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Healthcare Alliances — Ensuring ROI from an Affiliation
The most difficult challenges hospitals face in an affiliation or acquisition are not price or financial due diligence, but cultural issues. In fact, the most significant problems that occur post-acquisition usually are directly attributable to insufficient integration planning, a poorly defined vision for the combined company, and an underestimation of people issues, or cultural integration.
With as many as three-fourths of hospitals, according to some estimates, examining possible affiliations or acquisitions, leadership must carefully plan for any type of affiliation. Even with strong interest by the parties involved, making a joint venture or a merger work is challenging under the best of circumstances. Many mergers and acquisitions fail, with some not even advancing past the letter of intent stage. As many hospitals have found, even if an agreement or transaction proceeds, it may not be successful in that goals are not met (e.g. doesn’t generate revenue or savings anticipated) or legacy problems plague the organization for years (e.g. problems with integration, leveraging strengths of each organization, animosity between groups, etc.). The quality of the integration plan is probably one of the most critical factors in ensuring that the affiliation achieves its business strategy goals.Read More
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