From WBUR.org, Massachusetts' second and third largest health providers dissolve intentions to merge:
The surprising decision comes some five weeks after the insurers announced they were exploring a merger. On Jan. 25, the companies signed a non-binding memorandum of understanding — the first step toward a possible merger. The companies had spelled out who would lead the combined organizations and the new board.
While conducting due diligence, the insurers said it became clear a merger would not have been as financially prudent as first thought.
“We have spent the last six weeks in a vigorous process thoughtfully exploring the practical feasibility of combining our two organizations for the benefit of our customers, members and the many other people we aim to serve,” said Harvard Pilgrim CEO Eric Schultz in a statement. “As a result of this process, we have now determined that we are stronger as individual competitors than one company.”
This is a terrific example of the merger process going right. Start talks deliberately, define goals clearly, assess stakeholder reactions soberly, and make the best call for all involved. Sometimes -- as in this case -- the best call is not to merge organizations. In healthcare, in an era when the most critical path to success is in reducing costs and increasing efficiencies, it seems almost counter-intuitive to decline a merger opportunity that could yield such rewards.
Holly Green has a wonderful post over at Blogging Innovation this morning:
Too often companies invest a lot of time and energy in creating their strategic plan, but then make almost no effort to help people understand it, buy into it, and support it. To ensure that everyone in the organization runs the same race, we need to inform, engage and inspire people -– not just once when the plan is introduced, but continually throughout the year.
While Green isn't writing specifically about the hard choices that come with merging organizations, her guidance is spot-on. Getting key stakeholders aligned--staff, vendors, and in this case patients in particular--and ensuring a sound level of understanding and confidence in the organizations to support a merger is critical to ultimate success in a new organization. As we see with Tufts and Harvard in this case, if you can't find alignment, the deal's off.