired entity. In addition, the change plan must focus on enhancing operational efficiency and effective management of change impact on staff to avoid attrition during the integration process. It is noted that top performers are the first group of employees to leave an organization in a period of uncertainty.
Project Management
To ensure effective acquisition and subsequent management of change, a change model is necessary. Employees and other stakeholders, considered as the most valuable resources, should agree on well—defined change objectives, the implementing team, evaluation criteria, and feedback mechanisms (Edmonds, 2011).
The project management processes should focus on limiting employee attrition by minimizing the impact of change on individual employees.
Organizational Development
NMC has realized significant growth after the acquisition of ProVita. This outcome reflects effect proper change management and strategic business decisions by the board. In this case, it shows that NMC has successfully integrated the newly acquired hospital into its organizational structures, management practices, cultures, and values. These aspects of management philosophy can only be realized when senior leaders and managers promote them to new employees.
Any change models are designed to identify both supporting and opposing forces in the changing environment. For positive organizational development, change-driving forces should be stronger and be able to challenge the status quo while advancing new ways of operations. Therefore, a change management plan for organizational development should assess both forces and strike a balance between the two.
Developing Management and Leadership Capacity and Capability
One fundamental ingredient for successful change management is leadership style. As previously observed, the transformational leadership style has been effective for advancing change in organizations. However, in most instances, leaders and managers from small hospitals may lack the right leadership qualities to advance the intended change after the acquisition. In this regard, leadership capability and capacity development through training and development are often recommended for such managers. NMC conducts such training and development to ensure that its senior managers and employees acquire the right skills and competencies to advance and sustain change in their respective organizations across the UAE.
Training and development should focus on attributes that build leadership skills even among junior employees. While not employees can have the desired transformative leadership style, trained leaders should reflect effective leadership skills to ensure that they can tackle most challenges found in organizations and the business world. Through training, trainees can fulfill their leadership potential in specific areas such as strategic planning, teamwork, decision-making, and interpersonal communication among others. These valuable insights are applicable to all forms of leadership styles and actually work in the ‘real world’ environment.
Conclusion
This essay presents aspects of change management in the healthcare sector by using NMC and its acquisition of ProVita. It shows that individual change, team change, organizational change, and leadership are at the core of any change initiative efforts. While most change efforts fail, NMC has realized successful acquisition and management of change processes because of its leadership quality, effective communication, and resources to support change processes. NMC has been able to control the negative impacts of change and realize positive outcomes.
References
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