Properly Manage Change and Challenges of Mergers & Acquisitions

Properly Manage Change and Challenges of Mergers & Acquisitions

Mergers & acquisitions have become a rising trend for organizations in the Health & Human Services industry. The ever-evolving healthcare environment continues to drive organizations to seek new opportunities and resources through M&A’s, which allow them to improve services and overall operations to create for a more efficient and holistic business model.

Despite the rising number of M&A’s, an astonishing 70-90% of all mergers and acquisitions fail, as per the Harvard Business Review Report. Due to the complexity of M&A’s, many organizations become strained when trying to proactively manage the process.

Understanding how to properly manage change and challenges of mergers and acquisitions can help organizations develop strategies for successful execution. Some of the most common challenges that organization’s face during this process include:

Blending Workforces
When diversifying services, it’s imperative for organizations to blend skilled teams. M&A’s are commonly implemented to help organizations provide more integrated services, however, it is essential to maintain a high quality of care and excellence. Organizations will need to analyze the merging workforces and determine a plan for creating cross-functional teams that can continue to provide clients with best-in-class service.

Compliance Risks
As an industry strongly governed by regulations, many organizations have unique and complex needs to maintain mandatory compliance. During M&A’s, managing the necessary reporting and complying with requirements such as Wage & Hour laws, credentials, and budgets can become increasingly difficult and can put organizations at fault. It’s imperative for organizations to remain attentive and proactive to all regulations during an M&A.

Culture Clashes
Throughout the M&A process, many aspects of an organization will be integrated. One of the most challenging aspects to integrate and keep consistent is organizational culture. With conflicting missions and values, organizations may struggle to establish a new, inclusive identity. An integrated brand identity strategy can help management and leadership styles align, creating a united front that drives the new organization forward.

Outdated Technology
Technology plays a significant role in M&A success. Understanding technological needs of both organizations is essential for forecasting the integration, allocating resources, and placing talent. Without updated technology, organizations may not have access to the accurate data and information needed. In the long run, this can cause problems regarding employees, finances, and strategic plans, if the technological infrastructure in place does not have the bandwidth to support the needs of the new organization.

There are many long-term benefits to M&A’s for Health and Human Services organizations, including improved and integrated services, strengthened competitive advantages, and new opportunities. It’s essential for organizations to understand the challenges they will face and strategize for the best approach to overcome them.

This DATIS Blog was written by Erica Kavanagh, DATIS, on December 22nd, 2016 and may not be re-posted without permission.

Written by Erik Marsh

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