Acquisitions and Takeovers

Early in my MBA classes I had one professor with over 35 years in Healthcare consulting say to the class, “There are very few examples of actual mergers; usually someone is acquired or someone is taken over.” This resonated with me when my previous hospital was informed that in 90 days we would be closing the doors. Now, it resonates with hospitals at an increasingly rapid rate. If you’re a person who loves keywords, “integration” will be your new favorite on the list. I currently sit on two integration committees (Blood Bank, Education) where we discuss the different ways we do things and how we can standardize our procedures to make sure that a patient receives the same testing at any Cleveland Clinic location. As big healthcare systems acquire more and more independent entities, integration will be the axiomatic factor to their future success.

If you’re a small community hospital laboratory manager/supervisor that has just received word you are going to join in a partnership with a large system, what next? The really big issues that laboratories deal with are instrumentation and supply chain. Once your service contracts are up, you’ll need to switch to the systems the big laboratory uses. You will be thrust into a much larger network of people and more importantly, talent. If you have open spots you will have a larger talent pool to pull from much easier than going to the job sites.

The biggest challenge you will have is watching your services be consolidated. If you were a full service hospital you will more than likely lose some services and this can have an effect on your test menu in the lab. Low volume but high profit tests will almost always be consolidated into a single location to get the most profit out of it. The send out department of your lab may become much busier because of this increased workload. The system will try its absolute hardest to lower their cost structure and this will include changes in your laboratory.

On a personal level the first thing to do as a manager/supervisor when you find out your hospital is being acquired is don’t panic. Very rarely do they come in immediately and “clean house”. They usually have a period of time when talent is evaluated and then decisions are made. The real question becomes do you want to work for the new system? The integration period can be difficult and time consuming. If you feel your hospital may be acquired, stay prepared. Keep your resume updated and just scan the job sites every once and a while and see what is out there. My biggest piece of advice is don’t get caught in a situation you have no control over. You are the manager/supervisor of the laboratory so you are the reason that it succeeds or fails. These are the same reasons the managerial staff is kept or let go once an acquisition has been completed.

This consolidation is only going to increase as the new healthcare legislation takes effect. Decreasing reimbursement from the government will force entities to combine forces and form systems of healthcare. Put yourself at the forefront and know what in your test menu that you could do without and what you could use from a larger system to be more profitable. When the time comes you are the talent they are looking to acquire, not take over.

-Matthew Herasuta

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