By JULIE MINDA
ORLANDO, Fla. — In completing a merger or acquisition, some organizations focus so heavily on the legal aspects of the transaction that they fail to involve in the planning the people who will implement the deal at the local level. This mistake can lead to severe buyer's remorse or seller's remorse, said two executives connected with Catholic Health Initiatives during an Innovation Forum session last month at the Catholic Health Assembly.
Jonathan Timmis (left); Peter Banko (right)
During "Partnership Integration in a Catholic Health Care Ministry," Peter Banko and Jonathan Timmis explained that Englewood, Colo.-based CHI has blended its transaction and integration teams for mergers and acquisitions. Banko is president and chief operating officer of Centura Health, and Timmis is system vice president of strategy integration and operations for CHI. Centura is co-sponsored by CHI and Adventist Health System.
Under this blended model, market-level leaders involved in every major division of both organizations provide input into the deal from the beginning of the negotiations. Timmis explained to Catholic Health World that the transaction and integration team engage market-level leaders even prior to the signing of a letter of intent, as they develop a strategic and operational assessment, which is an in-depth review of the organization's market position and operational performance. Timmis told the paper, "The completion for the assessment includes engaging the team on-site to test the assumptions made and provide direct input into understanding the opportunity and determining the mutual value of a potential transaction to both the local organization and to CHI.
"This informs the decision-making process for both organizations and serves as a foundational plan that gets refined as the organizations move past a letter of intent toward a definitive agreement," Timmis explained.
Assembly attendees listen to a presentation on blending the integration and transaction teams for mergers and acquisitions.
Banko and Timmis spoke of the importance of both organizations' senior leadership fully buying into the deal, of leaders being physically present at the organizations involved and fully engaged in the integration process. Timmis told Catholic Health World, "Transactions are very relationship-driven. Engaging the local team and exposing them to system leadership and CHI during the negotiation process is critical to understanding the cultural fit between the leaders, and ultimately the organizations."
While the composition of the system team varies by circumstances, there is a small core team of system executives for each transaction that communicates regularly with senior leaders across CHI. "They are engaging the local markets in every aspect of the transaction and are actively visible in the markets throughout and after the transaction," Timmis told Catholic Health World.
Banko and Timmis said it's essential to recognize that integration is a slow process and that individual staff members at both organizations will accept the integration at their own pace. Timmis told the paper that people move from "letting go," through the "neutral zone" to the "new beginning" at different speeds. "Understanding the variation that exists allows both CHI and the local market leaders to plan and communicate accordingly."
Banko and Timmis said people at the organizations involved in an integration also should recognize that both organizations can learn from each other.
Timmis spoke of the need for planners to use what they've learned through interaction with the local market to develop a playbook for what will happen at each of the organizations involved in the deal one, 30, 60 and 90 days out from the effective date of the transaction. Once a plan is in place, they should communicate to their stakeholders exactly what will be happening, when and why. This will help allay the natural fears that people have when major change is happening.
Banko and Timmis said that rather than muddling their way through an 800-line spreadsheet of merger tactics, as some integrating organizations do, CHI organizations focus on 15 elements of each transaction. Those 15 elements include such considerations as evaluating service lines, establishing networks of combined operations, evaluating productivity, integrating the physician enterprise, establishing a wage index and integrating payer systems.
Banko said it's important in transactions involving ministry organizations to celebrate the culmination of negotiations and the start of combined operations, while also making a statement about the centrality of the Catholic health mission. CHI organizations mark the start of a new integration with a day-one missioning ceremony.
A theme that ran throughout Banko and Timmis' presentation was that mergers and acquisitions can go more smoothly when more voices are heard. "The integration process is the glue," said Banko, and it must be factored in from the start of strategic discussions.
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