Marketing a Merger: Assessing the Brand, Forming a Culture

According to the 2011 HealthLeaders Industry Survey, 46% of health leaders are contemplating merger or acquisition activity – to acquire or be acquired. The track to consolidation or integration of an organization involves a high level of external and internal communication, brand analysis, and alignment across multiple organizations. Over the next few months we'll be checking in with three organizations that recently announced plans to merge.

Albany/Troy-based Northeast Health, St. Peter's Health Care Services, and Seton Health, intend to begin the process of merging this fall and expect to achieve full integration over the next 3-5 years.

St. Peter's Health Partners, the singular entity, will start using the new name and brand in September and will combine service lines by 2012. The organization's leaders anticipate the move to save 25-30 million (or about 2.5%) on the health systems' bottom line.

Here's where they began. First, at the start of merger talks, the organizations surveyed their patients to measure brand loyalty and recognition.

"We had hospitals tripping over each other within a five mile radius," said Scott St. George, interim CEO of Seton Health. "Over the 2-5 year timeline we are going to start consolidating services with the idea that volume helps improve quality."

After the careful system identity process, it was decided that individual hospitals would retain their names, while all under the umbrella of the St. Peters Health System identity and logo facilitated by BrandEquity.  

"The biggest metric was [that] we surveyed patients in our six county area and 1,200 individuals responded," said St. George. "There were questions asking folks how they felt about the healthcare providers that could provide care in those markets – would they choose to go to different organizations or were they satisfied with their care?"

Deciding on a name was one of the first steps in the journey to become a merged entity. Finding a new name for the organization was a longer process than the CEOs anticipated. Choosing a name was not like drawing names from a hat, but came from measurement of the communitiy's response and recognition.

"Because mergers are often laden with emotional responses in regard to branding, we found that the research-based process that our clients had decided upon up front was very useful – we recommend that others consider a similar process," said Don Giller, senior project director at BrandEquity.

Next the health systems had to figure out how to overcome their differences to align the three different cultures with community needs.

One of the immediate differences that must taken into account is the cultural differences between Northeast Health, a secular system, and St. Peter's Health Care Services, a faith-based system. To read the public's response, the systems held community town halls and eventually decided to build a separate hospital, not affiliated with the merged organization, to perform sterilizations and abortion procedures.

Another great challenge in the merger has been deciding the governance structure of the new organization.

"The fact that Northeast did not have a parent organization prior to the merger, psychologically for our board to work through that, was a challenge," said Jim Reed, CEO of Northeast Health.

To address internal culture and integration, the three health systems formed a mission and culture integration group of about a dozen leaders from each of the organizations. The group will apply information from an organization-wide culture assessment survey to form action plans and remeasure the results in order to create a common culture.

"Physicians were generally supportive of the merger," said St. George. "About 80% responded that they were moderately supportive or extremely supportive."

After identifying a common culture among the organizations and staff, the next step is creating clinical integration groups in fields such as oncology, cardiology, behavior health, etc. The timeline for clinical integration for St. Peter's Health will begin in the summer when Deloitte Consulting begins designating teams to organize where service line consolidation should happen.

1. Measuring brand recognition
2. Addressing potential alignment issues within the entities
3. Allowing transparency between the organizations and patients – through town halls or newsletters
4. Creating an action plan for a common culture and governance structure
5. Creating a clinical integration group

"This process utilized a fact-based, market-driven methodology to determine a brand for the new organization that would be instantly recognizable to the communities we serve and put us in the best position to operate in a highly competitive, unpredictable, and rapidly changing healthcare marketplace," said St. George.

The teamwork St. Peter's Health Partners shows can be a model for other organizations considering a possible merger. The timeline is set – stay tuned for more information in the fall.

See also:

Breakthroughs - Merger and Aquisition Strategies

Hospital merger touted as a "game-changer" for Upstate Medical University