Post-Merger Integration: The Balance of Forces

Healthcare CEOs then need to consider the structure and systems that impact five interrelated—but separate—constituencies: line employees, middle management, senior management, the medical staff, and the board. At each level, different kinds of identity with the mission and vision of the organization exist. A shared sense of purpose within and between levels is a critical centralizing force. CEOs must recognize the power of symbolism and build a common identity for the members of a merged organization. This becomes the foundation of organizational culture.

Next, CEOs should build divisional and departmental structures within the organization to get work done efficiently without segregating the functions that need to interface smoothly. This process begins with a careful assessment of end-users (patients) and other customers (doctors, families, etc.) and an analysis of the organizational services and processes. The goal is to design work interfaces that eliminate unnecessary steps, work-arounds, and other inefficiencies that frustrate staff and tend to set them in opposition to the institution and each other. Uniform processes across organizational sub-units and compatible, interlocking systems hold the parts together even in the face of centrifugal forces.

Managing trade-offs

As the structure is built with these principles in mind, CEOs will need to make decisions regarding the balance between centralization and decentralization and between a flat, broad organization or a narrow, deep one. Practical considerations like span of control and management layers must be addressed.

Decisions will reflect a CEO's style and preference, but they must be informed by the degree of specialization required to provide certain services or to meet the needs of specific customer groups. It is imperative that the structure is aligned with organizational strategy. Savvy CEOs will recognize that each decision involves trade-offs, and no given structure will work perfectly.

Nevertheless, CEOs must also recognize that poor design choices will interfere with growth, innovation, communication, and decision making, and undermine integration and synergy.

Business integration and clinical integration

Most healthcare CEOs begin post-merger integration on the business side rather than the clinical side of the organization. Business systems, like billing, are more easily integrated clinical systems because business systems are typically more generic. Most CEOs and CFOs can more readily identify the efficiencies and consequent cost savings.

Moreover, business systems do not directly challenge the professional autonomy that clinicians, especially physicians, exercise in healthcare settings; however, clinical services are the core business of healthcare organizations. To exclude them from post-merger integration means foregoing the most significant opportunities for operational improvement.

To integrate or centralize business systems while leaving clinical systems essentially non-integrated means that there will continue to be powerful forces working against post-merger integration. However, in many healthcare settings pushing clinical integration too fast will generate strong resistance. Once again, CEOs must consciously evaluate the trade-offs. If they defer clinical integration for practical reasons, they should revisit that decision on a regular basis to test for readiness, as it is likely to change over time. Some healthcare CEOs have found that centralizing performance improvement/quality assurance and building meaningful leadership roles for respected clinicians in the process has been an effective centripetal force that has increased readiness. Others have found that creating uniform standards in key areas like ancillary services has similarly increased readiness for further post-merger clinical integration.

Although CEOs may not welcome an additional task on their already full plates, designing effective consolidated organizations is one of their primary responsibilities, akin to strategic planning. It requires many of the same skills and analytic rigor. Like planning, design requires a deep understanding of the business, it forces choices, and it is not permanent. Fortunately, strategic planning and organizational design overlap and are mutually supportive, although design does not involve as many unknowns as strategic planning. But organizational design is not simply moving boxes around on an organizational chart. CEOs who design as carefully as they plan will add to their competitive advantage and create stronger, healthier, and more vibrant healthcare organizations.